Small businesses can be overwhelmed by the resources they need to move around to meet customers’ demands. But SMEs that learn effective supply chain management can operate smoothly and maximise profit, ARINZE NWAFOR writes

Your business is a part of an interconnected global economy. It can be an amazing and overwhelming experience, especially for small and medium-sized enterprises. Nigeria’s 39 million SMEs, which contribute 84 per cent of the country’s total employment, need supply chain management to survive and grow. We will learn what a supply chain is and why it is necessary for business success.

A supply chain is the network of people, companies, activities, information, and resources involved in producing and delivering a product or service, from raw materials to the final customer. It is related to but different from a value chain, which is about the value a company’s internal processes add to make a product or service more valuable to the customer.

Managing a supply chain entails coordinating the entire production flow of goods or services, from acquiring raw materials to delivering finished products to consumers. It is a process that encompasses sourcing, procurement, production scheduling and inventory management. Nigerian businesses that wish to have success must pay attention to developing trends in SCM, including new information and technology, to stay ahead.

Efficient supply chains enable SMEs to reduce operational costs, enhance customer satisfaction through timely deliveries, and respond competently to market fluctuations. Conversely, disruptions within the supply chain can lead to increased expenses, lost sales, and reputational damage. The COVID-19 pandemic caused global supply chain disruptions in air and sea freight, leading to significant delays and shortages. According to a 2020 news report citing the International Chamber of Shipping, the outbreak cost the shipping industry an estimated $350m weekly in lost revenues.

In 2025, geopolitical events will have profound implications for SMEs. The United States of America-China trade tensions led to the imposition of tariffs that directly impacted small businesses reliant on Chinese manufacturing. Some companies relocated to countries like Mexico to mitigate tariff impacts. The tariffs have rewired global trade, and Nigerian businesses have to build resilience through planning strategically, diversifying supplier networks, investing in technology, and fostering strong relationships with logistics partners.

These effective SCM tips will help you run your business smoothly by optimising resource flow and minimising disruptions:

Get your sourcing right

Sourcing involves identifying, evaluating, and selecting suppliers that provide the necessary raw materials, components, or services for production. Think of a food chain, such as So Fresh, identifying a fruit farmer in Jos, Plateau State, or the cosmetic company Nivea sourcing palm seeds from Okomu Oil Palm Plc and Presco Plc. SME owners get their sourcing right by analysing potential suppliers based on cost, quality, reliability, and compliance with regulations.

You have to conduct a risk assessment when looking for suppliers. Evaluate potential risks such as geopolitical issues, natural disasters, and the financial instability of suppliers. You also have to insist on sustainable and ethical sourcing.

Consumers are increasingly prioritising sustainability and ethical practices. SMEs that adopt responsible sourcing not only appeal to conscientious consumers but also contribute to long-term environmental and social benefits.

You need multiple vetted suppliers

Let’s explore procurement. Think about your process of acquiring goods and services from suppliers; yes, that is procurement. It deals with purchasing and contract management, unlike sourcing, which focuses on finding suppliers.

Key activities in procurement include purchase order management, which involves issuing purchase orders and tracking their fulfilment, and negotiation, which ensures cost-effectiveness through bargaining on price, delivery terms, and service level agreements. Conduct compliance and regulatory checks by ensuring suppliers meet industry standards, ethical practices, and legal requirements.

One supplier is not healthy for a business’s supply chain. City lockdowns during the COVID-19 pandemic remind foreign traders to diversify procurement. Diversifying the supplier base mitigates risks associated with regional disruptions.

According to a supply chain professional, Oluchi Okafor, “You can’t keep all your eggs in one basket. That has always been a cardinal rule of the supply chain. You must have multiple suppliers.” Okafor advised businesses to maintain “supplier variability”, noting that the US tariffs’ impact on global trade means SMEs should explore suppliers in other locations that are not tariff-based.

“There are other countries without any change in the international trade space,” she stated. “For instance, Nigeria and China are still doing business without any interruptions based on tariffs per se, except you are routing your goods via the US, which is not advisable at this time. Supplier variability is key.”

Choose your partners wisely

You have to build strong relationships with logistics partners. Collaborating with reliable logistics providers ensures the timely and efficient delivery of goods. Companies like DHL Express offer solutions tailored for SMEs to build resilient supply chains.

Participate in industry associations and collaborative networks that allow SMEs to share resources, information, and strategies. Such engagement fosters collective resilience and provides access to best practices.

Okafor observed that supply chains need healthy partnerships to thrive. She remarked that in a case where a business does not have the needed documentation to transport goods, it needs to partner with a registered and reliable shipping partner. She explained, “Your partners are everything in business. Whether it’s your supply chain partner, transportation partner or supplier. Choose your partners wisely.

“Choose your partners based on mutual interests, meaning they gain and you gain. Don’t choose partners where you’re the only one gaining. Be fair in your business dealings and choose partners based on mutual growth.”

Okafor denounced self-seeking business practices as detrimental and argued that if you want “to have long-lasting businesses that stand the test of time and the test of tariffs and everything that comes up, you must also be seen as a ‘surplus’. So, deal with your partners fairly.”

Tech helps you to be on time

Time is crucial in managing resources from raw materials to customers. This makes production scheduling important to the supply chain of any business. It determines when, where, and how products should be manufactured to meet customer demand efficiently.

