HUNTINGTON — Small businesses can be at a distinct disadvantage when it comes to supply chain management during the COVID-19 pandemic, according to Avinandan Mukherjee, Dean of the Lewis College of Business at Marshall University that is home of the Brad D. Smith Schools of Business.
“I absolutely believe the bigger companies seem to get preferential treatment,” Mukherjee said. “The main difference between larger and smaller companies when it comes to supply chain issues is bargaining power. Because small companies are at the mercy of larger retail buyers and suppliers sometimes, they do get less focus and attention, especially when production is lower at the other end. So bargaining power definitely creates some risk for smaller companies.”
Still, Mukherjee believes there are a number of measures that small businesses can take to mitigate supply chain disruptions, whether due to a pandemic or any number of other factors. One is to localize the supply chain.
“There are advantages and disadvantages of localizing the supply chain,” he explained. “For example, if a company based in West Virginia and they want to source local, then clearly the advantage is you have a better bargaining power and the problem becomes less of an issue. I see a lot of advantages to doing that in the post-COVID, post-pandemic world.”
Mukherjee said the disadvantages might include variety, options and even the costs.
“Those are small disadvantages compared to what you get,” he said. “What you get more is an understanding the value of supply chain as a complete positioning of the company. I mean, when you think of the marketing value of it by saying you are using local suppliers or the political value of it by saying you are getting local investment and creating local jobs because of that or the entrepreneurship value of it creating new small businesses being able to supply products once that commitment is made, better risk management because you have more reliable supply chains and better relationships with suppliers that can chip in much more easily and be flexible to your needs, it becomes clear there can be a tremendous value going local.”
Mukherjee said a small business going local with its supply chain is a long-term strategy.
“You minimize the disruptions and you minimize the risks,” he said. “You are reducing the costs of sourcing if you are going to bigger suppliers, sometimes far, far away, but a company can actually reduce the investments in technology and other forms of expectations. When you work with a large supplier you often have to invest in other supply chain technologies that can be very costly. Sometimes you cannot even be in that game unless there is a certain degree of technology investment into that system. The question is do we need that and can we avoid that by going local and going smaller and really focusing on innovation, entrepreneurship and local supply development?”
Mukherjee says Marshall University continues to address supply chain issues.
“There are three points of support that I can think of,” he said. “The first of course is the Robert C. Byrd Institute (RCBI). They have done a lot of work with local small businesses, suppliers and manufacturers and continue to be a huge resource.”
RCBI recently announced an online event to connect small businesses to major manufacturers.
The virtual expo offers small businesses the chance to virtually connect Tuesday, Sept. 15, at 1 p.m. with Constellium, a major West Virginia manufacturer that serves aerospace, defense, transportation, marine and other industrial markets.
Participants will hear directly from the purchasing office at Constellium about its needs, which include hydraulic hoses and fittings, service and parts for overhead cranes, metal machine shop or fabrication services, waste management and industrial general contractors.
Mukherjee says another unit on campus that is important to keep in mind is the Brad D. Smith Business Incubator, which provides dedicated office and conference room space to entrepreneurs in the Marshall University Visual Arts Center in downtown Huntington.
“The business incubator is new, but now we are slowly getting more companies to locate there,” he said. “As we get more companies to locate there, physically or virtually, we are going to see a sort of startup culture around the incubator.”
Mukherjee says another resource is Marshall University’s iCenter, which is part of the Lewis College of Business. Its mission is to inspire the inner entrepreneur in everyone and empower them with the innovation knowledge they need to reframe the future of the state and the region.
“We are doing a bi-weekly small business webinars,” he said. “We are addressing various small business issues at these webinars.”
The next is scheduled from 10 to 11 a.m., Monday, Sept. 14 and is titled, “Emerging from the pandemic: A small business health checkup.”
“We are doing this to make the community be engaged with new ideas,” he said. “The pandemic forced businesses to re-evaluate traditional business models and more broadly embrace e-commerce platforms of various types that include e-commerce-based supply chains. We also address re-strategizing, and the supply chain is definitely part of that discussion. Developing and investing in local e-commerce supply chain solutions is just as important as using the big supplier solutions because there is a much better and faster fulfillment if we take it local at times. …
“It is very much a viable business model if it is done with minimal points of interaction and generally good routing and network planning.”
Huntington Regional Chamber of Commerce President and CEO Bill Bissett says while many chamber members have been able to alter their business plan to adapt and, in some cases, grow given the constraints of COVID-19, there have been challenges connected to logistics and getting the supplies needed to serve their customers.
“When you don’t have the necessary elements for your business to offer its services or products, you lose business and it affects your bottom line,” he said. “While the situation seems to have normalized somewhat at present, there’s likely still some uncertainty moving forward.”