• The EU AI Act is the first comprehensive law regulating artificial intelligence in the European Union.
• If your SMB operates in the EU or sells products and services to EU customers, you need to comply with the Act (even if your business is based outside the EU).
• The Act uses a risk-based approach, categorising AI systems from minimal to unacceptable risk.
• Early compliance enables SMBs to establish trust with clients and gain a competitive advantage.
• inFlow offers tools and resources to help SMBs navigate compliance requirements.

You’ve probably seen the headlines: the European Union is leading the way in setting clear rules for artificial intelligence. The EU AI Act is the first comprehensive law designed to build trust and ensure businesses use AI responsibly. If you run a small or medium-sized business (SMB) in Europe, you might be wondering how this impacts you. In this guide, we’ll break down exactly what the EU AI Act is, explain how it affects your business, and share practical steps to help make compliance a lot easier.

What’s considered a small or medium business under the EU AI Act?  

Let’s start with the basics. The EU categorizes small and medium-sized businesses as those with fewer than 250 employees and either an annual turnover of under €50 million or a balance sheet total of under €43 million. So, even if your business isn’t massive, you’re still on the hook for this legislation (especially if you’re using or developing AI in any capacity).

The EU AI Act’s risk-based approach  

The EU AI Act sorts AI systems into four risk categories:

1. Unacceptable risk 

These are AI applications that the EU has decided are simply too harmful to allow (like those that would violate fundamental human rights). For example, governments aren’t allowed to use social scoring systems or predictive policing algorithms. 

2. High risk 

AI that has a significant impact on safety or human rights falls into this group. Think recruitment software making hiring decisions or biometric identification systems. If your business uses these, you’ll need to follow strict regulations, including having solid risk management and transparency plans in place.

3. Limited risk 

This category includes things like chatbots and AI-powered product recommendation systems. You’ve just got to be upfront with users and let them know when they’re dealing with AI.

4. Minimal risk 

Most AI applications, such as inventory management tools powered by AI or automated invoice sorting systems, fall under this category. While the rules aren’t as strict, it’s still a good idea to follow best practices.

Compliance timeline  

Keeping up with new regulations and deadlines can feel overwhelming, but you’re not alone. The good news is that the EU AI Act will roll out in stages, giving you time to prepare. Here are the main milestones to keep in mind:

• August 2024 – The Act was officially enacted 

The Act is already in effect, so if you haven’t yet, now’s the time to review your AI tools and make sure you’re familiar with the new rules.

• February 2025 – Unacceptable-risk AI banned

From this date forward, any AI systems labelled as ‘unacceptable risk’ are no longer allowed, so you need to steer clear of these completely. High-risk AI systems also need to meet all the requirements for documentation, oversight, and risk management.

• August 2025 – Transparency for general-purpose AI 

At this point, transparency obligations for general-purpose AI (like large language models) will take effect. If you use or connect to these tools, your users must be able to see how and when AI is being used.

• August 2026 – Most other provisions fully apply 

By this stage, the majority of the EU AI Act’s rules will be live. This means that high-risk AI will need to be fully compliant, documents will need to be up to date, and you’ll need to feel confident that your business is following the framework.

Who needs to comply?  

If you do business in the EU (or sell to EU customers), the AI Act applies to you, no matter where your company calls home. Even if you’re based elsewhere, those rules still follow you right up to the checkout. Think of the AI Act like the GDPR: what kicks off in Europe often becomes the blueprint for everyone else. But here’s the good news – if you get compliant early, you’ll stand out from the crowd, boost trust with your customers, and be prepared for even more opportunities as these standards become the new norm.

Penalties and fines for non-compliance

Staying on the right side of the EU AI Act isn’t just about ticking the right boxes – it can save your business from some serious headaches down the road. If your company doesn’t comply, fines can get steep: up to €35 million or 7% of your global annual revenue (whichever is higher). It’s not just about the financial hit – non-compliance can disrupt your business and damage your reputation.

Measures to support SMBs  

Worried that this all sounds overwhelming? You’re not alone. Navigating new regulations can be daunting, especially for small or medium-sized businesses already juggling countless tasks. The good news is that the EU recognises this and has put support measures in place specifically to help SMBs adjust.

One key resource is access to targeted training programmes designed to focus on what matters for your business. These workshops and online courses cut through technical jargon, guide you through best practices, and show you how to plan your compliance journey step-by-step. 

Financially, you may be eligible for grants or low-interest loans designed to support digital transformation and meet AI standards. Funding may go towards updating tech or hiring consultants, so you’re not shouldering costs alone.

The EU has also streamlined specific compliance rules for smaller companies, resulting in less paperwork and more straightforward reporting, allowing you to focus more on your business.

If you’re ever unsure, dedicated hotlines and online resources offer advice relevant to your sector. For more detailed information on EU support and tools for SMBs, visit the EU support tools for small and medium-sized businesses or see EU policies and support for SMEs.

Case study: The Rubber Duck Co.

Let’s demystify the compliance process with a fictional example. Imagine you’re a manufacturer supplying rubber ducks to toy retailers across Europe. You utilize AI to predict inventory needs and streamline your sales process. Here’s what you need to do to meet the EU AI Act requirements (and how inFlow can help):

• Assess your AI risk level 

Start by identifying every AI-powered tool in your rubber duck business, from demand forecasting to sales analytics. Then review how each tool impacts customer experience and data handling. Most inventory and sales forecasting systems, like those tracked in inFlow’s dashboard, are considered ‘low risk’ under the EU AI Act. You can easily review and document your AI use with inFlow’s reporting features.

• Be transparent with customers 

If you use AI for order updates or personalised offers, let your customers know. With inFlow’s customisable reports and templates, you can clearly communicate how AI affects delivery times and promotions, helping you build trust with your retail partners.

• Keep humans in the loop 

Clearly define who on your team oversees AI-powered inventory and sales decisions. With inFlow’s user management feature, you can set roles and permissions to ensure key staff have the right level of oversight and can make timely, informed choices.

• Regularly review your systems 

Set up regular checks to ensure your AI tools are running smoothly and remain compliant. inFlow’s audit log and automated reminder integrations help you catch issues early and keep your operations reliable.

• Train your team 

Make sure everyone understands your compliance processes. inFlow’s team management and onboarding features help new and existing employees stay up to date with best practices and requirements.

• Document your processes 

Store your compliance policies and procedures in one central place with inFlow by attaching them to relevant records like products, customers, or orders. This keeps documentation organised, helps your team understand expectations, and simplifies audit preparation. Learn more in our guide on how to add attachments to records and orders. 

Final thoughts

The EU AI Act will undoubtedly shape the future of AI regulation, but following the rules doesn’t have to be an uphill battle. By getting your ducks in line early and using supportive tools like inFlow, you’re setting yourself up for success and building extra trust with your customers.

The post What the EU AI Act Means for Small Businesses appeared first on inFlow Inventory.

• The minimis exemption, which allowed imports under $800 to enter the US duty-free, is being eliminated in phases, with full termination codified for 2027.
• China and Hong Kong lost eligibility in May 2025, and as of August 29, 2025, de minimis treatment ended for all countries, subjecting all imports to duties and full customs scrutiny.
• The change significantly increases costs, compliance requirements, and processing delays, putting heavy strain on SMBs that rely on low-cost international sourcing.
• Businesses must now handle full customs documentation, accurate HTS code classification, potential bonding requirements, and choose between informal and formal entry types.
• Shipping strategies are shifting toward bulk orders, nearshoring and onshoring fulfillment, and regional distribution hubs, requiring more working capital and storage space.
• To adapt, businesses should diversify suppliers, explore nearshoring or onshoring, implement automation for compliance, optimize inventory management, and update financial planning to handle new cost structures and cash flow demands.

The global ecommerce landscape is about to face a monumental regulatory shift. The United States’ de minimis exemption, which has allowed packages valued under $800 to enter the US duty-free, is being systematically eliminated, with complete termination scheduled for 2027. This change poses a major threat to companies that have built their business around low-cost, direct-to-consumer shipping from overseas suppliers.

So, if your business relies on international suppliers, cross-border ecommerce, or low-value shipments, this article is for you. We’ll break down what the de minimis exemption is, what its elimination means to you, and lastly, how you can prepare for this major disruption.

What is the de minimis exemption?

For years, the de minimis exemption has been a cornerstone of international trade policy. It allows goods valued at $800 or less to enter the United States without paying duties or undergoing an extensive inspection process. The de minimis exemption is among the most generous globally after it was raised from $200 to $800 back in March 2016.

This system has done more than just reduce duty fees. It also simplified the entry process, requiring less documentation, resulting in faster processing times. Platforms like Temu, Shein, and AliExpress have thrived in this environment, flooding the US market with minimal regulatory oversight.

