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

Business stock photo

Tips for Choosing a Brand Name

You’ve got a great idea for a business, but when it comes to naming it, the well suddenly runs dry. Should it resonate immediately, or is that not even the point? The difference between a company name and a brand name matters more than you’d think—just ask Facebook or Twitter, names that meant nothing until they meant everything. Here’s how to choose one that will actually work.

Read More »
Business stock photo

How Gelato Cimmino Turned an Italian Family Recipe Into a Nearly 2,000-Person Grand Opening

Mario Cimmino grew up in Torre del Greco, a small town in Southern Italy, where some of his fondest childhood memories involved eating unpasteurized, pure-cream gelato with his family. Years later, as a successful business owner in Scottsdale, Arizona, he decided to bring that authentic taste to the U.S. — but launching a food and beverage brand from a standing start meant navigating everything from licensing to marketing to sourcing ingredients an ocean away. “I really appreciate John’s help,” said Mario Cimmino, Owner of Gelato Cimmino. “I don’t think I would have made it without his help.” Big Vision, Untested Ground Mario already owned the commercial property for his shop and had succeeded in other ventures, but opening a specialty food business was new territory. He needed a business structure and a set of growth steps built from scratch, along with a marketing plan strong enough to generate real buzz for an unproven concept. Beyond that, there were the less glamorous but essential pieces: understanding the licenses and registrations required to operate, and figuring out how to stand out in a market with existing gelato and dessert competitors nearby. Engineering a Grand Opening Waters Business Consulting Group started with the numbers, building a business model that showed Mario exactly what revenue he’d need to drive based on his cost structure — critical information before a single scoop was sold. From there, the team provided guidance and support so Mario could import raw gelato ingredients directly from Italy, preserving the authentic recipe and quality he grew up with. On the marketing side, the goal was ambitious: a grand opening with more than 1,000 people in attendance. The team built a comprehensive marketing plan using social media, PR outreach, and brand-building strategies designed to create a following before the doors even opened. That included orchestrating an event specifically for food critics and local publications, giving them a reason to write about Gelato Cimmino on their own channels ahead of the launch. A financial model mapped out the upfront capital investment needed for equipment, staffing, and the buildout itself, while a hiring strategy and clear position descriptions ensured Mario brought on quality staff from day one. The team also assisted with developing the business’s website to support the launch. A Line Down the Sidewalk The strategy worked, and then some. Opening day drew a line down the sidewalk of almost 2,000 people — nearly double the original goal. The PR outreach paid off too, with multiple media outlets covering the event and amplifying the buzz well beyond Scottsdale. Several years later, Mario has kept the momentum going and is now working toward franchising Gelato Cimmino across Arizona and the broader Southwest. Ready to Launch or Scale Your Concept? Whether you’re opening your first location or planning your next one, having a real plan behind the excitement makes all the difference. Reach out for a free consultation to talk through what that plan could look like for your business. Contact Waters Business Consulting Group to schedule your free consultation.

Read More »
Background illustration

How New Business Owners and Startup Entrepreneurs can Deal with Holiday Stress

The holidays are supposed to be joyful, but for business owners and entrepreneurs, they often bring a different kind of pressure entirely. Between year-end deadlines, a packed schedule, and heightened expectations, stress can build up fast if you’re not careful. Left unchecked, it can hurt you mentally and physically. Here’s how to recognize it and cope.

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.