Monday, November 28, 2022
Home Business Setup How Businesses Can Handle Supply Shortages Better

How Businesses Can Handle Supply Shortages Better

By Matt Doyle, VP and co-founder of Excel Builders, a truly unique custom home builder, creating homes that make every day easier.

Supply shortages are a fact of life for many businesses operating right now. It’s possible that this will continue for several more years. Leaders who can’t react and adapt to these problems won’t be able to keep their businesses afloat.

Working around supply shortages is something I’ve experienced more than once as a builder in the custom home industry. Every few years, some construction material becomes more expensive and harder to find due to industry shifts and distant events. 

My team and I have developed a lot of strategies for dealing with these shortages when they appear, and I’ve detailed some of them below. The following recommendation can help you keep your operations moving and your customers happy. 

Get to know alternative vendors before you need them.

You should always be building relationships with alternative vendors, even if that only means inquiring about current prices once every few months. I recommend you make a list of which vendors offer the materials you need to stay in business, and have at least one alternative vendor listed for every material you can’t operate without.

This is important because as soon as one vendor starts experiencing shortages, buyers start piling onto the alternatives quickly. If you’ve already built relationships with other vendors, you stand a better chance of getting your orders in before everyone who is still doing research.

The importance of this timing can’t be understated. If you’re the only business in your area that can supply a certain product or service, it can leave a lasting impression on clients. 

Consider how replacement materials fit your brand.

You may have to change the materials you use in order to adjust to shortages. When this happens, you should try to choose replacements that are still in line with your vision.

For example, in my industry, materials like timber and concrete regularly dip or spike in price. That often leads us to recommend one or the other at different times. Sometimes, materials simply aren’t available. 

This same principle applies to all kinds of consumer goods companies. Whether you’re selling buildings, phone cases or T-shirts, you should think carefully about changing the materials your customers expect.

My recommendation: If you have to change some material in your product, look for an alternative that can help you reinforce your brand. For example, if your brand is environmentally friendly, you may be able to find a more sustainable material to use as a substitute.

This will likely increase costs, but that part is rarely avoidable in shortages. Your only choice may be between increasing costs and frustrating customers versus increasing costs and projecting confidence and growth. 

Use shortages to clear out built-up inventory.

Sometimes, there’s no explaining why a product isn’t popular. If you’ve ever misread public interest and spent too much on a stock that wouldn’t move, you know it isn’t necessarily about quality. Sometimes, great products and designs just haven’t had their time yet.

During supply shortages, you may find that customers are more willing to give what’s left a second look. This is an opportunity you shouldn’t waste to show off the great products that would otherwise have been sold at a loss.

Any business can do this with leftover stock. If you have leftover products from unsuccessful launches, consider how you would market them differently given a second chance. Supply shortages give you the chance to try again with an audience that is more receptive. 

Find opportunities in your next shortage.

Shortages will always be on the horizon. However, you can be ready to pull opportunities out of them if you are paying attention. Make sure you form relationships with vendors before you need them. 

Changing materials in your products may be a necessary response to shortages. You can reduce the risk of harm to your brand by choosing materials that are already in line with your vision. Finally, remember to let your remaining stock shine when people are most receptive to alternatives.

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