The original intent of the policy was to reduce the administrative burden on customs officials for items that wouldn’t generate significant revenue. However, the explosive growth of ecommerce in recent years has made de minimis a major trade policy issue.

The end of the de minimis exemption

The good news is, the elimination of de minimis isn’t happening overnight. The US government will be rolling it out in phases, and it’s vital to understand the timeline to help your businesses plan your transition strategy.

Phase 1: China and Hong Kong (Completed May 2, 2025)

The first significant restriction started in May 2025, when products originating from China and Hong Kong lost de minimis eligibility. Since Chinese goods represented 76% of de minimis shipments in 2024, this first phase has already had a massive impact on many businesses of all sizes. 

Phase 2: All Countries (August 29, 2025)

The Trump administration accelerated the timeline, eliminating de minimis treatment for all countries, which took effect on August 29, 2025. This means all imports, regardless of value or origin, now face applicable duties and enhanced customs scrutiny.

Phase 3: Legislative Codification (2027)

The recently passed “One Big Beautiful Bill Act” formally codifies the end of commercial de minimis shipments by July 1, 2027. This move will ensure the changes become permanent regardless of future administrative decisions.

Impact on ecommerce businesses

For companies that have built their business model around low-cost international sourcing, the elimination of de minimis exemption creates immediate and long-term challenges. These include:

• Increased costs: The end of di minimis couldn’t have come at a worse time for US businesses, who are already dealing with increased duties thanks to new tariffs. Every imported item now faces duties that could exceed 50% for certain Chinese goods. Businesses must decide whether to absorb these costs or pass them on to consumers.
• Market positioning: Increased costs have made it much more difficult for SMBs to stay competitive. Larger companies have a lot more resources and can absorb the new costs associated with the end of de minimis. The little guys, on the other hand, often operate with razor-thin margins which means they’re less likely to be able to absorb the massive increase in duties.
• Consumer behavior: When prices increase, people tend to spend less. It’s inevitable. Businesses must prepare for potential decreases in demand and adjust their financial projections accordingly.
• Documentation requirements: All shipments now require proper customs entry forms with accurate 10-digit Harmonized Tariff Schedule (HTS) codes. This eliminates the simplified Entry Type 86 process that many businesses used for smaller shipments.
• Processing delays: Enhanced customs scrutiny means longer processing times. Packages that previously cleared customs in a matter of hours may now be sitting for days or even weeks.
• Compliance burden: Businesses must ensure accurate product classification, proper documentation, and compliance with all applicable regulations. Mistakes can result in penalties, delays, or even shipment rejections.

New compliance requirements

The new costs associated with the elimination of de minimis exemption are just the tip of the iceberg. For many businesses, the introduction of complex compliance obligations is the real kick in the teeth. These include:

• HTS code accuracy: As mentioned above, you must classify every product with the correct 10-digit HTS code.
• Entry type selection: Businesses must choose between Entry Type 11 (informal) for lower-value shipments or Entry Type 01 (formal) for higher-value or regulated products.
• Bonding requirements: Many shipments now require customs bonds to ensure payment of duties and compliance with regulations.

The time commitment required to ensure compliance will eat away at your administrative fees and ultimately could cost you more than the duties themselves. 

International postal shipments

For packages sent through international postal networks, businesses face two duty calculation options. The first option is the ad valorem method, which applies the standard tariff rate based on the product’s country of origin and classification. The second is the specific duty method, which means you pay a fixed per-item rate ranging from $80 to $200 based on the applicable tariff percentage, though this option expires February 28, 2026.

How will the supply chain adapt to the end of the de minimis exemption?

The end of de minimis will force fundamental changes in how the global supply chain operates, especially for businesses that revolved around small, frequent shipments. Here are some of the most significant changes we’ll see in the coming weeks and months.

Changes to shipping strategies

The end of the de minimis exemption means bulk shipping is back, baby. Many businesses are making the shift from frequent small shipments to larger, less frequent bulk orders. This strategy is effective at reducing the per-unit duty cost but requires more working capital and storage space.

We’re also seeing more companies establish or expand their US-based fulfillment to avoid international shipping complications entirely. This represents a significant capital investment but provides long-term operational benefits.

Some businesses are even creating regional distribution hubs in countries with more favorable trade relationships. These centers act as intermediate points before final US delivery.

Changes to inventory management

The biggest change you’ll see in inventory management is the increase in required capital. Bulk purchasing requires more upfront investment in inventory, and larger inventory volumes demand more storage space.

Businesses will no longer have the amount of flexibility for quick reorders, which means accurate demand forecasting becomes critical to avoid stockouts or excess inventory. 

How can businesses respond to the end of de minimis?

There is no denying that the end of de minimis exemption has put many businesses in a sticky situation. However, forward-thinking companies have risen to the occasion and started to implement comprehensive strategies to adapt to the post-de minimis world.

Supply chain restructuring

• Supplier diversification: Reducing dependence on a single country or supplier helps mitigate tariff impacts and provides flexibility.
• Nearshoring initiatives: While onshoring may still be cost-prohibitive, nearshoring may be the next best thing. By moving production closer to the US market, such as to Mexico or Central America,  you can reduce shipping costs and complexity while maintaining lower duty rates.
• Onshoring initiatives: Where economically viable, shifting to US-based suppliers eliminates international shipping complications entirely. While this option seems attractive, the reality is that it’s just not possible in many cases. 

Technology and process improvements

• Automated classification: Tech-savvy businesses are investing in software that automatically assigns correct HTS codes, reducing compliance risks and processing delays.
• Inventory optimization: Advanced inventory management systems help with demand forecasting, real-time inventory visibility, and automated reorder points, which in turn will help cash flow management. These solutions can also better track the total cost of goods, including duties and compliance expenses, enabling more accurate pricing and profitability analysis.

Financial planning

• Cost structure analysis: Businesses must recalculate their cost structures to account for duties, longer shipping times, and increased compliance costs.
• Pricing strategy revision: When costs increase, so do prices. Adjusting product pricing to maintain profitability while remaining competitive in the market is key.
• Cash flow management: Bulk purchasing and longer lead times require more sophisticated cash flow planning and potentially additional financing options.

Conclusion

The elimination of de minimis exemption isn’t just about increased duties—it’s about a fundamental overhaul of how international commerce operates. Companies that embrace this change and adapt their strategies accordingly will position themselves for long-term success in the evolving global marketplace.

For businesses managing complex international supply chains, having robust inventory management systems becomes even more critical. Tools that can track costs, manage compliance requirements, and optimize inventory levels will be essential for navigating the post-de minimis landscape successfully.

The post The End of De Minimis: How Businesses Can Adapt appeared first on inFlow Inventory.

• Operational risk encompasses internal and external threats. This includes human error, process failures, system breakdowns, and natural disasters, which can disrupt a business and result in financial or reputational harm.
• Proactive operational risk management (ORM) helps businesses maintain stability, reduce the cost of disruptions, and respond swiftly to challenges.
• Common causes of operational risk range from data entry errors and system crashes to supply chain delays and cyberattacks, all of which can lead to major operational and financial setbacks.
• ORM involves five key steps: identifying risks, assessing likelihood and impact, mitigating through controls, continuously monitoring for new risks, and reporting to stakeholders for transparency.
• Tools like inventory and manufacturing software minimize operational risk by automating tasks, reducing human error, and enabling real-time tracking.

Operational risk is a critical concept in business. It refers to the uncertainties and potential hazards that arise from everyday activities, including process failures, human errors, system breakdowns, or external events. It encompasses a wide range of uncertainties that can impact a company’s ability to operate efficiently and meet its objectives. Identifying and preparing for these risks is essential for businesses of all sizes. It helps safeguard against unexpected disruptions that can lead to financial loss, reputational damage, or regulatory penalties.

By proactively managing operational risks, companies can enhance their resilience, maintain stability, and ensure smooth ongoing operations. Being prepared also enables businesses to respond promptly to challenges, minimizing adverse effects and maintaining the trust of customers, stakeholders, and employees.

Common causes of operational risk

Operational risk can manifest in several forms, significantly impacting business operations. Human error, such as a data entry mistake, can lead to substantial financial reporting errors, as seen in high-profile finance sector mishaps. System failures, such as server crashes, can disrupt operations and customer access. The resulting downtime can be devastating, costing an estimated $1.4 trillion a year among the world’s 500 largest companies. Process breakdowns, like inefficiencies in supply chain management, can also wreak havoc, causing delayed deliveries that often result in stock shortages during peak retail periods.

Operational risks can also stem from external events like natural disasters or cyberattacks, which have led to hurricane-induced factory shutdowns and data breaches. These examples highlight why businesses must adopt robust risk management strategies to mitigate and respond effectively to such operational challenges. By anticipating potential disruptions, organizations can reinforce their resilience and ensure smoother operations despite unforeseen events.

