Expert Insight: Supply Chain Insight for Medium-Sized Businesses
By Dr. Chris Norek
Date: July 30, 2009

Opportunities for SMBs in a Difficult Economy

Don't Bunker Down - Simple, Lower Cost Options to Survive

These are still difficult economic times for most companies. All companies, large and small, are looking for ways to keep their business rolling along.  Many companies are taking on the “bunker” mentality of just shutting down all expenditures and trying to make it through the downturn.  However, in small and medium-sized businesses (SMBs), there might be some simple and lower cost options to help the company survive these difficult times. 


Look First at Procurement and Transportation

There are a couple of areas to look into first: procurement and transportation. Why here?  Because a reduction in the purchase price of a raw material, component, or OEM product is an immediate savings to the bottom line. Same goes for transportation - if you can negotiate a lower rate with a carrier on a product/lane combination, you save money the first time you ship this product/lane combination under the new rate. 

As an example of potential savings in this downturn, I know of a company in the industrial products sector who has a significant opportunity to reduce costs in their transportation rates. We estimated that they could save between $10,000 and $30,000 per week with renegotiated rates. This company, like many companies is trying their best to be good employers to their personnel and keeping layoffs to a minimum and hopefully, zero. With some time (just a few weeks) and expense to get help in negotiating the new rates, this company can begin to realize the savings immediately.

Unfortunately, due to the constraints due to lower revenues, they chose to postpone the rate negotiation and froze the additional expenditures on outside help (even when offered to pay later). The additional unfortunate circumstance is that in five to six weeks, they could save at least one full headcount and others as time went on.

It is a common viewpoint that SMBs are the first ones to come out of a difficult economy. What is your small to medium-sized company doing right now to improve their supply chain operations?  Are you reducing costs in your supply chain to save jobs?  Are you preparing for the increase in business as the economy improves?  Please give us your feedback!

Agree or disgree with Norek's perspective? What would you add? Let us know your thoughts for publication in the SCDigest newsletter Feedback section, and on the website. Upon request, comments will be posted with the respondent's name or company withheld.

Send an Email
profile About the Author

Christopher D. Norek, Ph.D. is a founding Senior Partner with Chain Connectors, Inc. He has been in the logistics field and consulted for major firms for over 15 years.  Dr. Norek has been active in publishing for journals in the field. He is on the editorial advisory board of Logistics Quarterly (LQ) and DC Velocity and is an outside reviewer for the Journal of Business Logistics.

Visit SCDigest's New Distribution Digest web page for the best in distribution management and materials handling news and insight.

Norek Says:

A reduction in the purchase price of a raw material, component, or OEM product is an immediate savings to the bottom line.

What Do You Say?
Click Here to Send Us Your Comments
profile Related Blogs
Supply Chain Comment: Affordable Opportunities for SMBs in Supply Chain Technology

Opportunities for SMBs in a Difficult Economy

SMBs Should Invest in Supply Chain Technology NOW?!?!

Wanted: Supply Chain Strategies for Mid-Market Companies

See all posts