Building resilience in trade: a With recent global events exposing vulnerabilities in traditional supply chain models, it could be time to rethink how your family business manages sourcing, inventory, and risk.
For many family-run businesses and SMEs, international trade and supply chains are the lifeblood of operations – whether you’re a local manufacturer, a regional distributor, or a retailer dependent on timely deliveries. Recent disruptions have exposed the fragility of conventional supply and trade models, urging family businesses to reconsider how they manage sourcing, inventory and risk. From just-in-time to just-in-case The once-popular “just-in-time” (JIT) approach – holding minimal inventory and depending on smooth, predictable deliveries – has become increasingly risky. Family businesses often operate with tighter margins and fewer resources than larger corporations, making supply disruptions especially costly. “The once-popular just-in-tim e (JIT) approach – holding minimal inventory and depending on smooth, predictable deliveries – has become increasingly risky.” In 2024, 76% of European firms reported shipping delays caused by global disruptions, with many experiencing over 20 incidents in a year according to AP Moller - Maersk. For SMEs, such interruptions can delay production, frustrate customers, and damage reputations. These supply chain strains arise from geopolitical tensions, tariff disputes, and instability in key shipping routes. Conflicts in regions such as the Middle East have forced vessels to reroute, increasing costs and transit times. Meanwhile, trade tensions between major economies like the US and China have introduced tariffs and regulatory hurdles. For family businesses, these issues translate into higher costs, unpredictable delivery times, and difficulties in planning production or sales. While the pandemic triggered some challenges, ongoing geopolitical volatility continues to make “business as usual” difficult. Unique challenges for family businesses Compared to large corporations, family firms face distinctive supply chain and trade challenges: • Limited bargaining power : Smaller order volumes reduce leverage with suppliers and logistics providers. • Cashflow constraints : Holding extra inventory strains finances, yet stockouts risk losing customers. • Resource limitations : Dedicated supply chain or risk management teams are rare in smaller firms. • Supplier dependency : A narrow supplier base heightens vulnerability to disruptions. • Less access to advanced technology : Investment in AI or predictive tools may be beyond budget. Despite these hurdles, family businesses benefit from flexibility, close relationships and nimbleness – assets that can help adapt to new trade and supply realities.
Strategies to boost trade and supply chain resilience 1. Diversify suppliers and sourcing regions Relying on a single supplier or country increases risk. Exploring alternative suppliers in different locations can help spread risk and avoid costly downtime during disruptions. 2. Adopt ‘just-in-case ’inventory management While maintaining larger inventories ties up capital, safety stock of critical items can shield against delays. Family firms can start small by identifying essential products and building buffers gradually. 3. Consider nearshoring and local sourcing Sourcing closer to home or within stable trade partners for example, UK firms looking to Europe or Commonwealth countries can reduce lead times and improve reliability. 4. Invest in supplier relationships Personal, long-term supplier relationships common in family businesses can improve communication and enable faster problem-solving when disruptions occur. 5. Use accessible technology Affordable tools like inventory management software, cloud-based order tracking, and supplier portals can enhance planning and responsiveness without large investments. 6. Build financial resilience Work with financial advisors to ensure sufficient liquidity to manage supply delays or cost spikes. Explore options like invoice financing, credit lines or government support schemes for SMEs. 7. Stay informed on trade policies Keeping abreast of geopolitical developments, tariffs, and regulations through industry bodies or government sources enables anticipation of risks and opportunities. Opportunities for trade amid disruption Challenging times in trade and supply can also open new doors for family businesses: • Reshoring and domestic production : Governments encourage local manufacturing to reduce reliance on distant suppliers. Family firms with production capacity may access grants or contracts through reshoring initiatives. • Sustainability and ethical trade : Consumer demand for sustainable, ethically sourced products plays to the strengths of family businesses rooted in local communities and responsible practices. • Niche, customised products : Supply chain uncertainty can hamper mass production, but family firms can capitalise on agility to offer high-quality, tailored products with faster lead times. • Digital adoption for competitiveness : Using affordable digital tools to provide real-time updates or flexible ordering can enhance customer experience and differentiate your business. ’ ‘ – –
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