What is operational risk management?

Operational risk management (ORM) is the systematic approach to identifying, assessing, mitigating, monitoring, and reporting risks that could disrupt everyday activities or lead to business asset losses. The main goal of ORM is to reduce the impact of unplanned events, helping a business to continue with as little cost as possible.

The ORM process begins with identification, where potential risks are identified across various facets of operations. These risks are then examined to evaluate their likelihood and potential impact. Mitigation then focuses on developing strategies to reduce the probability or consequences of risks, like implementing stronger controls or backup systems.

Ongoing efforts are needed to monitor potential risk factors and evaluate the effectiveness of mitigation strategies, especially as risks evolve over time. Finally, reporting ensures that stakeholders are informed about risk levels and management efforts, fostering transparency and accountability. Establishing a structured approach helps businesses respond more effectively, maintaining trust and stability amidst uncertainties.

Tools that help reduce operational risk

Inventory and manufacturing management software reduces operational risk by improving accuracy and efficiency. Automation and system integration minimize manual processes, thus preventing data entry errors that can lead to costly mistakes. The software helps automate routine tasks, such as updating stock levels or creating reports, which in turn helps businesses reduce the likelihood of human error and save valuable time.

Implementing strategies like barcoding and inventory tracking ensures precise, real-time data collection. This accuracy helps avoid discrepancies in inventory levels and supports better decision-making. For example, barcoding speeds up the inventory management process, ensuring accurate tracking of product movement and reducing the risk of misplaced items. Tracking inventory in real time allows companies to make adjustments as needed, reducing the time it takes to respond to issues like shortages. Collectively, these practices streamline operations, enhance data accuracy, and safeguard businesses against potential disruptions.

How to create an operational risk management plan

To create an effective ORM plan, start by assembling a cross-functional team from across the organization to provide a variety of perspectives. Begin with a risk assessment using tools or scorecards to prioritize risks based on potential impact and likelihood. Encourage open discussions to identify specific risks unique to each department while fostering a culture of transparency.

Next, develop tailored mitigation strategies for prioritized risks, ensuring they align with department-specific needs. Implement controls to minimize risks, clearly assigning responsibilities to relevant team members. Establish a plan for responding to risks, and regularly update it as needed to maintain its effectiveness.

Utilize continued training and workshops to encourage involvement and understanding from members throughout the organization. This process allows departments to manage risks proactively, safeguarding the organization’s assets and operations effectively.

Measuring and monitoring operational risk

To effectively monitor operational risk over time, businesses can track key metrics and indicators such as incident frequency, near-miss occurrences, processing error rates, and downtime. Monitoring these metrics provides insights into potential vulnerabilities and allows for timely interventions. When you incorporate feedback loops, such as employee and customer feedback, it supports continuous learning and adaptation.

Scenario planning is foundational for preparing organizations to respond to unforeseen events. It provides a structured approach to testing the robustness of current risk mitigation strategies and uncovering weaknesses in operations. By incorporating these elements, businesses can track operational risk effectively while fostering a culture of continuous improvement. This enables them to adapt to changing conditions and maintain resilience against potential disruptions.

The post What Is Operational Risk? appeared first on inFlow Inventory.

• US tariffs on Europe are reshaping global supply chains and hitting European SMBs hard.
• These tariffs create higher costs, slower growth and tougher planning for EU-based businesses.
• Diversifying suppliers, tweaking pricing and exploring new markets can help offset the impact.
• Staying informed on policy updates regarding US tariffs, EU tariffs and trade policy is crucial. 
• Inventory management tools like inFlow help businesses adapt and streamline operations during tariff turbulence.

No matter where you look, news about Trump’s unpredictable tariff policies is everywhere. And while burying your head in the sand might sound tempting (we’ve certainly considered it), the reality is that US trade policy is reshaping global supply chains, and its impact is impossible to ignore.

For European SMBs tied to US trade, this spells challenges for profit margins, market access, and supply chain stability. However, it’s not all bad news, and we’re not entirely at the mercy of US tariffs. With a solid strategy, EU-based small and medium businesses can stay resilient—even in the face of an uncertain trade environment.

Today, we’re diving into the hefty topic of US tariffs on the EU, discussing what they mean for small and medium-sized businesses, and providing practical strategies that’ll help you stay resilient and flexible.

US tariffs on Europe

To understand the current tariff landscape, let’s rewind to March 12, 2025, when the United States slapped a 25% tariff on all steel and aluminium imports—marking the Trump administration’s first major move to disrupt global trade since his return to office earlier this year. Since then, it’s only got worse, with those tariffs now doubled to a hefty 50% as of May 30, 2025. And let’s not forget the 25% tariff on all automobile imports announced just two weeks after the initial steel and aluminium tariffs.

Then, on April 5, a global 10% ‘baseline’ tariff on all imports took effect. At the time of writing, the US and EU are in the midst of a tariff standoff of sorts. To make a long story short, the US first threatened to raise the 10% baseline tariff to 20% and is now considering an even bigger hike to 50% – a move the EU naturally opposes.

However, the transatlantic waters appear to have cooled slightly, with both President Trump and European Commission President Ursula von der Leyen agreeing to reinstate the 90-day pause period, which should give them a chance to reach some sort of deal by July 9 (the final deadline). In the meantime, small and medium businesses across Europe are caught in the crossfire, wondering how to operate amid tariff mayhem and the looming threat of a 50% tariff on all exports to the United States.

The impact of tariff uncertainty

No matter what unfolds in the next round of Trump Tariffs vs Global Trade (a saga we’d gladly switch off if we could), businesses and consumers are already feeling the impact. Even the hint of uncertainty is damaging: when investors get nervous, borrowing becomes more expensive, and people pull back to avoid extra risk. Leaders are forced into tough trade talks, which can strain global relationships, and higher tariffs slow down trade itself. Meanwhile, businesses are juggling stress and extra costs, rethinking suppliers and shipping routes while prices jump all over the place, making it hard to plan or budget for the future.

How will US tariffs impact EU SMBs?

While the scale of the impact largely depends on the terms negotiated in the upcoming deal, it’s safe to assume that the tariffs will have a negative impact no matter what. According to a recent report published by the European Union, the tariffs could seriously hit both the US and EU economies and stir up trouble for global economic stability. 

For small and medium businesses reliant on US trade, the impact could be major. Tariffs make imported goods more expensive, which unfortunately means higher costs and tighter margins. You might also notice less demand if your goods become more expensive for American buyers. 

There’s also that pesky issue of uncertainty mentioned earlier. Trump’s infamous style of global trade means volatile markets and shifting trade rules are now the new norm. For small and medium European businesses, this means planning is more complicated because budgets, pricing strategies, and long-term contracts are harder to manage. 

Before we stop bombarding you with bad news, there’s one more point worth mentioning: higher tariffs mean slower growth. With both the US and EU economies under pressure, funding, investment, and consumer spending could slow down. Much like the chaos caused by the COVID-19 pandemic, small and medium businesses will likely bear the brunt of it. 

How can SMBs prepare for US tariffs? 

Now that we’ve hashed out the bad news about the US tariffs on Europe, let’s shift our focus to what we can do about the tariff turmoil. While the global economy is out of our hands, how we run our businesses – and the strategies we choose – are firmly within our control. To help lighten your load, we’ve created a tariff preparation checklist that you can follow:

Diversify your suppliers

We’re going to use the age-old adage here and advise that you ‘Don’t put all your eggs in one basket’. Consider shopping around – especially regionally and with local suppliers- if possible. Tools like inFlow can help by letting you track multiple vendors per item. You can also compare costs, lead times and stock availability all in one place – making it easier to switch between suppliers if need be. The key is to reduce your dependence on US suppliers wherever possible. 

Tweak your pricing

Nobody wants to increase prices in an already competitive market. But with the US tariffs on Europe, if costs can go up, you need to make sure your pricing reflects that. Our advice? Be open with your customers about it. We’ll all be feeling the pinch, but keeping the lines of communication open will go a long way. inFlow helps you stay on top of this by tracking real-time costs and applying pricing rules across your product range. Whether it’s tiered pricing, markups, or quick adjustments, it’s all built in. 

Check your contracts

It’s a good idea to have a read through the fine print of your agreements with suppliers, partners, and clients. Check for price adjustment and hardship clauses in case tariffs cause changes. You might also add buffer time for potential customs or shipping delays and aim to share extra costs or setbacks with partners rather than carrying the burden alone. While inFlow doesn’t handle contracts directly, we can give you all the data you need (like past order volumes, historical pricing, and delivery performance) to confidently negotiate smarter terms.