What are the major activities in production scheduling? First, demand forecasting is where a business owner uses historical data and market trends to predict production needs.

The other activities include capacity planning, which ensures that production facilities, labour, and materials align with demand; resource allocation for distributing raw materials, machinery, and human resources efficiently; and real-time adjustments for reacting to unexpected changes, such as equipment breakdowns or urgent orders.

Leverage technology to enhance your business’s visibility and control over supply chain operations. You can implement inventory management systems, demand forecasting tools, and real-time tracking to streamline processes.

Utilising SCM software provides real-time insights into inventory levels, demand planning, and procurement processes. The software company Sage Africa offers solutions like Sage 300cloud and Sage X3, which help businesses manage accounting, inventory, operations, and distribution. These tools enable SMEs to automate manual processes and make data-driven decisions.

The supply chain professional, Okafor, urged businesses to “keep up with trends and to forecast a bit differently”, noting that “they are almost like a window into what to expect.”

Okafor acknowledged that forecasts may be wrong, but they are important as businesses have to “forecast differently now, with the tariffs, and forecast within the sphere of your control.” She urged business owners to keep an open mind and their ears to the ground on new developments.

Keep better records

You can keep better records with inventory management. The practice of controlling the storage, movement, and tracking of raw materials, work-in-progress goods, and finished products is inventory management. It helps you to optimise supply chain efficiency.

Adopt stock level optimisation, maintaining the right amount of inventory, enough to meet demand but not excessive, to avoid storage costs. Also adopt Just-in-Time inventory for ordering materials only when needed, reducing storage expenses.

Other tips include warehouse automation using RFID tags, barcodes, and AI-driven analytics to track stock in real time. You need to carry out inventory audits by conducting periodic checks to prevent theft, loss, or discrepancies.

Transportation is your lifeblood

Transportation involves moving raw materials, components, or finished goods between suppliers, manufacturers, warehouses, and customers. It is the lifeblood of the supply chain of any business.

In transportation, you understand the suitable mode of air, sea, rail, or road transportation based on cost, speed, and reliability. Optimise routes using artificial intelligence and Global Positioning System tracking to determine the most efficient delivery routes.

Other important tips are cold chain logistics for ensuring temperature-sensitive products, including pharmaceuticals and fresh food, are transported under controlled conditions. You can also engage third-party logistics, outsourcing transport needs to specialised firms like DHL, UPS, or Maersk.

The supply chain professional Okafor advised businesses to be “smart about their transportation choices”. She explained that shipping is cheaper than flying, but there are urgent needs that could require having to fly goods in rather than shipping.

She encouraged supply chain managers to ensure they contract transporters with the necessary documentation and who are registered with the Council for the Regulation of Freight Forwarding in Nigeria.

She cautioned, “Anyone transporting for you should have the right documents so that you can avoid customs fees and other extras. Any extra fee that you incur, whether in transportation or the customs duties, you’re not going to absorb that fee by yourself.”

E-commerce helps to reach customers faster

Distribution ensures that finished products reach retailers, wholesalers, or directly to consumers in a timely and cost-effective manner. You can employ e-commerce to reach your customers faster.

Important tips include having warehouses and fulfilment centres. Here, you store products at strategic locations for faster delivery. You also need last-mile delivery for managing the final leg of delivery to customers efficiently, reverse logistics for handling product returns, recycling or refurbishing and digital platforms to manage online orders and automate deliveries.

The e-commerce platform Jumia uses localised distribution centres and AI-driven demand forecasting to ensure fast delivery across multiple countries.

Keep your eye on costs

SMEs need to continuously monitor their operations and assess risks. Regularly assessing the supply chain for potential risks enables proactive mitigation strategies.

Implementing key performance indicators and conducting periodic audits help in identifying vulnerabilities early.

According to the supply chain professional Okafor, a competent supply chain manager needs to always find out what the business’ reorder levels are.

She explained the reorder levels with a rice analogy: “Say in my house, it shouldn’t be at the point where the rice is finished that I would know that it is time to buy more rice. In that same vein, as a business, you must know what your reorder levels are. Where is the point you get to, and you know that you need to order again?”

Extra tips on personnel training and access to credit

You need to invest in the continuous education of staff on supply chain best practices and emerging trends to equip SMEs to adapt to evolving challenges. Workshops, seminars, and certifications can enhance the skill set of employees, fostering a culture of excellence.

You need to maintain a healthy cash flow and have access to credit facilities to respond swiftly to supply chain disruptions. Establishing relationships with financial institutions and exploring trade finance options can provide liquidity during crises.

A supply chain is as strong as its weakest link

The supply chain professional Okafor explained that all steps in the supply chain are vital to the success of a business. She remarked, “It is just like the name supply chain entails. “It’s like a chain and only as strong as its weakest link.”

Okafor noted that it is dangerous when the weak link of a business’s supply chain is broken. “If the weak link is your transportation or marketing, then people are unaware of your routes to markets – like we say in fast-moving consumer goods. Or they are not aware that your product exists or that you exist.”

You can master these SCM processes, integrate technology, strategic sourcing, and strong supplier relationships and witness your business become more resilient and competitive.