How Businesses can Deal with Inventory Supply Shortages

Inventory supply shortages will happen. Sometimes, it’s due to overwhelming consumer demand, leaving businesses unable to keep stock. Other times, like now, inventory supply shortages occur as a result of material shortages and/or manufacturing issues. At this time, lumber and other essential construction materials are in short supply. Likewise, computer processing chips are also limited in supply. So, if this happens to your business, you need to be prepared.

Inventory Shortages are Inevitable

There’s no such thing as unlimited supply when it comes to material inventory. Whether it’s a disruption in the supply chain or sudden and unexpected limit of raw materials, the end result is the same — businesses can’t keep their shelves stocked. When put in this precarious situation, sales are inevitably affected, usually negatively.
COVID-19 has had a disruptive effect on the global supply chain, and small businesses are not immune. An average of more than 30% of American small business owners across sectors still reported a disruption to their supply chain in June 2020 data, months into the pandemic. Supply-chain disruptions can affect small businesses in many ways: They can reduce revenue, inflate costs, cut into market share, or cause issues with production—all of which can damage a company’s bottom line. —The Balance Small Business
Of course, a drop off in sales can be temporary and inflict minimal damage. But, a prolonged shortage will certainly cause a lot of monetary damage. If there’s enough inventory missing for a long enough period of time, it can spell the end of a business altogether.

Ways Businesses can Deal with Inventory Supply Shortages

When inventory supply shortages occur, it’s only prudent to react with strategic means. Business owners must act immediately, particularly if there’s a sense the shortage will go on for a lengthy period of time. Here are four ways businesses can deal with an inventory supply shortage:
  • Explore alternative vendors. Fortunately, there are usually a few or more vendors who supply businesses with the same types of inventory. Even a source that’s a bit more expensive can be worthwhile if it keeps customers coming through the door. (And, better still, if competitors aren’t willing to pay a higher sourcing price.)
  • Clearly communicate with customers. There’s simply nothing good that can come from not being totally up-front with your customers. In fact, there’s hardly more that is counterproductive. If you experience an inventory supply shortage, let your customers know what’s going on — especially if it’s expected to last for a significant amount of time.
  • Tap into super-sized, large bulk orders. Much like the first suggestion, you might find inventory for products in short supply in larger bulk orders. Obviously, you’ll have to run the numbers to determine if it’s financially viable and doesn’t present too much a risk.
  • Identify problems with inventory management. There are times when businesses have inventory issues that are caused by their own ordering and selling practices. Go over your procedures to identify any problems and then apply sensible solutions.
What other suggestions do you have? Please take a few moments to share your thoughts and experiences so others can benefit from your unique perspective! Your input could really help someone out! Interested in learning more about business? Then just visit Waters Business Consulting Group.

Like this article?

Share on Facebook
Share on Twitter
Share on Linkdin
Share on Pinterest

Related Posts

Question mark illustration

Want to Be Successful? Stop Doing these Six Things Starting Now

We’re taught that quitters never win, but even Michael Jordan says he learned more from losing than winning. The truth is, knowing when to stop doing something is just as important as knowing when to push through. Here are six things you need to stop doing right now if you want to move your business, and yourself, forward.

Read More »

John Waters Talks Breaking the Mold on the Vivid Ventures Podcast

.elementor-widget-text-editor{font-family:var( –e-global-typography-text-font-family ), Sans-serif;font-weight:var( –e-global-typography-text-font-weight );color:var( –e-global-color-text );}.elementor-widget-text-editor.elementor-drop-cap-view-stacked .elementor-drop-cap{background-color:var( –e-global-color-primary );}.elementor-widget-text-editor.elementor-drop-cap-view-framed .elementor-drop-cap, .elementor-widget-text-editor.elementor-drop-cap-view-default .elementor-drop-cap{color:var( –e-global-color-primary );border-color:var( –e-global-color-primary );} John Waters sat down with Matt Nguyen and Trevor Jensen of Vivid Ventures for a wide-ranging conversation about what actually separates growing businesses from stagnant ones, and the episode is live now. Titled “The ‘What If?’ Mindset: How Great Businesses Break the Mold,” the episode brings together John’s 40 years in business and 17 years of entrepreneurial consulting with Matt and Trevor’s own experience working with contractors, service businesses, and product companies. The premise of the conversation is simple to state and hard to practice: most business owners run their companies the way they’ve always run them, and that habit is often the very thing holding them back. John, Matt, and Trevor spend the better part of 44 minutes pulling that idea apart, looking at where “the way you’ve always done it” quietly caps growth, and what it looks like to ask a different question instead. What They Get Into The conversation moves through several threads that will sound familiar to anyone who has hit a plateau they can’t quite explain. John talks about the gap between companies that grow and companies that stall, and why that gap usually has less to do with market conditions than with what’s happening inside the business itself. From there, the discussion turns to financial literacy, not as an abstract virtue but as a practical skill that changes how owners make decisions day to day. There’s a good stretch on team building and the kind of organizational structure that lets a business run without the owner holding every piece together personally. That naturally leads into systems and processes, and the case John makes for building operational visibility so that delegation becomes possible instead of theoretical. He also draws a clear line between reactive management, where the business runs you, and proactive planning, where you set the direction on purpose. One of the more useful parts of the episode is how John applies this questioning approach across very different kinds of businesses, from contractors to service firms to product companies, showing that the “what if” mindset isn’t industry-specific. The conversation closes with a look at leadership and infrastructure as a business scales, plus a segment on how technology and AI fit into modern business optimization, and the value of leading indicators over lagging ones when it comes to steering decisions. Why It’s Worth a Listen This episode is a good fit for anyone who has felt the friction of outgrowing their own systems, whether that’s a founder still doing too much personally, an operator trying to build a team that can actually take work off their plate, or a leader who wants a clearer read on where the business is headed before the numbers force the conversation. John’s style throughout is direct and grounded in what he’s actually seen work, not theory for its own sake. You can listen to the full episode, “The ‘What If?’ Mindset: How Great Businesses Break the Mold,” on the Vivid Ventures podcast: Listen on Spotify. Want to Accomplish More for Your Business? Do you want your company to grow faster and earn more while spending more time with your family doing everything you started your business to do? We can make that dream a reality. Give us 30 minutes, and we will show you how to get your life back. Skeptical? Good! Put us to the test. You can call us for your free appointment at 480-636-1720, or, if you prefer, send us an email. You can also visit us at Waters Business Consulting Group to learn more about us and the services we offer.

Read More »
Credit card stock photo

How Entrepreneurs Can Establish Good Business Credit

Starting a business gives you the chance to build credit that’s completely separate from your personal finances—a separation that can protect you if either one takes a hit. But good business credit doesn’t happen automatically; it takes deliberate steps to establish and maintain. Here’s what entrepreneurs need to know about securing a debt instrument, building payment history, and keeping your credit files error-free.

Read More »

Imagine Selling Your Business…

How Would Your Life Change?

You didn’t start your business just to stay busy—you built it to create freedom, security, and options for yourself and your family. Selling your business can be life-changing, but the real question is whether you’re intentionally building toward that outcome or simply leaving it to chance.

Sign up below for a free consultative session to learn what your business could be worth today and in the future! 

Thank you for your interest in learning what your business is worth. We will be in touch shortly.