Look at new markets

As the saying goes, ‘There’s plenty of fish in the sea’ (though it likely wasn’t coined with tariff reshuffling in mind). Still, if you rely on the US for trade, now’s a good time to see what else is out there. inFlow supports multiple currencies, regions, and locations, and integrates platforms like Shopify and Amazon—making it easier to expand and adjust without the added stress. By shifting your focus to regions with more stable trade relations, you can help offset potential losses. 

Run a tighter ship

This doesn’t mean making drastic changes – just being smart about streamlining your internal processes. The aim is to absorb extra costs without cutting into your margins. This is where inFlow really shines. From inventory tracking to order fulfilment, inFlow helps streamline absolutely everything. And with features like automated reordering notifications, mobile barcode scanning, and centralised stock control, you can cut waste, reduce human error, and keep operations lean.

Stay in the loop

While keeping up to date with the tariff saga isn’t exactly riveting, it is important. Staying informed on policy changes means you can react quickly and make smart, strategic decisions as things evolve. With inFlow, you’ve got real-time dashboards, reporting, and mobile access, so you always know what’s in stock, what’s on order, and what needs attention. It means you have clear visibility that helps you respond quickly when things shift.

Seek support

Alongside implementing an inventory management system, it’s wise to take advantage of EU grants, industry networks, and advisory services that can provide extra support and guidance. Our friendly support team is on hand to answer any questions and share practical advice from Monday to Friday. And when it comes to getting started or troubleshooting challenges, our knowledge base, community forum, and learning resources are there to back you up every step of the way.

Wrapping up

As we navigate the rocky waters of US tariffs on Europe, it’s clear that European SMBs are facing real challenges. But uncertainty doesn’t have to be a dead end. With a solid strategy, the right tools, and a proactive approach, you can stay resilient and adapt to whatever comes next. Remember: staying informed, seeking support, and making smart decisions will help you ride out the storm and even find new opportunities along the way.

The post Navigating US Tariffs on Europe: Practical Strategies for SMBs appeared first on inFlow Inventory.

• The UK still faces an ongoing HGV driver shortage. They’ll need around 40,000 new drivers annually over the next five years to keep supply chains moving.
• The shortage peaked in 2021 and continues to disrupt SMBs, especially those without the resources of larger businesses.
• Small and medium businesses are more vulnerable to delays, rising costs, and stock shortages. Particularly if they rely on just-in-time inventory models.
• To minimise disruption, SMBs should focus on building more resilient supply chain strategies. They can do this by diversifying delivery partners, working with local suppliers, and holding strategic buffer stock.
• Adopting an inventory management system like inFlow can help SMBs stay proactive with real-time tracking, automated reordering, demand forecasting, and streamlined operations.

You’ve probably heard about the lorry driver shortage in the UK. And if you own a small or medium business, you’ve likely felt its impact too. From late deliveries and production hold-ups to stock shortages and increased operational costs, the HGV driver shortage has caused a ton of disruption. To make matters worse, the shortage disproportionately hits small and medium businesses hardest.

In this article, we’ll explain exactly what the HGV driver shortage is, which industries are affected, and what you can do to minimise its disruption to your business.

What is the HGV driver shortage? 

The HGV driver shortage refers to the significant lack of qualified Heavy Goods Vehicle (or ‘HGV’ for short) drivers across the UK. There simply aren’t enough lorry drivers to operate the number of large freight vehicles needed to keep our shelves stocked and the wheels of the British economy rolling. 

According to a recent report by the Road Haulage Association (RHA), we’ll need to see some 40,000 new lorry drivers recruited annually over the next five years in order to meet future demand and growth. However, in order to reach that target, the government will need to invest mainly in HGV training programs and retention incentives. They’ll also need to find ways to make the profession more attractive to young people. According to data from the Office of National Statistics (ONS), less than 2% of HGV drivers are under 25. At the same time, the RHA report shows that the average age of lorry drivers is 51, and that 55% of lorry drivers are between 50 and 65. This means that most experienced HGV drivers will be retiring over the next decade while the onboarding of young recruits continues to crawl along. 

What caused the HGV driver shortage?

The shortage isn’t a new problem. In fact, it’s been bubbling under the surface for the past decade or so. Back in 2018, the UK was short of HGV drivers by about 52,000 (FTA). However, the crisis hit its true peak in 2021 when a combination of Brexit backlash and Covid restrictions saw this number skyrocket to more than 100,000. British withdrawal from the European Union resulted in the loss of some 16,000 EU drivers, which, in combination with 25,000 fewer HGV test passes due to COVID-19 disruptions, culminated in the whopping shortage (UK Parliament). 

While the situation has certainly improved and somewhat stabilised since 2021, the driver shortage and subsequent disruption to UK supply chains continue full steam ahead. The profession’s low entry rate is largely considered a reflection of the industry’s negative reputation. Long working hours, low pay, extended periods away from home, poor working conditions, and ill-equipped roadside facilities are often cited as the biggest turn-offs. While the government has introduced several measures to combat the issue, there’s still a fair bit of work to be done.

How does the shortage disrupt supply chains?

There’s no doubt we’re short on lorry drivers, but the list of problems this crisis causes is anything but short. Like all economies, the UK relies on transport and logistics to produce, store inventory, deliver, and distribute goods and services. According to recent data from the Department for Transport (DfT), road freight accounts for 81% of all domestic freight transport in the UK, while waterways account for 12% and rail just 8%. So, it’s clear to see how a shortage of lorry drivers can throw a massive spanner in the works.  

And, unfortunately, small and medium businesses bear the brunt of the HGV driver shortage. While larger companies will feel an impact, they’re better equipped to weather the storm. This is because they can pay a premium to secure transport (which most SMBs simply can’t afford). And when fewer drivers are available to deliver goods, the logistics networks that keep small and medium businesses running slow down. SMBs face late deliveries, manufacturers awaiting materials face production hold-ups, and businesses reliant on just-in-time supply chains are first on the chopping block. 

We saw the full effect of the shortage in 2021 when customers were met with empty shelves. Retailers lost out on crucial sales during peak trading periods like Christmas and the back-to-school season. Haulage companies also took a hit, having to fork out higher wages to attract and keep drivers. Not to mention, the farmers had no other choice but to leave produce rotting in fields because they couldn’t secure the transportation needed to deliver their goods. 

For small and medium businesses today, the shortage continues to cause a major supply chain bottleneck. The result is constant uncertainty: juggling late shipments, unpredictable stock levels, and rising costs. Because of this, many businesses find themselves managing their stock more reactively. The trouble with this is that it can lead to over-ordering, understocking, or missed opportunities. Unlike larger companies with dedicated logistics teams and access to all sorts of resources, SMBs need smarter systems and better planning tools to keep up.

What can you do about the HGV driver shortage? 

Let’s be honest, there’s not much you can do about the lorry driver shortage – at least not directly. But there are a number of measures you can implement to ease its impact. The key is to build a robust supply chain strategy that can withstand a few knocks. 

Shift from reactive to proactive stock management

SMBs tend to get stuck in a reactive mindset regarding stock control. Often, they only take charge and make changes in response to external factors. With small teams and over-stretched resources, it’s easy to understand why many fall into this trap. But by adjusting your mindset – and adopting the right tools – you can prevent stockouts, over-ordering, and last-minute scrambles. Inventory management tools like inFlow can help by offering real-time tracking, automated reordering, and accurate demand forecasting to give you more control over your stock. 

Diversify & localise your supply chain

Relying on a single logistics partner is risky considering the HGV driver shortage and how tight it’s making driver availability. We advise that you don’t put all your eggs in one basket. Instead, opt for a multi-delivery provider solution to maximize flexibility if things go haywire. You might also consider working with local or regional suppliers to reduce your reliance on long-haul transport. Essentially, the closer your sources are and the more diverse your transport options are, the better. 

Build a strategic buffer

In times of crisis, businesses tend to fall into one of two categories: the panic over-stocker or the ultra-lean under-stocker. While having a lean inventory model is great for minimising waste, reducing holding costs, and improving efficiency, it can cause serious problems during supply chain disruption. To counter this, we recommend holding buffer stock of essential or high-turnover items to help bridge delivery gaps and ensure supply continuity.

Streamline internal operations

To have things run as smoothly as possible, you’ll want to have all your internal operations in one place. This will help you get a clear bird’s eye view of your business and save you a lot of time by reducing manual errors. With inFlow, you can automate purchase orders, track stock movements in real time, and centralise communications with suppliers all in one system. We also have handy features like built-in barcode scanning, mobile access, and custom workflows that you can tailor to your exact needs.

Keep customers in the loop

There’s no denying that delays can be a real pain, but SMBs can ease the burden by keeping the lines of communication open. This will help maintain customer trust and maintain brand reputation even when shipments slow down. With inFlow, you can check fulfilment progress, generate invoices or packing slips instantly, and even respond directly to customer queries.

