For startups, the global supply chain disruptions are more than a nuisance, they’re an existential threat. However, there are steps early-stage companies can take to plan for inevitable delays, manage stakeholder expectations, and ultimately deliver the product to a happy customer.
Recently, a panel of VentureWell thought leaders compared notes on the global shipping crisis, leading to five strategies to help entrepreneurs find “a port in the storm.” Our panelists are:
- Camillo Archuleta, senior program officer
- Cara Barnes, senior program officer
- Tricia Compas-Markman, senior program officer
- Khandle Hedrick, program officer
- Christina Tamer, director, programs—early-stage innovators & venture development
Anticipate These Three Challenges Due to Shipping Delays
Fledgling ventures still refining untested manufacturing processes often struggle to navigate the unexpected—including the current supply chain disruptions. Here are three ways shipping delays may impact your business:
- Delayed or lost shipping containers can cascade into manufacturing and fulfillment delays.
- For some companies, the global shipping disruptions have coincided with an increase in customer demand for their product. This can exponentially increase customer satisfaction issues and strain partner relationships.
- The increase in shipping delays has coincided with an increase in cost. Before the pandemic, transporting a container from China to Los Angeles cost about $2,500. Today, shipping the same container can run ten times that amount.
Surviving the Supply Chain Disruption Requires Flexibility and Planning
While there are no magic shortcuts to free your widgets stuck in a distant port, a little preparation and a few strategic partnerships can minimize the impact of shipping delays. Here are five strategies to consider:
- Build buffers into timelines: Rather than adhere to pre-pandemic timelines, assume up front that receiving manufacturing materials and distributing your product will take longer than expected—and revise your workflow accordingly.
- Keep customers and stakeholders engaged: Newsletters and investor updates can be instrumental in keeping your stakeholders informed and engaged throughout a delay. Let customers know you’re anticipating or experiencing shipping delays—and that you have a plan.
- Revisit pricing strategies: Increased shipping costs are inevitable for the foreseeable future, so price accordingly. Can you temporarily decrease your profit margin, or pass along a portion of this expense to your customer?
- Diversify your vendors: Sourcing the same materials from multiple suppliers can help insulate you from unexpected regional shipping delays. Better to have more inventory than to bring your production to a halt.
- Source locally and domestically: Most shipping delays have involved overseas transport; savvy early-stage entrepreneurs have begun developing relationships with local and domestic suppliers to avoid disruptions abroad.
Case study: “Do our customers care that this sensor is proprietary?”
One VentureWell E-Team produces technology that measures air quality in buildings. Previously, their product had included a proprietary sensor built in-house with overseas components. As shipping delays slowed production, they began to question whether building their own air sensor brought any notable value. Deciding that an outsourced sensor would work just as well—and not negatively impact their unique value to customers—they pivoted to domestically sourced off-the-shelf sensors, restoring their production schedule and getting deliveries back on track.
Planning for the new reality of supply chain disruptions needs to start on day one. Don’t assume that the supply chain will be sorted out by the time you hit production, or that because you haven’t seen snags so far that you won’t in the future. Issues in just one international port can often result in unforeseen ripple effects around the globe. The answer? Take twice as long in planning—and expect shipping and manufacturing to also take twice as long as expected.