What happens when your industry runs into critical shortages

The world is on the edge of a global crisis regarding parts and spares shortages in essential industries. The global chip shortage is affecting everything from car manufacturers, electronics, and even logistics.

The problem is more critical than most people are letting on. Shutdowns in 2019 and 2020 set production back months, but specific industries did not consider these shortages.

So what can your business do to not land up on the back foot?

Prepare for the unknown

Ok, so nobody could have predicted the pandemic or how long it has lasted. The lockdown shutdowns did not play fair. With production halted, global logistics, and shipping prices soaring through the roof, businesses are still battling.

Forward buying is always a good solution if you can. Holding stock can be costly, but if your business can manage the buy and storage, you will be in an excellent position to continue trading while your competitors are waiting for stock to be delivered.

Prepare for the forward buy

When your suppliers tell you that there is a six-month turnaround on stock, it is time to place the orders and keep them coming. When you know that you and your competitors are all in the same boat, if you can better prepare, you will have stock when your competitors don’t.

Customers do not like waiting, so they can easily swop suppliers based on availability.

Hedge your cash vs. profit

If you can forward buy, it is critical to know what exchange rates will be, your interest in holding the stock, and funding the buy. You will need to add that to your end price. When you have inventory available and customer demand, you can charge more for your products and services. You can justify the price increase based on the fast turnaround time and availability.

Service like your business depends on it

Just because you cannot supply your customers with a product does not mean you stop communicating with them. It is the time when you can have face-to-face or zoom meetings with your customers, find out their challenges and plans for the future, and see where you can fit in with their challenges.

If you have customers who have switched to you, getting to know them and servicing them as your business depends on them can get you a new customer for life.

Bizcash is a South African business that looks to grow and develop SMME’s in SA. For Credit or business finance options, get in touch with us on 0861 93 93 93 or email us at info@bizcash.co.za or contact us here.

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