Tech Investments Help SMBs Fortify Supply Chains Amid Economic, Workforce, and Security Concerns

Economic pressures, talent shortages, and cybersecurity threats are plaguing global supply chains, particularly at small to midsize businesses (SMBs). Software Advice’s international Supply Chain Plans Survey of 1,100 supply chain management (SCM) leaders in the U.S., U.K., Germany, France, and Australia reveals key issues currently impacting SMBs and how they’re building supply chain resilience in the face of these challenges.

Following insights from Software Advice’s research, SMB supply chain leaders should adopt these strategic measures to safeguard their operations against ongoing challenges:

  1. Focus on diverse cost management strategies.
    SMBs are especially vulnerable to fluctuations in consumer demand, supplier availability, and pricing as they often lack the financial buffer to absorb sudden cost increases. A diverse cost management strategy can better position them to withstand economic challenges. In fact, 53% of SMB supply chain leaders are negotiating supplier/logistics contracts in 2024, while another 28% plan to start. To leverage collective purchasing power, 39% report being in a group purchasing organization (GPO), and another 26% plan to join one soon—making it easier to negotiate discounted prices and favorable terms with suppliers.
  2. Improve workplace strategies to address a lack of skilled workers.
    Delivery delays due to insufficient staffing are impacting the bottom line for SMBs and the work-life balance of their present workforce. A majority (80%) of SCM leaders are struggling to attract and/or retain skilled talent. The most affected departments are logistics/distribution, quality control, and customer service. SMBs should consider enhancing their employer branding and implementing flexible work policies to attract highly sought-after professionals and to compete against larger employers.
  3. Invest in cybersecurity to safeguard your supply chain.
    41% of SCM leaders report one or more disruptions linked to a cyberattack in the last 12 months, making it a top supply chain concern this year. Over half (55%) of SMBs report advanced cybersecurity as critical to the success of their company, and it tops the list for the type of technology they plan to maintain or increase investing in for 2024, followed by AI (44%). Beyond technology, SMBs should also consider investing in employee training and conducting regular risk assessments to identify potential vulnerabilities.
  4. Increase technology budgets to improve supply chain resilience.
    31% of SCM leaders plan to adopt new supply chain management software in 2024. Specifically, spending in the U.S. has increased as 56% report allocating 6% or more of their company’s 2024 budget to supply chain technology spending.

    “Strategic tech investments will be pivotal in helping SMBs weather current economic storms and emerge stronger in the long run,” says Olivia Montgomery, associate principal analyst at Software Advice. “To get the most of their technology, SMBs should leverage predictive capabilities to forecast demand, identify potential risks, and optimize inventory levels. As AI and machine learning continue to advance, predictive capabilities will become more powerful and accurate.”

As SMBs find themselves at the intersection of economic uncertainty and workforce challenges, technology emerges as a reliable partner. For more recommendations on building SMB supply chain resilience, read the full report here and check out Software Advice’s list of top supply chain management solutions.

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