Impact of supply chain disruption on businesses

impact of supply chain disruption

The shipping industry has been highly affected by the COVID -19 pandemic, which has impacted thousands of businesses. Even though the supply chain industry offered the finest solution for maintaining vital operations, 2020 witnessed the most upheaval.

A practical and streamlined supply chain should be a priority for all businesses. But the adverse impact of supply chain disruptions is usually more severe for small businesses with limited resources to overcome these issues.

In this blog, let’s understand the supply chain issues and their impact on business.

Supply chain Issues

There are many ways supply chain problems affect businesses. The potential issues with supply chains and transportation are listed below:

1. Delays

When an organization has a limited staff, usually due to poor wages, bad weather that slows down the shipment, or false shipping information that results in late delivery, shipping delays become a significant problem for enterprises.

2. Rising costs

Businesses have consistently reported rising production or operational expenses over time. Producers often fix pricing to maximise their profit. Of course, they will occasionally make price decisions that do not result in the most significant immediate gain but give long-term benefits (such as brand loyalty) or raise demand for other items. Despite being on average, inflation typically results from rising distribution, transportation costs and lack of raw resources.

3. Adverse weather conditions

Shipping and supply chain industries are frequently delayed or even stopped because of bad weather. If there is ice or flooding on the road, vehicles cannot move. If there is a storm at sea, ships could be compelled to take longer routes. Flooding will interrupt the supply chain and cause problems for businesses by blocking the busiest seaports and shipping lanes.

4. Cyber-attacks

Scams and cyberattacks have increased massively in the last couple of years. Employees became significantly more susceptible to fraud and malware when they were away from offices with established IT security procedures. Installing cutting-edge malware protection software will help one prevent cyberattacks during cargo transportation.

How businesses get impacted by supply chain disruptions

1. Lost revenue/lower profits

Being able to deliver products to your customers in the stipulated time or a proper condition will lead to a loss in revenue or significantly lower profits. Clients often consider long delivery times unappealing, which may lead to either discarding the purchase or buying from a competitor.

2. Damage to brand image

The company’s reputation and the image will be harmed if consumers receive their orders late or with some damage. This typically results in future concerns about delivery delays and perhaps a reluctance to renew. Shipping issues are some of the most significant disadvantages of e-commerce purchases.

3. Unsatisfied customers

A client is less inclined to purchase from a company if the delivery date cannot be maintained. This will lead to that business falling out of favour, and the client might move on to a competitor.

4. Inventory issues

Delays in shipping make it difficult for retailers to forecast demand efficiently and plan their future inventory. This may lead to the retailers overstocking and paying higher costs for inventory storage. Or it may lead to understocking, and the stock will finish quickly without fulfilling the customer demand.

5. Cash flow troubles

If the goods are not delivered on time, businesses don’t receive the payments on time. This leads to cash flow problems that will negatively affect day-to-day operations and create issues on a larger scale for the companies.

Dealing with supply chain and shipping issues is crucial because the customers will always see it as the company’s fault, and the company will eventually lose revenue. One must take proactive steps to identify these risks and then follow them with proper mitigation.

Steps to tackle the impact of supply chain disruptions

1. Tracking

GPS tracking of orders can be beneficial when customers wait for delivery. Customers will feel more secure knowing that the purchase is being dispatched. This will also help to significantly reduce the number of customer support or customer care requests.

2. Consistent communication

Ensuring transparency with the delivery promises will go a long way towards retaining customers and acquiring new ones. Customers like to know the delivery expectations at the very beginning. Upon completing a purchase, receiving regular updates about their order status will help build customer trust. Companies should invest in delivery practices, transparency, and delivery promises, like letting the customer know when an order has been packed, shipped and out for delivery.

3. Free shipping

Even if there are delays, free shipping is a desirable feature that will improve customer experience and encourage people to shop with you. Free shipping significantly impacts the purchasing decisions of customers. It is an opportunity to let the customers know that you value them and helps brands build trust and improve customer experience.

4. Proper planning

To guarantee on-time delivery and satisfied clients, careful planning is required. Examine the specifications of the cargo to verify proper packing, labelling, and dimensions. Buying insurance for the shipments in case they get lost, stolen or damaged are ways to ensure timely deliveries and much happier and more satisfied customers, which will, in turn, lead to higher revenues. This will also help to build a secure future for the shipping industry.

5. Other gift cards and discounts

Discounts and gift cards are a great way to show customers how much you value them. Offering discounts or gift cards will help reduce the frustration surrounding late delivery or other shipping issues in case of delays or supply chain issues. This method will require a little investment on the company’s part, but it will be a lot better than receiving bad reviews or losing customers.

6. Making supply chain management part of the strategy

A proper supply chain resilience or management team will protect crucial points in the supply chain. This will eventually lead to a reduced impact of supply chain disruptions, happier customers, and increased revenue. According to the BCI, 75% of companies now include business continuity and supply chain resilience as a part of negotiations with new suppliers.

There are a lot of factors, like delays, adverse weather conditions, cyber-attacks, inventory issues etc., that impact of supply chain disruptions in businesses. However, proper planning and mitigating the risks will help tackle the problems. LOTUS Containers has been one of the top specialists in shipping container solutions since 2008. We handle everything for you, from container purchasing to intermodal container transportation. For more information, please contact us at

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