As the holidays approach, small businesses grapple with supply chain disruptions
Cecily Habimana, co-founder of Sew Creative Lounge, a sewing school in Mount Rainier, Maryland, normally imports her fabric from Chinaâ¦
Cecily Habimana, co-founder of Sew Creative Lounge, a sewing school in Mount Rainier, Maryland, normally imports her fabric from China and West Africa, but international shipping and customs delays have become unaffordable for the owner of the small business.
âI can’t afford the cost of a big shipment, so I pre-order the fabric, but this season due to delays, I have no way of knowing exactly when it’s coming,â Habimana said. at Capital News Service.
As the holidays approach, small businesses like Habimana are taking the brunt of the supply chain delays that have caught the White House’s intercession and the attention of Congress.
“I don’t remember a time in history when (the model of supply and demand) was reversed, where one side dictates the other in a way that never happened. before, “Representative Kweisi Mfume, D-Baltimore, told a hearing of the House Small Business Committee’s Oversight, Investigations and Regulation subcommittee on Wednesday. The panel heard testimony about the impact of supply chain disruptions on small businesses.
The pandemic has forced many factories overseas to close, drastically reducing production. There are also shortages of ships, containers and truck drivers.
Lack of coordination between the transportation and logistics sectors is causing the disruption, said Dr Martin Dresner, professor of logistics and public policy at the Smith School of Business at the University of Maryland.
âJust saying ‘let’s have more throughput at the port’ probably won’t solve the problem if there aren’t enough truck drivers to pull these containers out of the port,â Dresner said.
The Port of Baltimore, however, is an exception to supply bottlenecks.
“The Port of Baltimore is not experiencing supply chain congestion issues that impact other ports,” Maryland Port Authority executive director William P. Doyle told CNS in a statement. “In fact, due to congestion at other ports, we recently attracted two new container services totaling 21 new vessels.”
He added that the port “has been preparing for more than a decade for the widening of the Panama Canal and that we are one of the few ports on the east coast to have a canal 50 feet deep and d. ‘a mooring for ultra-large ships “.
âIn addition, our local market has built an efficient warehouse network over the past six years with millions of square feet of distribution, sorting and distribution centers located throughout Maryland and central Maryland. Atlantic – Amazon, Home Depot, IKEA, Fed Ex., And Floor and Decor to name a few, âDoyle said.
Still, some small businesses in Maryland are struggling with supply chain disruptions.
“It’s not a new problem, it’s something that has been going on for a very long time,” said Patty MacCrory, owner and president of AwardsPlus, a company that makes trophies, plaques and promotional items in Clinton, Maryland. . She said she had seen supply chain issues since January 2020.
Big companies like Walmart and Target have a way to claim products in a way that small businesses just can’t, said Rich Weissman, assistant professor of supply chain operations at Lesley University in Massachusetts.
âBig businesses get what they ask for and small businesses don’t,â Weissman said.
Supplies on ships stationary in the ocean are causing cash flow problems for these small businesses, said Michael Kelleher, executive director of the Maryland Manufacturing Extension Partnership, a nonprofit funded by industry and the State of Maryland which works in coordination with the National Institute of Standards and Technology. Each state has a similar program.
American manufacturing that has migrated overseas must be reestablished at home, according to Kelleher.
“In the long run, it’s eye-opening for Maryland and for domestic manufacturing as we need to bring some things back to earth and rebuild some of the expertise we’ve lost nationally over the past 20 years.” Kelleher said. .
Additionally, Kelleher said, “most of what we make in Maryland is not directly for the consumer and most of it goes into other products.”
“These delayed repercussions tend to have an exponential effect because they reverberate downstream,” he said.
Kelleher’s program helps small businesses manage supply chain backlogs by showing them how to communicate with customers, manage customer expectations, and adjust cash flow.
Such measures can help save small businesses from devastating consequences, Kelleher said.
Habimana, who started buying locally made fabrics when shipping costs skyrocketed, said she would start buying fabrics from China and West Africa again once prices come down.
China is the only reliable manufacturer it has found, Habimana said. With a clientele that mainly buys its African printed fabrics, Habimana wants its purchases to benefit people living in these countries.
Yet even with a national materials supplier, inventory selection was greatly affected, MacCrory said.
Customers have been reasonable and understanding about product availability, MacCrory said, but the current situation has really had an impact on his ability to get inventory, especially lumber.
When a customer requests an item that is not in stock, MacCrory said it turns to a stock of substitute products that it offers instead.
To accommodate growing alternatives, MacCrory said it will add a second warehouse next month.
Teaching small businesses how to handle supply chain disruptions is imperative, as current shortages are not an isolated event, Kelleher said.
In a bid to reduce the backlog in the supply chain, President Joe Biden last week secured agreement from the nation’s busiest port, the Port of Los Angeles, to remain open 24 hours a day, Sept. days a week.
This follows a similar expansion of operations at the nearby port of Long Beach. The two ports together account for about 40 percent of container shipments to the United States.
“â¦ The commitments made today are a sign of major progress in moving goods from manufacturers to a store or to your front door,” said the president.
But there is no immediate solution, which consumers and businesses will have to adapt to, Transport Secretary Pete Buttigieg has warned.
âA lot of the challenges we’ve faced this year will continue into next year,â Buttigieg told CNN on Sunday.
Weissman doesn’t believe regulation or government intervention will make a difference in supply chain disruptions in the months to come.
âWe have to realize that we’ve been through a massive economic shock and it’s not over,â Weissman said. âLet the system play and let it run. “
For small business owners in particular, the next few months could determine who will survive and who will fail.
After the holiday shopping sprees last December, many of his customers stopped spending a little, Habimana said.
“I’m trying to make sure that whatever we do, we try to get around any profitability issues that could hurt us this season,” said Habimana.