Be flexible & stay informed

This ties back to the earlier point about being proactive rather than reactive. If you can monitor trends and stay informed, it’ll help you prepare and navigate potential supply chain disruptions. We’ve got tools that can make this easier. inFlow’s reporting dashboards and real-time analytics can help you monitor stock movement, lead times, and supplier performance. The goal is to help you make faster (and more accurate) decisions. 

Wrapping up

The HGV driver shortage isn’t going away overnight, but that doesn’t mean your business has to suffer. For small and medium businesses, the key is taking control of what you can manage. Things like your inventory, operations, and customer relationships. By shifting from reactive stock management to a more proactive, data-driven approach, you’ll be better prepared to weather the unpredictable supply chain management storm.

Tools like inFlow can make all the difference. From real-time inventory tracking to smart reorder alerts and streamlined internal workflows, inFlow gives you the visibility and control you need to stay one step ahead (even when driver numbers are down, and delivery timelines are up in the air). The UK’s logistics challenges may be complex, but that doesn’t mean your business has to get stuck in traffic.

The post What the UK HGV Driver Shortage Means for Your Small Business appeared first on inFlow Inventory.

• The Corporate Sustainability Due Diligence Directive (CSDDD) is an EU law requiring companies to identify and address human rights and environmental risks in their supply chains.
• Although the directive targets large companies, small and medium-sized businesses (SMEs) will also be affected — especially those supplying to larger firms.
• SMEs may be asked to show proof of ethical sourcing, formalise policies, and adopt traceability tools to stay competitive.
• Early action and better supply chain visibility can help SMEs build trust, meet client expectations, and prepare for future regulatory requirements.

With the Corporate Sustainability Due Diligence Directive (otherwise known as the CSDDD) just around the corner, European businesses are taking a fine-tooth comb to the inner workings of their own operations, as well as those of their subsidiaries and – importantly – their suppliers. While the legislation does not directly apply to small and medium-sized businesses, the CSDDD’s supporting measures mean you’re likely to feel its impact too.

In this article, we’ll break down the CSDDD by defining exactly what it is, what it could mean for your business, and what you can do to prepare for regulatory compliance.

What is the Corporate Sustainability Due Diligence Directive?

Essentially, it’s a directive in EU law that requires companies to conduct appropriate human rights and environmental due diligence across their supply chains. But here’s what makes it unique. The CSDDD goes above and beyond any regulatory directive that’s come before because it applies to a company’s entire supply chain, which includes both its upstream and downstream activities. This will have far-reaching effects both within Europe and across the globe, as companies reshuffle their operations and realign business partnerships to ensure compliance.

What are the CSDDD requirements?

The CSDDD, formally adopted on July 25, 2024, will hold companies accountable for their impact on people and the planet. This requires businesses to take meaningful action regarding human rights and environmental protection. Not just make empty promises. Under the directive, companies must integrate responsible practices into their day-to-day operations. They need to actively look for risks in their supply chains that could harm people or the environment. From there, they need to take steps to prevent or fix any problems they find, and regularly assess whether those measures are working. They’re also expected to communicate openly about their efforts and provide support or remedies if harm has occurred.

Who needs to comply and by when?

Although the EU has already adopted the legislation, the full rollout will happen gradually. This is because EU member states first need to move the directive into national law before companies are required to comply. And each member state has until July 26, 2026, to do so. From there, the CSDDD will first apply to the largest companies:

• Companies with 5,000+ employees and a net global turnover of €1.5 billion or more must comply by the end of July 2028.
• Companies with 3,000+ employees and a net global turnover of €900 million or more must comply by the end of July 2029.
• Companies with 1,000+ employees and a net global turnover of €450 million or more must comply by the end of July 2030.

The legislation will also apply to non-EU companies doing business in the EU, provided they earn more than €450 million in annual turnover within the EU. The only difference is that employee numbers don’t count towards compliance for these companies. Here’s a breakdown of the requirements:

• Non-EU companies that generate a net turnover of more than €1.5 billion in the EU in the last financial year preceding July 26, 2028, must comply by the end of July 2028.
• Non-EU companies that generate a net turnover of more than €900 million in the EU in the last financial year preceding July 26, 2029, must comply by the end of July 2029.
• Non-EU companies that generate a net worldwide turnover of more than €450 million in the EU in the last financial year preceding July 26, 2030, must comply by the end of July 2030.

How is the CSDDD different from laws that already exist?

While several EU laws are already in place — such as those covering deforestation, conflict minerals, and battery production — the CSDDD goes a step further by not just encouraging action, but legally requiring it. It creates clear rules that companies must follow to remain compliant. For example, the CSDDD works alongside the Corporate Sustainability Reporting Directive (CSRD), which focuses on transparency through ESG reporting. Together, they create a legal framework that ensures companies not only report on issues but actually take steps to address them.

The CSDDD will also help create a more consistent, EU-wide approach to supply chain responsibility. It builds on international standards such as the UN Guiding Principles and OECD Guidelines. It supports the EU’s broader sustainability goals, including those outlined in the EU taxonomy (a set of rules that helps define which business activities are truly sustainable). By requiring companies to do their due diligence, the directive ensures that environmental and human rights considerations are central to supply chain policies across all member states.

In essence, as this directive rolls out, it’s expected to influence and expand on pre-existing national laws — like Germany’s Supply Chain Act and France’s loi de vigilance — and set the tone for new global standards of supply chain responsibility.

What does the CSDDD mean for my small or medium-sized business?

The directive mainly aims at large companies, but it will still have a clear impact on small and medium-sized businesses. Especially those that supply goods or services to larger firms.

Big companies covered by the directive will be responsible for making sure their entire supply chain follows environmental and human rights standards. As a result, SMEs will likely need to show proof of ethical sourcing, provide sustainability documentation, and introduce basic due diligence practices. This means you can expect more transparency and accountability from businesses at every level of the supply chain.

Even if not directly regulated by the CSDDD, many SMEs will still need to formalise policies on working conditions, environmental responsibility, and supplier relationships. This could lead to more administrative work, but it’s also becoming necessary for businesses wanting to retain contracts or win new ones with larger, sustainability-focused clients.

At the same time, early action can be a real advantage. SMEs that currently align with CSDDD principles can position themselves as trustworthy, future-ready partners. This opens up new opportunities and builds stronger, long-term relationships with key customers.

How can I ensure CSDDD compliance?

To support these changes, many SMEs may need to adopt tools that offer better traceability. Systems like inventory or supply chain management software can help businesses track product origins, store supplier data, and monitor risk. Essentially, they make compliance more manageable. For small and medium-sized businesses looking to stay competitive and compliant, this might feel overwhelming. That’s where tools like inFlow’s inventory management system (IMS) can help. With features like barcode scanning, inventory tracking, alerts, and reporting, businesses can strengthen traceability and take meaningful steps towards responsible supply chain practices.

Traceability of goods

The CSDDD calls for clear visibility across the supply chain. This is where barcodes become incredibly powerful. With inFlow’s barcode scanning and inventory tracking features, businesses can monitor the movement of raw materials, components, and finished goods from origin to delivery. This level of traceability helps companies identify supply chain risks and ensure they handle stock responsibly. For SMEs, it can reduce operational risk and build trust with larger partners that must meet CSDDD requirements.

Monitoring and alerts

Being proactive is key to compliance. With inFlow’s alert features, businesses can track important stock changes and disruptions in real time. This helps teams respond quickly to issues — adjusting procurement plans or reviewing inventory levels —  so potential supply chain problems don’t go unnoticed.

Inventory reporting

CSDDD readiness also means having clear, accessible data. inFlow’s reporting tools allow businesses to track key inventory metrics and generate structured reports. These reports can support transparency efforts and simplify internal reviews, giving SMEs a clearer view of how goods move through their operations.

Conclusion

The CSDDD marks a major shift in how companies should operate. It brings sustainability and human rights from the periphery to the core of business decision-making. And while it’s mainly aimed at larger organizations, its ripple effects will undoubtedly be felt by SMEs, especially those working within global supply chains. Whether you’re supplying materials, manufacturing goods, or simply managing stock, expectations around traceability, accountability, and transparency will only grow.

The good news? You don’t have to tackle it all at once – or alone. Taking early steps to organize your processes, strengthen supply chain visibility, and adopt the right tools positions you to meet new requirements and stand out as a responsible, forward-thinking partner. Solutions like inFlow can help make that transition smoother by giving you better control over what’s coming in, what’s going out, and where it’s all going. That way, you can focus on what really matters: growing your business while doing the right thing.

The post The CSDDD Explained: What It Means for SMEs appeared first on inFlow Inventory.

