The pandemic has created many new challenges for companies, including state-wide shutdowns and new social-distancing requirements. One of the biggest hurdles companies have faced is procuring the supplies they need to keep their businesses up and running.
In the first wave of the pandemic, we saw shortages driven by increased demand and supply-chain bottlenecks. In the second wave, many businesses are struggling with cash-flow issues that make purchasing a challenge.
To rebound from the pandemic, your business needs to be able to procure the supplies and materials it needs. You can’t afford to be stymied by a sluggish supply chain, and you shouldn’t have to choose between placing an order and keeping your employees.
Here are six ways to overcome any purchasing challenges you may face during the crisis:
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Uncover weak points in your supply chain.
One unexpected consequence of the pandemic was that it exposed several weaknesses in the global supply chain. Consumers found supermarket shelves empty — not because there was a shortage of food or toilet paper — but because truck drivers could only work so many hours and were waiting in long lines to pick up deliveries.
Supply-chain disruptions are one of the most devastating purchasing hurdles your business could face during the pandemic. The key to minimizing these disruptions is to first identify factors that could put your supply chain at risk.
These can include a lack of transparency on where goods come from, the need to transport supplies from overseas, and ordering from a sole-source vendor. If you don’t already know where your materials come from, now is the time to find out.
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Diversify your supply chain.
Once you understand where your supply chain is vulnerable, you can begin to address those weak points by finding other suppliers. Working with a supplier that has factories spread across multiple countries can help minimize disruptions to your supply line in the event that one country becomes the next coronavirus hot spot.
Another option is to source supplies locally or regionally. Although it’s often more expensive, working with a local supplier can reduce lag time from shipping, and many customers are willing to pay more for items that are made in the USA or locally grown. Even if shifting away from overseas suppliers isn’t financially feasible now, identifying another supplier you could fall back on creates an added layer of security.
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Join a group purchasing organization.
As companies reopen for business, many leaders are looking for creative ways to cut costs without laying off employees. One way to save money is by sourcing supplies more cheaply. This used to be difficult for small businesses that didn’t have the purchasing power of a giant corporation, but it isn’t anymore.
By joining a group purchasing organization, your business can access the lowest bulk rates available. You can think of group purchasing like splitting the cost of a Sam’s Club membership with your in-laws: Everybody gets the cheapest price without having to buy a lifetime supply of paper towels.
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Review the terms of your supplier agreement.
If certain items aren’t available from a group purchasing organization, take the time to review your existing agreement and negotiate with your suppliers. In some cases, you may be able to get a lower price simply by changing your ordering practices.
Many suppliers offer discounts for purchasing in higher quantities less frequently or consolidating your deliveries. You might also be able to get better pricing by working with only a handful of vendors who can meet all your needs.
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Apply for federal relief.
Reopening for business post-coronavirus can feel like a catch-22: Your business needs to ramp up sales to rebound from the pandemic, but after months of depressed revenue, you may not have the cash on hand to put in orders for what you need.
If that’s the case, you may be eligible for one of the loans offered by the U.S. Small Business Administration. The SBA is once again accepting applications for its Economic Injury Disaster Loans, which provide funds for companies with 500 or fewer employees that are experiencing a temporary loss in revenue. Businesses that already have a relationship with an SBA Express Lender can access up to $25,000 cash in bridge loans as they wait for a decision on an EIDL.
Another way to free up capital for purchasing is to get payroll relief from the federal government. The Paycheck Protection Program has been extended through August 8, and the program will likely be included in the next recovery package. If the Small Business Expense Protection Act is passed, small businesses will be able to deduct expenses paid with a PPP loan from their taxes.
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Take advantage of state-run assistance programs.
A loan from the state could be just what you need to free up capital for purchasing. Today many states are administering their own relief programs for small businesses, which may include low-interest working capital loans, tax filing and payment extensions, and relief from interest and penalties.
Pennsylvania’s Working Capital Access Program offers loans up to $100,000 for businesses with 100 or fewer employees. Illinois has created an emergency loan fund for businesses affected by the pandemic and the Chicago Small Business Resiliency Fund. If passed, the RELIEF for Main Street Act would earmark an additional $50 billion for small businesses to be administered by local institutions. Check your state or county website to see what’s available in your area.
The coronavirus pandemic has put a strain on the entire global economy, but it’s hit small businesses the hardest. At a time when you’re making tough decisions related to staffing and customer safety, you shouldn’t have to worry about how to afford your next order or where you’re going to source raw materials. By finding creative ways to reduce expenses, free up capital, and protect your supply chain, you’ll be prepared to weather any purchasing challenge — now and in the future.
