As people in many regions of the United States dig their way out from under heavy snow, I think this is a good time to talk about how small businesses can deal with adverse weather and its negative effects.
Just-in-time inventory models begin to fall apart when faced with weather-related delays. Running a lean business is usually a smart way to cut costs. But if you depend upon a constant stream of deliveries to meet demand, then you could suffer major outages when something happens to disrupt your supply chain.
If you’re a small business and this was your first time dealing with a major disruption in your supply chain, you might be feeling a little shell-shocked. What can you do to deal with bad weather? Here are four inventory management solutions you can consider using.
The Chipmunk Solution
Chipmunks and other mammals often store enough food to last them through the winter. You can follow their example and stock up on supplies you’re confident you’ll need. Of course, you run the risk of overstocking on unpopular products that you’ll be stuck with. Also, it ties up a lot of your working capital in inventory. As long as you view this as a temporary solution to be used sparingly, you should be fine.
The Rain Check Solution
A simple way to deal with supply chain problems is to promise your customers that you’ll get out-of-stock products to them as soon as they arrive. Rain checks certainly live up to their name when bad weather strikes. However, if it’s a true emergency and you’re out of supplies your customers desperately need, that could give your business a black eye. They may not go to you when times are good because they couldn’t count on you when they weren’t so good.
The Almanac Solution
Plan far ahead. Study weather patterns and try to make an educated guess about when storms are likely to strike. Then adjust your inventory to compensate for those times. You should also stay on top of weekly weather forecasts to see if you need to make changes to your long-term plans. Having a framework for how to respond to emergencies can help you avoid panic decisions or major outages.
The Inventory Software Solution
With inventory management software, you can get detailed reports about which suppliers are the most reliable. Cultivate multiple options so that if one supplier can’t make a shipment, you can try another. Plug in data on your sales, on-hand inventory and suppliers to inventory management software to help you decide which of the above options works best at different times. Perhaps it’s best to stock up on certain products at one time but not at another. You can find out if you have the right data. Use QuickBooks manufacturing software to get the right information on both inventory and accounting.
What should you do when bad weather hits? Hopefully you can relax and know you’ve already done all you can to prepare ahead of time. Whether you use product stockpiles, rain checks, almanacs or inventory management software, your solution to bad weather and supply chain disruptions should focus on keeping your customers happy.