• The make-to-order (MTO) manufacturing process involves producing products only once an order is placed.
• In contrast, make-to-stock (MTS) production is done in bulk based on demand forecasts to ensure availability.
• MTO allows customization, minimizes waste, and reduces storage needs, but it also has longer lead times, higher costs, and complex order management.
• MTS leads to lower production costs, bulk purchasing advantages, and faster fulfillment, but it requires accurate forecasting to avoid excess inventory and storage constraints.
• Make-to-order is ideal for high-cost, customizable, or perishable products, whereas MTS suits mass-market items with steady demand.
• Success with MTO relies on understanding customer needs and closely monitoring production quality.
• Make-to-stock businesses rely on accurate demand forecasting, leveraging economies of scale.
• Regardless of your manufacturing process, every business can benefit from manufacturing software to better track its workflow. 

If you work in manufacturing or assembly, choosing the proper manufacturing process can be the difference between profitability and operating at a loss. This is because not every manufacturing process is suitable for every product. For example, a business that sells custom furniture will undoubtedly have a different process than a company that manufactures cell phones. For this reason, there are several different manufacturing processes, each with its own unique use case.

Today, we’ll focus on two distinct manufacturing processes: make-to-stock (MTS) and make-to-order (MTO). We’ll discuss the differences between the two, offer advice on which might be suitable for your products, and review some best practices to help you get started. 

What is make-to-order (MTO)?

For the most part, make-to-order is precisely what it sounds like. Instead of producing in bulk, businesses manufacture their orders as they come in. This approach allows companies to tailor their products to their customer needs. It also dramatically reduces the risk of overproduction. 

Benefits of make-to-order 

As with any business model, make-to-order has both benefits and downsides. Here are some of the benefits of make-to-order:

• Reduced Storage Demands—make-to-order manufacturing only occurs when you receive an order, so you don’t need to store as many raw materials. Additionally, since every product you produce has already been sold, there is little need to store finished goods. 
• Less Waste—demand-driven production minimizes the risk of your products becoming obsolete, lost, or even stolen. 
• Customization & Personalization—low-volume production runs allow you to customize your products according to your customers’ needs. 
• Adaptability—make-to-order will make your business much more agile. You’ll be able to pivot more quickly to meet shifting customer demands. 

Drawbacks of make-to-order

As always, some downsides come along with make-to-order production. Here are some of the biggest ones to consider:

• Longer Lead Times—producing products only when an order comes in means it will take longer for your customers to receive the product they ordered. In today’s world of Amazon’s same-day delivery, this could prove problematic.
• Higher Production Costs—small batch production can lead to higher per-unit costs compared to mass production.
• Complex Order Management—as we mentioned earlier, make-to-order products tend to be more customizable, which makes managing these orders much more difficult.
• Limited Scalability—small production runs and highly personalized products mean scalability will be near impossible without a substantial investment.

What products are best for MTO?

As a good rule of thumb, expensive products designed to be customizable are suitable for make-to-order manufacturing. Examples include custom computers or furniture with various potential configurations. 

However, many other products would benefit from an MTO production strategy—for example, perishable items such as food and pharmaceuticals. Take a chocolate manufacturer, for instance. The freshness of their products is paramount, so mass production without orders to fill may not be the best idea since the quality of their chocolate will diminish over time. 

MTO best practices

Knowing what MTO is and how to implement it are two different things. Here’s some best practices to help you bridge that gap. 

Understand your customer’s needs

As we said above, make-to-order tends to favor expensive, customizable products. Understanding what your customers need and how to provide that with your product is key. For instance, let’s look at a company that provides components for data centers. While all data centers generally function similarly, the racks, cooling solutions, and drives required may differ according to needs.

Keep a close watch on your manufacturing process 

Quality products are essential, and that goes doubly so for custom ones. Customers who pay a premium to get exactly what they’re looking for demand a certain level of quality. This is why it’s vital to monitor your manufacturing process closely. The best way to do this is to use manufacturing software. 

It’ll track things as they move through the manufacturing process, ensuring quality and timely delivery. Systems with barcodes are another excellent boon and help track every individual component throughout the manufacturing process.

Consider adopting lean manufacturing

We’ve discussed lean manufacturing before, so we won’t go too in-depth. To summarize, lean manufacturing is a process that aims to streamline and optimize every stage of manufacturing. It can help reduce waste, defects, and operating costs if done correctly.

What is make-to-stock (MTS)?

When someone hears “manufacturing, ” make-to-stock (MTS) is probably the first thing that comes to mind. Rather than manufacturing products as orders come in, make-to-stock manufacturers produce large batches all at once and store them for future demand. This production strategy relies heavily on demand forecasting to determine optimal stock levels. 

Benefits of make-to-stock

The make-to-stock production strategy has been widely adopted in the manufacturing industry because of its vast array of benefits. Some of these benefits include:

• Shorter Lead Times—producing products en masse means you’ll have plenty of inventory ready when an order comes in, expediting your order fulfillment process.
• Lower Production Costs—mass production runs lower production costs through economies of scale. The result is a lower cost per unit. 
• Bulk Purchasing Advantages—when you manufacture large quantities of products simultaneously, you’ll need a lot more raw materials, and businesses can negotiate better prices with suppliers on high-volume purchases. 
• Increased Sales Volume—the ability to produce more inventory means you can sell at a much higher volume.

Drawbacks of make-to-stock

The make-to-stock production strategy isn’t perfect and comes with several downsides. Some of those include:

• Storage Space Constraints—if you use the MTS production strategy, you’ll need large amounts of raw materials ready at a moment’s notice. Not to mention, if you’re creating products in bulk, you’ll need to store your finished goods until they are sold. 
• More Waste—with high levels of stock to manage, there is a greater chance that things may become obsolete, damaged, lost, or stolen. Even a small mistake in forecasts may result in a ton of excess inventory. 
• Limited Customization—make-to-stock relies on manufacturing products beforehand. This production strategy leaves little room for customization, so making changes based on customer preferences will be difficult. 
• Slow Response to Market Changes—if your business operates with an MTO production strategy, you might find it hard to adjust production or pricing if there is a sudden shift in customer sentiment.

What products are best for MTS?

Because of its batch production methodology, make-to-stock is suitable for products with a consistent demand. For example, consumer electronics, small toys, and everyday household items. 

For instance, a business that manufactures silicon kitchen utensils can confidently mass-produce spatulas since every customer wants the same thing. Something simple that serves a specific function.

Best practices for make-to-stock

While MTO may be the most “traditional” manufacturing process, implementing it efficiently isn’t easy. Here are some best practices to help you get started. 

Invest in accurate forecasting  

Accurate forecasting is crucial for any make-to-stock business. It ensures that you maximize profits, all while reducing risk and avoiding over or understocking. If there’s one takeaway from this segment, it should be this one. 

Take advantage of economies of scale wherever possible

Economies of scale refer to the fact that, typically, manufacturing larger batches drives down the per-unit price. This is a massive benefit to manufacturers who can take advantage of it. It reduces operating costs and also results in a higher per-sale profit. However, doing so carries some risks and depends on accurate forecasting.

Track your manufacturing process

Whether your manufacturing process is make-to-order, make-to-stock, or assemble-to-order, tracking your production process is key. This is why all manufacturers can benefit from manufacturing software. It’ll help keep close tabs on every stage of the process.

Wrapping up

Choosing between make-to-order, make-to-stock, or any other manufacturing process depends on various factors, including product type, demand, and storage capabilities. While MTO can reduce carrying costs and waste, it requires incredibly efficient order processing and production scheduling. 

On the other hand, MTS ensures your business always has products ready to meet demand, but your overhead costs will suffer. You also run the risk of overproduction and being left with deadstock. 

It’s essential to weigh all your options before deciding which production strategy suits you.

The post The Impact of Make-To-Stock vs. Make-To-Order in Manufacturing appeared first on inFlow Inventory.

• A wholesale license allows businesses to purchase products in bulk without paying sales tax.
• It is not always required to have a wholesale license. Some jurisdictions only require wholesalers to have a reseller’s permit when selling to businesses (B2B). 
• While not always a requirement, obtaining a wholesale license fosters trust and adds legitimacy to your business.
• A seller’s permit is also required if your wholesale business plans to sell directly to consumers (B2C).
• To apply for a wholesale license, you’ll need to submit a variety of information about your business. Generally speaking, the process is simple.
• Legislation surrounding wholesale licenses differs based on your location. Be sure to check your local legislation beforehand. 

Not all businesses that sell physical products fall into the same category. For example, you’ve got retailers, wholesalers, distributors, and other business models like dropshipping. But in most cases, regardless of your business model, you’ll need a license of some sort before getting started. Otherwise, you may find yourself in legal trouble. 

Today, we’ll focus on wholesale in particular. We’ll go over how to get a wholesale license, why you need one, and what benefits it brings. So, if you’re thinking about how to sell wholesale, this article is a must-read. 

What is a wholesale license?

