• Global supply chain disruptions impact small businesses in several ways — they increase costs, compromise profit margins, and create delays and bottlenecks that can negatively affect customer relationships.
  • Banking solutions like supply chain financing and managing currency risk may help businesses build resilience into supply chain management.
  • Creating a proactive contingency plan may help expedite decision-making during a crisis, allocate resources more effectively, and build flexibility into your supply chain.

During COVID, efforts to build resilience into supply chains were unprecedented. But the latest McKinsey Global Supply Chain Leader Survey reveals a marked slowdown in these efforts. In fact, nine of ten respondents encountered supply chain challenges in 2024.[1]

Managing supply chain risk requires a strategic approach. Keep reading to learn about banking solutions that may strengthen your supply chain and some practical steps you can take today to build a proactive contingency plan.  

The Impact of Supply Chain Disruptions on Businesses

Global supply chain disruptions have become more frequent in recent years for a number of reasons. Whether the cause is a trade war, increased regulatory hurdles, or simply the increased complexity of the supply chain itself, the impacts can be severe:

  • Rising costs and reduced margins. An increase in costs is one of the more immediate impacts on a business. When your business pays more for labor, raw materials, and transportation, maintaining competitive prices without sacrificing profitability and quality becomes extremely challenging. 
  • Delays and operational bottlenecks. Supply chain disruptions inevitably cause delays in production and delivery schedules. Missed deadlines can lead to strained customer relationships. And businesses that rely on just-in-time inventory management or lack the resources to properly forecast demand often find themselves especially vulnerable.
  • Supply chain diversification challenges. To mitigate risk, businesses often proactively seek to diversify their supply chains. However, finding reliable suppliers and making a transition involves due diligence, time, and resources. Many businesses lack the resources and funding to explore alternative sourcing strategies.

Banking Solutions for Building Resilience Amid Supply Chain Disruption

To keep customers happy, your business needs to adapt during times of disruption. Banks offer many solutions that help maintain customer confidence and keep your business running smoothly in the face of any challenge.

  • Access to flexible financing options. As supply chain costs increase, customized financing options may bridge cash flow gaps. To alleviate the pressure on working capital, banks offer revolving credit lines, term loans, and supply chain financing options.
  • Currency risk mitigation for international supply chains. For businesses with global supply chains, currency fluctuations can quickly skyrocket the prices of imported goods. Banks offer hedging instruments (e.g., forward contracts, currency swaps, etc.) to help businesses protect margins and manage currency risk by locking in favorable exchange rates.
  • Building long-term strength through financial partnerships. Beyond immediate financial support, banks can also provide strategic guidance to help secure long-term resilience for your business. With insights and advisory services on everything from enhancing customer experience to understanding market trends and exploring growth opportunities, a collaborative relationship with your bank may be transformative in challenging times.

Create a Supply Chain Contingency Plan

A proactive contingency plan enables your business to expedite decision-making during a crisis, allocate resources more effectively, and build flexibility into your supply chain.

Too often, however, businesses find themselves with no contingency plan when the disruption occurs.

While developing a contingency plan during a disruption may be challenging, doing so can minimize the impact on your business and expedite recovery while preserving customer trust and mitigating financial losses. 

The following are critical steps in developing a supply chain contingency plan:

  1. Designate a crisis management team. Identify people who are both familiar with your most important vendors and effective in challenging situations. Clearly define their roles and provide them with the authority to ensure swift decision-making.
  2. Assess the situation. Trace the root cause of the disruption and evaluate the impact on your operations and finances. Gather data from team leaders and include feedback from suppliers, logistics partners, and customers in order to identify which parts of the supply chain are impacted. From there, prioritize areas — like customers, suppliers, and production lines — in need of immediate attention.
  3. Develop a communication plan. Create a structured plan that uses all relevant communication channels to ensure stakeholders (e.g., employees, customers, suppliers, etc.) remain informed throughout the disruption in a clear, timely, and consistent manner.
  4. List temporary stopgap solutions. Stopgap measures may help your business stabilize operations during a disruption. For example, identify alternative suppliers or shipping methods. Brainstorm solutions that make sense for your particular situation while prioritizing those that minimize customer impact and maximize the likelihood that critical deliveries still occur.
  5. Engage financial partners. Work with your bank to understand cash flow requirements and access funds like credit lines or emergency loans in order to execute your contingency plan. Your bank can also provide advice about how best to manage risks like currency fluctuations or cash flow constraints.
  6. Update the contingency plan with lessons learned. Throughout the process and once the disruption subsides, analyze and document the effectiveness of your response and identify any areas for improvement. Incorporating these insights into an updated contingency plan will optimize how your business navigates future disruptions.

Your bank can help customize a contingency plan to address current and future supply chain disruptions that may include financial modeling, stress tests, and scenario planning.

We’re Here to Help

While supply chain disruptions can shine a spotlight on the vulnerabilities within your business, these disruptions also represent an opportunity to innovate and optimize the efficiency and resilience of your supply chain.

PNC can work with you to develop strategies to enhance supply chain management, mitigate disruption risk, and position your business for sustainable growth. For more information about these services, learn how PNC can help your business.