An Oklahoma restaurant is paying nearly $200 for a case of gloves that normally costs $40. A medical-device maker in Colorado is tweaking the way it manufactures its products to offset higher plastic costs. A clothing wholesaler in Michigan has hundreds of hoodies it has yet to sell because winter was over by the time they arrived from Bangladesh.
The supply-chain disruptions rippling across the business world are taking a heavy toll on small U.S. companies, which have fewer resources to absorb or push back on price increases and less leverage to pass along the higher costs to customers.
Forty-four percent of small businesses reported temporary shortages or other supply-chain problems in March, reports The Wall Street Journal (April 22, 2021). A U.S. Census Bureau survey of small businesses found supply-chain disruptions in wholesale trade, manufacturing and construction, among others.
Multiple forces are driving supply-chain woes, from coronavirus infections among employees and temporary business closures to increased demand as vaccines take hold and restrictions ease. A backlog at California ports, the temporary closure of the Suez Canal and weather-related problems have created additional challenges. Smaller companies typically have less sophisticated purchasing departments than larger corporations.
Delays can be particularly troublesome for small businesses selling seasonal goods. B&S Activewear, a Warren, Mich., clothing wholesaler, was still receiving shipments of zip-up hoodies and other winter apparel from Bangladesh in April, roughly two months later than expected. B&S has tried to speed up delivery by shipping goods via UPS Air Freight, at a cost of $8,000 for 72 boxes of T-shirts, more than 10 times the cost of sending the same items by boat.
Classroom discussion questions:
- What supply chain advantages do billion dollar companies have over small businesses?
- What advantages do small businesses have?
This may be the tip of an even bigger iceberg.