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Supply Chain Resiliency Needed to Protect Small Business, Economy

WASHINGTON – Today, the House Committee on Small Business Subcommittee on Economic Growth, Tax, and Capital Access heard from small business owners and experts on the impact of supply chain disruptions related to COVID-19 on small businesses.

“This black swan event sent a shockwave through the world, forcing supply chain leaders to rethink current operating models, questioning their organization’s emergency preparedness and dependencies on primary sources.  Industries of all kinds, from medical to agricultural, automotive, retail, manufacturing, and more have been indiscriminately harmed by the cascading effects of the novel coronavirus,” said Ranking Member Kevin Hern (R-OK).  “Where a big company might have contingency plans and a larger network built into their supply chain, many small businesses operate on a more linear path, leaving them at greater risk when disruptions occur.”

Supply Chain Disruptions Hinder Small Business

“Importing from 14 countries (over 400 containers & 92 million units annually) and exporting to 20 countries (380 customers & 78 million units annually) across the globe brought a list of challenges from the very onset of the COVID-19 Pandemic.  As the Chinese New Year in all Asian countries was extended by many weeks, our component and finished goods inventory were, by customer forecast, to be consumed very quickly,” said Ms. Sheila Lawson, Chief Operations Officer and Vice President of Supply Chain, RL Hudson, in Broken Arrow, OK.  “Through very strong relationships with our partners, prior to the end of the holiday extensions, we were able to secure inventory availability details along with the more challenging space on ‘fast’ boats.”

“These supply chains have enabled firms to source raw materials, intermediate inputs, and even final goods in more efficient and cost-effective ways than in the past.  It has also allowed firms to benefit from access to different technologies and innovative production processes, some of which are then incorporated into their domestic operations,” said Dr. Eswar Prasad, Professor of Trade Policy, Cornell University, Senior Fellow, Brookings Institution, in Ithaca, NY.  “Improved logistics management can help small businesses better manage their supply chains.  By adopting technology that facilitates real-time tracking of intermediate goods and products at different stages of the manufacturing process, small businesses can better protect themselves against volatility and make suitable adjustments in the production process when faced with imminent disruptions.”

“Another challenge we had to deal with was significant product shortages and disruptions to the healthcare supply chain.  Representing quality products is a pillar of our organization.  As demand was in many cases three times the capacity from our traditional manufacturer partners, we found ourselves having to vet new sources,” said Ms. Christine Fagnani, Co-Owner and Vice President, Lynn Medical Instrumentation Company, in Wixom, MI.

“Our raw material in Asia wasn’t shipping, and no one was answering our inquiries.  Our contract manufacturers in the U.S. started warning of us delays of finished product, as Apple struggled to make iPhones in China our apparel contractors in California struggled to make our clothes,” said Mr. David Billstrom, CEO, Kitsbow Cycling Apparel, in Old Fort, NC.  “We expected shipments from Italy, and it became clear they were in crisis.  Then the World Health Organization announced that COVID-19 was a pandemic.”

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