Small Business Supply Chain Disruptions

Share this via:

By William Dunkelberg, Forbes

The pandemic disrupted the small business sector in many ways. Thousands of firms were required to close or limit business operations, and this produced a surge of over 20 million unemployed workers. A significant number of the affected firms directly served the general population (restaurant, salon, etc.). But many of the firms had other small firms as their customers, part of a supply chain (wholesale, supplies, food, etc.). When these firms can’t hire enough workers, or close down, this impacts the performance of firms at the end of the supply chain.

Over 30% of small businesses reported that supply chain disruptions have had a significant impact on their business(es). Another third reported a moderate impact. Over half reported that the impacts of these disruptions are worse than three months ago, only 6% saw an improvement. As the economy re-opens, more and more of the “imbalances” and “mis-matches” are being discovered, slowing recovery and raising costs.

With supply chains not working smoothly, imbalances between the supply of goods and services, and the demand for those products are now center stage, creating an environment of rising costs and, subsequently, higher prices as those costs are passed on to consumers. Owners are reporting the highest frequency of price hikes for their products and services since 1971. The University of Michigan reported the highest percentages of consumers in their 50+ year survey history mentioning price increases as a concern.

Unfortunately, most of those impacted do not anticipate the problem easing for at least another six months. Six percent that anticipate the supply chain disruption impacting their business will be short lived, resolving in less than two months. About one-third of those impacted see it taking 3-6 months before any relief. Almost two-thirds (62%) anticipate having to manage through for more than six months, extending into 2022.

Leave a Reply

Translate »
Skip to content