Every SMB needs a supply chain contingency plan
Supply chain disruptions affect all businesses. But what may be a short-term setback for enterprise companies could severely impact small- and medium-sized businesses.
Learn why this happens and how a supply chain contingency plan can help SMBs stay agile and competitive even when things don’t go as planned.
Why disruptions hit SMBs harder
While enterprise-level companies typically have the resources to withstand delays and shift operations quickly, many small- and medium-sized businesses don’t. Here are some reasons SMBs may be more vulnerable to supply chain issues:
- Leaner inventory means a single missed shipment could halt production or delay delivery
- Fewer supplier relationships make it harder to pivot if a vendor falls through
- A smaller company may not have dedicated logistics staff to monitor risks or make changes
- Limited access to data and tools can prevent the ability to react in real-time
- Lower cash reserves restrict the ability to absorb higher costs for last-minute shipments in case of recovery or delay
All of these factors could create a higher risk for missed orders, lost revenue and damaged customer relationships — all massive challenges for growing companies to overcome.
How to build a contingency plan
If you're just getting started, follow this basic framework:
Map out your supply chain. Understand where your risk points are, including vendors, routes and shipping regions.
Rank your risk exposure. Ask yourself, “What disruptions would hurt my business the most?” Focus on those pain points first.
Design backup workflows. Identify your alternative routes, suppliers and modes of transportation. Proper routing guides can help with this.
Invest in technology. Even basic TMS or shipment visibility tools can make a significant difference. You can also consult your transportation provider to see how they can further optimize your supply chain.
Test and refine. Remember not to just set it and forget it. Your contingency plan should change with your business.
Contingency plan essentials: what to include
Once you have the basics in place, it’s time to make sure your plan covers the right things. A good contingency plan should be tailored to your business, actionable when disruptions hit and flexible enough to evolve as you grow.
Use this checklist to make sure you’re covering key areas that can help your business respond quickly and recover faster.
Inventory flexibility. Distribute critical products across multiple locations or partner with a 3PL to avoid depending on a single location. This allows you to shift inventory quickly while maintaining optimal service levels.
Supplier diversification. When possible, source from multiple suppliers across different regions. If your primary supplier can’t deliver, having a secondary one in place can reduce downtime and help with leveraging costs.
Carrier backup options. Build relationships with more than one carrier or work with a logistics partner that can access a broad network to secure capacity quickly when needed. It also helps to partner with a provider that offers multiple modes like LTL, truckload, expedite and air transportation to help you move freight efficiently.
Real-time visibility tools. Knowing where your shipments are and where delays are happening helps you to act before customers are impacted. Check out how ArcBest shipping tracking works.
Scenario-based response plans. Run “what-if” scenarios and build planned playbooks around them. Know what to do if a port shuts down or if a key supplier is delayed a week or two. Document these steps in your playbook and determine who’s responsible for each piece.
Open lines of communication. Keep partners and customers informed. Proactive communication about delays and alternate plans shows you’re prepared and builds trust when issues arise.
Stay ahead of uncertainty with ArcBest
Your business doesn’t stop when disruptions happen and your supply chain shouldn’t, either. At ArcBest, we can connect you with a diverse carrier and transportation network, provide real-time shipment visibility tools and build cost-effective plans.
Whether you need help in a specific area of your logistics operations or you’re looking for a more managed solution, our experts can assess your risk and help design a contingency strategy.
Contact us today to build a plan that fits your operations, risk profile and budget.