A wholesale license is a legal document that allows individuals and/or businesses to buy products in bulk directly from manufacturers or distributors without paying sales tax. In some areas, a wholesale license is required if you intend to sell goods to other businesses rather than consumers. However, wholesalers can operate in many places using a reseller’s permit or sales tax exemption certificate.   

Why do you need a wholesale license? 

While it’s true that you don’t always need a wholesale license, these situations are typically the exception rather than the norm. That’s why knowing how to get a wholesale license is so important. 

Even if it’s not always a requirement, having a wholesale license has some great benefits. Most notably, US businesses with a wholesale license are exempt from sales tax at the time of purchase. This is because the consumer will ultimately pay the sales tax when making the final purchase through the retailer. 

A less tangible benefit of having a wholesale license is that it’s a sign of trust. Sometimes, just having a business license isn’t enough. Manufacturers are more likely to trust someone with a wholesale license and may also be more open to negotiations with wholesalers who hold one. Ultimately, it adds an extra level of legitimacy to your business. 

How is it different from a reselling permit?

We briefly mentioned reseller’s permits above. These allow retailers to purchase goods tax-free from wholesalers. Although this sounds similar, the key difference is their intent with those products. Retailers specifically aim to sell to consumers, while wholesalers typically sell to other businesses.  

Although the two serve similar purposes, they’re split into two different documents. However, depending on your location, these two permits might be bundled together. Always double-check your local rules and regulations to determine what’s required in your area. 

What about seller’s permits?

Another important permit to mention is a seller’s permit. This permit allows businesses to collect sales tax legally when selling their products. It’s an essential part of any business that sells products directly to the consumer (B2C).

Wholesalers who are only doing business with other businesses (B2B) don’t need to worry about a seller’s permit since they won’t be collecting or paying sales tax. However, if you plan on selling both B2B and B2C, you will need a wholesale license and a seller’s permit.  

How to apply for a wholesale license

Now that you know why you need a wholesale license, you need to know how to obtain one. Some of these steps will differ from place to place, but the basic outline remains the same. Still, it’s best to look into your local legislation beforehand. Organizations exist specifically to help businesses obtain their licenses. 

Step 1: Register your business 

First things first, you’ll need to make your business legitimate. This means you’ll need to register your business, obtain a business registration, and choose a legal classification for that business. In this instance, “legal classification” means sole proprietorship, limited liability company (LLC), and so on. 

Step 2: Obtain an employer identification number (EIN) 

Even if you’re a one-person show, you’ll need an EIN. This also functions as your business’ tax number and is what you’ll use to open bank accounts and file taxes. To apply for an EIN, you’ll need to go to the IRS website and supply a variety of information. This includes your social security number, business address, and business name. 

Generally speaking, this process is relatively easy and not time-consuming. 

Step 3: Obtain a seller’s permit (if applicable)

Remember the seller’s permit we mentioned above? Well, if you plan to sell wholesale and directly to consumers, this would be the time to get a seller’s permit. The specific requirements to obtain a seller’s permit will differ based on location, so make sure to check ahead of time. 

Step 4: Gather the relevant information and apply

Before applying, you’ll need to put some information together. Most of it should be easily obtainable. A non-exhaustive list is as follows: 

• Business name
• Owner’s name
• Taxpayer ID
• Business address
• Contact information
• Nature of the business
• Seller’s permit (if applicable)
• General business license
• Employer identification number (EIN)

From here, you’ll submit an application to your local jurisdiction. We’ve said it a few times, but local legislation tends to differ based on where your business operates.

Additionally, applying for a wholesale license usually involves fees. These amounts can vary wildly depending on where you apply. For example, Alaska requires a bi-annual fee of $2,00 to maintain the license. On the other hand, Texas doesn’t require a wholesale license at all. 

Different industries may have different requirements

It’s also important to keep in mind that different industries may have different regulations. For example, a wholesaler carrying bulk hazardous chemicals will likely be subject to stricter regulations and require more certifications and licenses than a fashion company.

Knowing how to get a wholesale license is just the first step. You’ll also need to know the legislation surrounding the rest of your business and where to go next. 

Software that will help you succeed as a wholesaler

Whether it’s a wholesale license, reseller’s permit, or seller’s permit, obtaining the proper legal documentation is key to ensuring compliance with local regulations. This will keep your operation running smoothly from day one.

However, having the proper legal documentation is just the beginning of running a thriving wholesale business. How you manage your day-to-day operations is what truly determines your success. 

That’s where inFlow’s wholesale software comes in. Our all-in-one inventory and order management software helps wholesalers track stock levels, process bulk orders, and manage sales across multiple sales channels with flexible pricing schemes. That means you can easily sell both B2B and B2C seamlessly. With inFlow, you can also:

• Generate and track purchase and sales orders.
• Create, print, and scan barcodes with our built-in barcoding system.
• Automatically apply special tax rates for customers with exemptions.
• Integrate with ecommerce and accounting tools such as Faire, Shopify, QuickBooks Online, and Xero. 
• Create a private inFlow Showroom sales portal to display selected products and pricing for clients.

With inFlow, you’ll be ready to take your wholesale business to the next level. So what are you waiting for? See for yourself and give inFlow a try today!

The post How to Obtain a Wholesale License: A Simple Guide appeared first on inFlow Inventory.

• The core difference between wholesale vs retail is wholesale involves selling products in bulk to other businesses (B2B), while retail focuses on selling individual products to end consumers (B2C).
• When you sell products wholesale, you face less risk and lower overhead costs, reducing carrying costs and shipping expenses. In contrast, retailers face higher overhead costs due to the need for storefronts and a larger workforce.
• Retailers enjoy higher per-unit profit margins than wholesalers due to the added risk they take on.
• Some things to consider when choosing between wholesale and retail are product type, profit margins, overhead costs, customer relationships, marketing, and inventory management.
• Wholesalers rely on B2B marketing through trade shows and networking, while retailers focus on advertising and sales promotions.
• Some companies can successfully operate with a hybrid approach, acting as both wholesalers and retailers.

Wholesale and retail are two fundamental pillars of the supply chain, and each comes with its own challenges and benefits. While these business models generally have similar foundations, getting physical goods into the hands of the consumer, they differ significantly. Whether you’re an aspiring entrepreneur or a seasoned business owner, understanding the difference between wholesale and retail can significantly impact your business decisions.

In this article, we’ll explore the key differences between wholesale vs retail, the challenges and benefits each offers, and how businesses can decide which model aligns best with their goals. 

What is wholesale? 

As a consumer, you may have wondered where retail chains like Walmart and Target get all their products. After all, they offer a wide variety of products, ranging from food items to pharmaceutical medicine. They very clearly don’t manufacture everything in-house. 

That’s where wholesalers come in. Wholesalers sell products to other businesses in bulk at a discounted rate. Those businesses then sell those products directly to individual customers at a markup. Wholesalers typically charge less per item than retailers because they sell products in large shipments, which reduces carrying costs and shipping fees.

In general, selling wholesale carries less risk. Selling things in bulk makes moving products easier and means storing them for less time. Wholesalers also don’t have a physical storefront, further lowering overhead costs. This also reduces the need for staffing, which in turn reduces labor costs. 

On the other hand, selling in bulk to retailers can be difficult. A business-to-business (B2B) model requires building relationships, which can take a lot of time. And once you have those relationships, you’ll need to maintain them.  

What is retail?

We mentioned Walmart and Costco above because they are quintessential examples of retailers or a business-to-customer (B2C) model. Retailers purchase products in bulk from wholesalers, mark them up, and sell them to consumers. They play a significant role in the global supply chain because they are the ones who get the products into the hands of the consumer.

Selling retail vs wholesale can be challenging because having a product and being able to sell it are two very different things. Marketing your products to customers ultimately decides whether or not they sell, which can sometimes be expensive. 

Retail also involves more risk because you sell products individually. This means you hold products longer, adding storage costs and opportunity costs. Displaying and selling one product means that they can’t sell another at the same time. 

On average, retail has higher overhead costs. You need a storefront and somewhere to store the products that are not currently on the shelves. You’ll also need staff to handle day-to-day operations and more robust payment processing for things like returns. 

Retail vs wholesale: which is right for you? 

We can’t tell you specifically which model is best for your business. That will depend on a lot of different factors. However, we can give you some things to consider when deciding between wholesale vs retail.

