Supply Chain Challenges for SMEs and How to Overcome Them

February 10, 2021

Small and medium enterprises face similar supply chain challenges as their larger counterparts, but can find them more difficult to overcome. With advanced supply chain management software, small businesses are able to predict the future better, maximize available opportunities and nullify the negative impact of uncertainty and disruptions.

SME Supply Chain Challenges

Data Quality

SME Supply chain management is built on data such as, master data, physical inventory balances or open orders. Many SMEs have issues with the availability, age, and quality of the data that they use for their supply chain operations. If the data is missing, old, or of poor quality, then the resulting plans will not be effective. If the data is fresh and of a higher quality, through the use of digital technologies and effective data management processes, you can improve your supply chain management and decision making.

Inventory Management

Small businesses are up against a multitude of inventory management challenges. Customer expectations are constantly changing, demand is volatile, ecommerce is driving greater competition, and regulatory compliance is more complex than ever. Having the right inventory in place at the right time is crucial for SMEs to survive and find opportunities for growth. Being unable to fulfil customer orders on time due to inventory shortage or supply disruptions can hurt the public image of any company. Cloud-based supply chain management software can provide complete, real-time visibility into your supply chain operations and help you to make informed supply chain decisions.

Budget Constraints

SMEs typically have modest IT budgets, which can be a huge challenge to achieve the levels of visibility required for your supply chain to be competitive. Most enterprises struggle to achieve complete visibility due to heavy investments in legacy supply chain systems. Organizations are struggling with the transition from legacy solutions to the latest cloud platforms, and many small enterprises are running a patchwork of disconnected systems and applications which are highly inefficient. This makes it even tougher to utilize modern technology to increase efficiencies and reduce supply chain costs. Modernizing your supply chain systems and investing in automation could help SMEs realize significant cost savings over the long term.

Supplier Relationship Management

Supplier relationship management can be complex with potential conflicts on issues such as on-time billing and payments, delayed shipments, quality of shipments etc. Small companies have little leverage over their suppliers when compared to larger businesses, making it difficult for them to negotiate effectively. The suppliers, on the other hand, expect payments as soon as possible and sometimes complain about the timeliness of payments. The situation becomes more complicated when the supplier doesn’t have a tracking system in place for their receivables. This can become a point of friction for the supplier and buyer. SME Supply chain management software can improve the visibility of the supply chain. Each side can know where exactly the product is and when it will be delivered and what’s the payment status. Both you and your suppliers are able to predict lead times better and improve order accuracy.

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