Women-owned businesses in the U.S. are experiencing unprecedented supply-chain disruption as a result of the coronavirus.
Shari Hammond of Austin, Texas, who uses a trusted manufacturer in Shenzhen, China, to make her home products, says she’s dealing with serious production delays and bracing for the impact on cash flow. Funlayo Alabi, founder of beauty brand Shea Radiance in Baltimore, is worried that her U.S.-based packaging suppliers will run out of inventory. Other startups say they can’t source a number of key supplies, from herbal ingredients to fabrics.
Nationally, nearly 75% of U.S. small businesses are reporting supply chain disruptions in some capacity due to coronavirus-related transportation restrictions, according to the Institute of Supply Management. Of those, one in six companies are adjusting for revenue losses.
“For a majority of U.S. businesses, lead times have doubled, and that shortage is compounded by the shortage of air and ocean freight options to move product to the United States — even if they can get orders filled,” says Thomas W. Derry, ISM’s CEO.
Dealing With Delay
For Hammond, whose home products include the Cabinet Caddy and Go Hang It, the pandemic is making the purchase order process — already a “vicious money flow cycle” for many small businesses — the worst she has experienced. She and her father, Ron Hunt, have manufactured innovative housewares for decades, surviving other pandemics, including the 2002 SARS and 2009 H1N1 pandemics. Back then, “social media wasn’t what it was,” she says. This time, “the panic has really been a game changer.”
Right before the virus spread, Hammond says her Cabinet Caddy, a modular organizer for cluttered spaces that’s been on the market for 18 months, was chosen to be on QVC, the TV shopping giant. QVC ordered two full shipping containers of the product, to be touted on its network this spring, according to Hammond. “This is our first big order,” she says. “We followed their guidelines to a T.”
Hammond placed an order with her manufacturer, who is based in Hong Kong but runs his factory in mainland China. “He’s one of the manufacturers with the most integrity I’ve seen,” she says. “It’s a 30-year relationship.” After placing the order, “they all went away for the Chinese New Year, and then coronavirus hit,” she says. “I immediately contacted QVC and said, ‘We’re getting feedback that our facility is shut down.'”
What followed sounded like an international team effort, with — according to Hammond — the Chinese manufacturer taking all precautions necessary to fire up the factory and QVC reps on the ground in China working to test the products so they could ship. While there were more hiccups, “we were one of the lucky ones,” Hammond says. “Because of our transparency and taking action and immediately getting everyone in the loop, we were able to get approved [and] meet our shipping deadline.”
But while Hammond was able to get that particular order filled, more delays are certainly on the horizon for her and other entrepreneurs. Hammond says the Shenzhen factory is anticipating delays of at least 30 days for future orders. Transportation is an issue, plus “they have to constantly prove that the facility is clean,” she says.
In Maryland, Alabi of Shea Radiance is already fearing for the busy holiday season. Her beauty products are made with shea butter, shipped in from West Africa but mostly packaged in the U.S. She’s not sure yet if coronavirus will impact sea freight shipments of her critical ingredient — the shea butter is produced by women farmers in Nigeria — but it’s already impacting the packaging piece of supply-chain management.
“Most of my packaging suppliers based in the U.S. tell me they have adequate stock but that lead times on reorders are going from 7 to 15 weeks,” she says. “A part of me would love to stockpile packaging inventory for the rest of the year so that my holiday sales are not disrupted by uncertainty, but it is unrealistic to tie up my capital when I have other operating expenses.”
Aside from production delays, entrepreneurs who make products say they’re also hurt by the cancellation of premier trade shows, where they often gain critical exposure and win purchase orders from big retailers.
This year, Hammond was prepping for the Inspired Home Show in Chicago, which was scheduled to start March 14 before it was canceled due to virus concerns. She had even secured a booth across from Shark Tank’s Lori Greiner. “When I got the news, I turned to my dad and hung my head and said, ‘Let’s have margaritas and chocolate,'” she says. “I need comfort good.”