Supply Chain Issues are Zapping Profits:
What Can SMBs Do To Minimize Risk?
Record-hitting inflation, worker shortages, cybersecurity risks, natural disasters and shifting demands are stressing what was an already fragile supply chain. Some economists note this is the worst supply chain crisis we’ve seen in 50 years. Every sector of the economy is feeling the impact, but small- and mid-sized businesses (SMBs) are particularly hard hit. Indeed, 80% of small business owners say their supply chain issues have gotten worse or stayed the same since January 2022. It’s an enormously costly disruption. McKinsey’s researchers note that a single prolonged shock to production could wipe out 30-50% percent of a year’s earnings for companies in most sectors. Ouch.
You Can’t Wait This Out
This isn’t a wait-it-out proposition. SMBs need to make structural changes to their operations now to survive and thrive. For many businesses, change starts with recognizing that their existing technology is holding them back, preventing them from adapting to a changing world. CFO Marilyn Maher of ACD Distribution, a distributor of toys and game-related merchandise, had been running an unsupported Enterprise Resource Planning (ERP) system. She and her teams had dealt with obsolescence issues in the past, and didn’t want to go through that experience again. “We decided to just go ahead and move,” said Maher, who cited the software support and feature enhancements of the Next Generation ERP solution as justification for the switch. “And it has served us very well.”
For organizations that need help evaluating their current technological environment, Net at Work offers a complimentary Business Health Assessment to review core business functions alongside members of their leadership team. The outcome, thanks to the suite of services like Fractional CIO and Advisory Services, Managed Services and Customer Experience Plans from the technology advisor, can be a game-changer. SMBs can take on a full-fledged technology roadmap, IT governance and ongoing IT operations management, the migration from basic accounting systems, like QuickBooks, or aging ERP applications to Next Generation ERP – and more. And companies are seeing positive bottom-line results. Here are a few of the many ways it’s working for them.
Made Whole With Fractional CIO
The sting of the bullwhip effect resulting from COVID-19 has companies scrambling to gain greater visibility into their purchasing and inventory management. UniWell Laboratories, a contract manufacturer of nutraceuticals for retailers and direct-to-consumer companies, found that port closures and the overflow and resulting slowdown of other ports was wreaking havoc on their just-in-time (JIT) inventory processes and costs. “We saw freight costs quadruple, and if you didn’t have a blanket purchase order on materials six months in advance, you couldn’t place an order,” says Bryan Polozola, CFO at UniWell. These issues were compounded by a Material Requirements Planning function (MRP) that took eight hours to run and multiple raw materials would have three purchase order suggestions in a row. Buyers would forget to place orders, then inadvertently overorder. UniWell engaged with Net at Work in 2017 to re-implement its Next Generation ERP solution from a previous reseller, while undergoing an IT Diagnostic Assessment with its Fractional CIO and Advisory Services team.
“We’d have long production meetings to discuss what we should order and when,” recalls Polozola. “Now, we discuss strategy and optimization ideas. We’ve got the time to figure out how to be better, not just how to get by.” Today UniWell’s MRP produces near real-time results and the company is projected to increase revenues by 14%.
Order Among Disruption
Luxury building material supplier Artistic Tile, which has nine show rooms and a distribution center, tells the story of a New York metropolitan blizzard that kept employees at home for a day, then severe weather in the south halted freight traffic. To top it off, the company had recently migrated to a Next Generation ERP solution with Net at Work. “Our Vice President of Operations said it was the worst week of his career at Artistic Tile,” recalls Joshua Levinson, CEO of Artistic Tile. “I asked him if he thought we made a mistake moving to a new ERP solution. He said, ‘I don’t think so, I think it would have been worse if had we stayed on with the old system.’”
Artistic Tile’s new platform and support has given them a lot more visibility into what was going on in the company than its previous legacy business system. “Having that real time look into performance allows us to react that much more quickly than we have in the past,” he said. “We’ve taken a business with multiple bottom lines and can now look at one bottom line in the end through a more streamlined approach. I think it’s brought our whole business closer together.”
There’s no one easy answer to global supply chain challenges. However, there are ways your small-to-medium-sized business can respond to give you the best opportunity for success. It takes brave action and a break from the status quo — but the rewards are immense. Learn more about how UniWell Laboratories is overcoming its own technology limitations and supply chain disruptions to be a truly strategic organization by watching this on-demand “SMB Talk” session.