• Product type—A good rule of thumb is that wholesaling works well with essential items, like food or clothing. Consumables, in particular, are great since you know they must be replenished, which means repeat business. However, consumables also often have expiration dates and lot/batch numbers to worry about. 
• Profit margins—Wholesalers will get a lower per-unit profit margin than retailers, but they typically get a higher sales volume. While retailers enjoy higher per-unit profit margins, they also have higher overhead costs. 
• Overhead costs—These expenses are arguably the most important difference between wholesale and retail. Typically retailers will have to worry about more overhead costs than wholesalers, which will eat into their gross profit margins. 
• Customer relationships—While wholesalers don’t deal with the end consumer, they still manage customer relationships. In this case, their customers are the retailers they supply with products. The relationships may be different, but both require work to maintain.
• Marketing and Branding—Depending on whether you sell wholesale or retail, attracting people or businesses to your products will require a different approach. Wholesalers tend to rely on B2B marketing through trade shows and networking events. Retailers, on the other hand, focus on advertising, social media, and sales promotions. 
• Inventory management—Both retailers and wholesalers will need to manage inventory, but the challenges differ. For example, wholesalers will likely need a larger warehouse space, potentially multiple locations, to store large quantities of products. Retailers might not have to store as many products, but they’ll likely have a much more extensive selection of products to manage. 

Wholesale vs retail: why not do both?

Of course, many companies act as both wholesalers and retailers. Take Nike, for example. While it has its own stores, it also sells its products in bulk to other retailers. While the scale on which they do this may be unattainable for most small businesses, it doesn’t mean it’s entirely out of reach.

Many retailers have found success selling their products wholesale online while still offering their goods to the individual consumer. This hybrid business model provides the benefits of selling wholesale and retail. You’ll be able to have the peace of mind that large wholesaler shipments provide but also benefit from the high per-product profit margins that retailers enjoy. However, you’ll also need to manage the challenges of both business models. 

For example, you’ll need to account for different pricing schemes for your products based on which customer you’re selling them to. You’ll also need to track your inventory across multiple sales channels to ensure you’re not overselling. Thankfully, our software inFlow can do all that and a whole lot more, such as barcodes and real-time inventory tracking.

Ultimately, when deciding between wholesale vs retail, you’ll need to consider the products you carry, what problems they solve, and your business goals.

The post How to Choose Between Wholesale vs Retail for Your Growing Business appeared first on inFlow Inventory.

• 3PL vs 4PL: refer to 3rd and 4th party logistics, respectively. 
• These logistical models involve handing off logistic operations (packaging, shipping, storage, etc) to external parties. 
• 4PL is the next “step up” from 3PL and involves handing over almost the entirety of supply chain control. 
• 4PL providers act more as coordinators and usually don’t own any of their equipment. 
• As a rule of thumb, 3PL is best when experiencing sudden rapid growth, and 4PL is best when approaching enterprise level. 
• While 4PL is more expensive than 3PL and involves giving up a lot of control, the service is much more comprehensive. 
• Sometimes, it’s better to keep things in-house, and business software offers a solution to achieve this. 

These days, it’s rare for businesses to operate entirely independently. Even retailers that operate primarily online need to coordinate with payment processing companies, shipping carriers, suppliers, and so on. These vital tasks are expensive, time-consuming, and require specialized equipment, training, and personnel. 

This is why so many businesses outsource these tasks and instead focus on their core operations. A manufacturer, for example, may outsource shipping and logistics to focus on its manufacturing process. That’s part of why we’re seeing a growing demand for 3PL logistics (third-party logistics) and 4PL logistics (fourth-party logistics) companies. 

Today, we’ll be discussing both 3PLs and 4PLs. As a business owner, how do you decide between 3PL vs 4PL? What are the benefits of each, and what are the major differences between the two?  

What is 3PL? 

We’ve talked about 3PLs in depth here before, but here’s a quick refresher. In business, “logistics” refers to how a company handles and allocates resources. Translated, it relates to how they package, ship, source, and store their products. A third-party logistics provider aims to take care of these things for a business. In short, 3PL providers handle order fulfillment. 

For example, an ecommerce shop may use a 3PL company to store their products in warehouses. When they receive an order online, the 3PL is in charge of picking, packing, and shipping the product to the customer on behalf of the ecommerce shop. 

What about 4PL? 

Unsurprisingly, there are quite a few similarities between 4PL vs 3PL. However, they differ in two significant areas: scope and scale. You can think of 4PLs as being one step up from 3PL. Instead of handling just a few things, a 4PL provider coordinates practically the entire supply chain. 

For example, a 3PL may only handle warehousing, picking, packing, and shipping orders. On the other hand, a 4PL company would do that, as well as handle supplier relationships, last-mile logistics, and coordinate between various separate 3PL companies.  

Another important distinction is that 4PL providers generally don’t own their own assets. This differs from 3PL providers, who usually own everything (vehicles, forklifts, etc.). 4PLs act more as coordinators across the supply chain. 

Why use 4PL? Or 3PL? 

Different parts of business operations require different skill sets, which means you’ll need to hire new staff. For example, a mechanical engineer would likely make a terrible inventory manager. They’re good at designing and building things, not managing a busy warehouse.

Not only will you need to hire new staff, but you’ll also need to consider warehousing space and assets such as forklifts, pallet movers, and wrapping machines. For many small businesses, it’s simply easier to use a 3PL or 4PL that already has the infrastructure to handle these tasks.

Generally, small to medium-sized businesses can manage fine using a single 3PL. On the other hand, more extensive operations may consider 4PL logistics. This is especially true if you have to coordinate between multiple 3PL companies for your fulfillment. Fostering these relationships can sometimes be difficult, especially as your business grows. A 4PL logistics company will manage these relationships on your behalf, eliminating headaches down the road. 

What are the benefits of 4PL logistics? 

The biggest advantage of using 4PL vs 3PL is that it offers a more comprehensive end-to-end solution. In general, there are quite a few advantages to consolidating as many business operations into a single place as possible. 

This is a large part of why integrations in business software are so important. After all, manually migrating data between platforms is a massive waste of time. Because 4PL companies handle so much of the supply chain, they have a much easier time comprehending information and coordinating efforts based on that information. 

Another often overlooked benefit of working with a 4PL provider is that they provide you with a network of suppliers. Because they work with such a broad range of vendors, they can help you find better prices.

The bottom line is that it’s often easier for businesses to outsource some of their work, especially at the beginning of their lifespan. Initially, you should focus on building your business at its core and let the professionals handle the logistics. Once you start to see some success, consider investing the time and money into bringing more of your operation in-house, ultimately improving your gross profit margin.  

Downsides of 4PL vs 3PL

Of course, despite all the benefits a 4PL offers, it has downsides. The biggest downside of 4PL vs 3PL is cost. 

While using a 4PL logistics provider may be cheaper than handling everything in-house, it’s still more expensive than 3PL services. It’s often worth the price, but it can be prohibitive nonetheless. 

Another downside is the lack of control. There’s no two ways about it: using a 4PL logistics provider means giving up a lot of control. They control where your product goes, whose hands it goes through, and how it ends up at its destination. That’s a lot of control to give up, and it certainly takes a lot of faith to surrender that control to an outsider. 

This also means that switching 4PL providers can be daunting. Ideally, you’ll never need to switch, but sometimes, things happen. It’s best to take the time to find a quality, reliable provider. 

When should you start using 3PL vs 4PL?

As a rule of thumb, it’s a good idea to start looking into a 3PL when you experience rapid growth and can no longer manage fulfillment alone. This could be due to a higher volume of orders or a lack of necessary storage space; often, it’s both. Handing off fulfillment to someone else allows you to focus on maintaining the growth you’re experiencing.  

4PL, on the other hand, is a bit more tricky. Their job is effectively managing the entire supply chain, and not every business needs that. A good rule of thumb here is to look into 4PL when approaching the enterprise level. Doing so beforehand makes the cost much more relevant, and often, it’s better to have a closer connection to the supply chain. 

For many businesses, the downsides of 3PLs and 4PLs are too significant to overcome, so they try to keep everything in-house. Doing everything yourself may seem daunting—and it often is—but sometimes, it’s worth the trouble. 

That’s where software solutions for different business areas, such as warehousing, customer relationship management, and shipping, come into play. Tools like inFlow can help you manage inventory, invoicing, and shipping in one place. With inFlow, you can manage your inventory and order fulfillment in-house for longer without resorting to a 3PL or 4PL.  

Are there any other options?

Of course! There’s other “tiers”, such as 1PL, 2PL, and 5PL. First-party logistics, though, actually refers to handling everything in-house. There are no other parties involved, hence “first-party.”

Second-party logistics refers to a business that transports goods from one location to another. This differs from 3PL logistics, which handles packaging, warehousing, and shipping. 

It’s perfectly possible to take different pieces of logistical models and meld them together. For example, you can use 2PL and hire a 3PL to manage them. It doesn’t offer as robust a network or solution, but it gets you most of the way there. And it’s usually much cheaper. 

When deciding between 3PL vs 4PL, it’s important not to rush into things. Ideally, you’ll work with them for quite some time, so make sure you find a reliable partner. 

The post How to Decide Between 3PL vs 4PL For Your Growing Business appeared first on inFlow Inventory.