{"id":8412,"date":"2021-07-08T16:33:39","date_gmt":"2021-07-08T08:33:39","guid":{"rendered":"https:\/\/newsbites.hktdc.com\/?p=8412"},"modified":"2023-03-23T11:03:05","modified_gmt":"2023-03-23T03:03:05","slug":"make-your-supply-chain-more-resilient-during-covid-19","status":"publish","type":"post","link":"https:\/\/newsbites.hktdc.com\/markets\/make-your-supply-chain-more-resilient-during-covid-19\/","title":{"rendered":"3 Ways To Make Your Supply Chain More Resilient During Covid-19"},"content":{"rendered":"\t\t
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Since the beginning of the COVID-19 period, there was plenty of talk about whether China\u2019s title as \u201cthe world\u2019s factory\u201d was under threat. However, with the epicenter of COVID-19 shifting to Europe, and the situation worsening in America and the Middle East, many supply chains the world over have been thrown into a tailspin.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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The Coronavirus is the biggest global health emergency since the 1918 Influenza pandemic. However, it is by no means a \u201cblack swan\u201d event. SARS in 2003 and the 2011 Fukushima disaster also tested the resilience of supply chains, albeit not to the extent that COVID-19 has.<\/p>

Going forward, importers across industries, the majority of whom work with Chinese suppliers in some capacity, will have to adopt measures to manage their risk against these uncontrollable, yet inevitable global shocks. Here are three ways you can lower your risk profile in troubling times such as this.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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1. Consider near-sourcing<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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Near sourcing is when you shorten the distance between your production and\/or assembly factories and your consumers. This can be critical when travel is disrupted to the extent that it has been during the Covid-19 crisis. Your products won\u2019t have to travel through as many countries, so issues like the grounding of passenger planes, which has greatly diminished carrying capacities, won\u2019t hit your company as hard.<\/p>

That is not to say that you should move all production and procurement away from China, but it is worth diversifying your procurement destinations, thereby diversifying your risk. In fact, many importers with a North American consumer base have already moved some of their sourcing closer to their consumers. This is largely in response to the ongoing US-Sino trade war as well as the ever-increasing cost of labor in China. Covid-19 has simply made the case for near-sourcing even more compelling.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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2. Hedge your bets with multiple suppliers or sub-suppliers<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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Don\u2019t buy one key component from just one Chinese supplier even if that is the most cost-effective option in normal circumstances. Much like near-sourcing, this allows you to spread your risk, meaning that a shutdown in one province won\u2019t paralyze your supply chain.<\/p>

The exception to this is if your supplier has different sub-suppliers. Let\u2019s say that a factory in Ningbo is shut down due to a government-mandated lockdown. If your supplier has a sub-supplier in Shenzhen, you can, at the very least, partially fulfill demand on an interim basis.<\/p>

If you decide to add another vendor to your preferred supplier list, you will have to ensure they can maintain quality and comply with social and environmental standards and regulations. In such situations, especially if time is of the essence, many importers employ the services of a third-party inspection company (TPI). A TPI with a global reach can implement standardized product testing, auditing, and inspection protocols in each of your sourcing regions, allowing you to maintain a robust Quality Management System (QMS).<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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3. Create buffer stock<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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It isn\u2019t easy to predict the spread of the virus and when (or to what extent) countries will re-open their borders. In such volatile circumstances, it is crucial that you stockpile your products as much as possible before transportation networks and crucial supply routes are blocked once again.<\/p>

Having said that, in this mad rush to ramp up production your brand needs to consider the following:<\/p>