Small- and medium-sized (SMB) manufacturers across the United States are grappling with a pressing issue that threatens their operations -- resource scarcity.
Raw material shortages, coupled with concerns about the long-term availability of water, have left these companies vulnerable to a range of risks. Capterra's 2023 Manufacturers' Resource Management Survey reveals ways sustainability strategies can help SMB manufacturers combat these challenges. From the impact of resource scarcity to proactive solutions, small businesses can make adjustments to build resilience throughout their operations.
Raw materials are the lifeblood of manufacturing, and their scarcity is a major concern for small and medium-sized manufacturers. According to Capterra's survey, 80% of SMB manufacturers express moderate to severe concern about the availability of essential raw materials over the next year.
Plastics, oil, and plant-based materials top the list of shortages. These scarcities can disrupt production schedules, inflate costs, and even lead to lost sales, affecting the overall profitability of these businesses.
Smaller manufacturers face unique challenges when it comes to managing raw material shortages. They often lack the financial reserves and bargaining power that larger corporations have, making them more susceptible to price fluctuations and supply chain disruptions. Smaller businesses also tend to rely on a limited number of suppliers, increasing their exposure to risks related to supplier operations, such as natural disasters or geopolitical issues. The need for sustainable strategies is evident.
To navigate the uncertainties of raw material availability, SMB manufacturers can begin risk management strategies. Leveraging supply chain management systems, risk management software, and analytics tools, they can identify the most critical risks and their potential impact on the business. These tools offer simulation capabilities to run what-if scenarios and proactively address high-risk, high-probability events, such as boosting inventory at one location or adding secondary supply sources.
Aside from raw materials, water availability is another concern for SMB manufacturers. The survey reveals that 71% of these businesses are moderately to severely concerned about the long-term availability of water for their operations. Food and beverage and apparel manufacturers are among the most concerned, according to the survey, while machinery, electrical equipment, and metals-based companies show less concern.
SMB manufacturers can proactively address water scarcity concerns by enhancing their technology infrastructure. Supply chain management software with features for tracking sustainability goals and water resource management can be valuable.
Emerging technologies, such as machine learning models, can help businesses run simulations and make data-driven decisions. Increasing the use of monitoring devices throughout operations enhances visibility and resource usage accuracy.
Over half of SMB manufacturers are already engaged in sustainable packaging strategies to reduce environmental impact. Sustainable packaging aligns with growing environmental consciousness, reduces long-term costs, and fortifies businesses against material shortages. For customers, sustainable packaging demonstrates a commitment to environmental responsibility, fostering brand loyalty and attracting eco-conscious consumers.
Manufacturers can enhance sustainability through their packaging choices by:
Manufacturers must adopt proactive and adaptive strategies to thrive in an increasingly disruptive world. Sustainability is now a strategic imperative for long-term success. As small- and medium-sized manufacturers navigate the challenges of resource scarcity and environmental realities, prioritizing sustainability positions them to prosper in the years ahead.
In conclusion, resource scarcity poses significant challenges to SMB manufacturers. However, by implementing sustainability strategies and leveraging technology, these businesses can build resilience and ensure their long-term success in an ever-changing landscape.
