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Truck at loading dock
Chances are if you run a small business in Milwaukee—or anywhere in Wisconsin—you’ve already struggled with supply chain disruptions due to everything from the ongoing pandemics to a continuously volatile economy. What you probably don’t know is that, taken in aggregate, Wisconsin ranks at the top of the list of all 50 states for disruptions in its various supply chain processes and procedures.
According to data from the U.S. Census Bureau’s Small Business Pulse Survey, 53.3 percent of the state’s small businesses—defined as 500 or fewer employees—have experienced domestic supplier delays. Among that same group, 28.6 percent suffered delays in shipping to customers, and 25.4 percent have had trouble locating alternate domestic suppliers. Those three numbers are the worst among states nationwide. The shortfall lessens when it comes to foreign supplier delays (19.4 percent) and locating alternative foreign suppliers (8.2 percent).
Granted, Indiana, Michigan and Ohio—the only other Midwestern states that fall into the bottom 15 states nationwide—are not far behind in their rankings on the Small Business Pulse Survey. But overall, 14.4 percent of Wisconsin’s small businesses are experiencing production delays, and that’s not good in any respect.
Supply chains, classically defined, chart the course of raw materials through the manufacturing, marketing and sales process and into the hands of the final customer. Any disruption in any one of those linkages will delay individual production steps, if not the entire manufacturing and delivery process, a case where the supply chain’s efficacy truly is only as good as its weakest link.
Multiple causes can be credited with these escalating supply chain woes, but the secret to the score lies in the fact that the study concentrated on small businesses, according to Mark Kosfeld, associate director of the Supply Chain Management Institute, an industry/educational partnership that’s part of the University of Wisconsin-Milwaukee’s Sheldon B. Lubar College of Business. And when it comes to small businesses, Kosfeld says Wisconsin has a lot of them.
According to a Q1 2022 data from the U.S. Bureau of Labor Statistics, Wisconsin is home to 186,354 firms that employ slightly less than 2.5 million people. Those numbers include 9,031 manufacturers that employ 471,762 workers. The manufacturing labor force equates to 19.3 percent of all state workers, making Wisconsin second only to Indiana in terms of manufacturing workers in the U.S. per capita. Based on those numbers, Wisconsin ranks 13th among the most important manufacturing states in the country, Kosfeld says.
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“Our rank is far behind California, which ranks number one with 45,330 manufacturers with 1.3 million employees,” Kosfeld notes, “but then California is rich enough to be its own country.”
Labor shortages undeniably contribute to breaks in the supply chain at all levels, Kosfeld says. So is the relative inability of smaller firms to access more and different suppliers who can help them better meet the needs of their customers, Kosfeld says. “I haven’t talked to Harley Davidson or MasterLock so I don’t know how they may be affected exponentially by these issues, but larger firms tend to have more options available to them,” he adds.
Kosfeld suggests that all firms, no matter the size, create operational plans that treat supply chain problems as inevitabilities, not merely unpleasant surprises. In addition, more flexible operating plans that can accommodate a wider variety of workers also would help small firms adjust to current conditions, both good and bad. Finally, increased digitization and automation also can help address labor shortages, accomplishing a similar or greater number of tasks with a decreasing number of employees.
“We don’t want you to get rid of employees, but you do have businesses to run here,” Kosfeld says. “It’s time to start tapping into pools of people who don’t fit the standard 40-hour work week.”
