COVID-19 could of been the black swan event that left stock markets crashing, retail shelves empty, economies crumbling but the Chinese manufacturing kept on operating and found ways to keep world supply chains intact. Today, goods are still being produced but we do have other supply chain issues that involve raw materials and logistics. But this could of been a disaster.
Prior to Covid-19 event, there was the trade war between USA and China that caused companies to second guess their supply chain in China. During this period, companies were thinking, how do I reduce my risk in my supply chain if all my products are produced in China. There was many articles from other news outlets about how vulnerable China was. We actually had a few clients who was asking if we had partners in Vietnam, Thailand, and other southeast Asia countries. We did offer assistance on possible suppliers, we understood the issue and as responsible partners, we offered solutions. Of course, during the trade war, people were worried about the unknown. What was companies going to do, was manufacturing going to close down doors, etc. It was a scary, confusing and a lot of guessing.
Then the Covid-19 situation in happened in later 2019 and escalated in 2020. What we learned during this pandemic, China was able to keep running with minimal impact to it's manufacturing supply chain. Many factories modified themselves to produce life saving medical items. Exports were booming due to China's ability to be flexible in the manufacturing world. Not to take away other countries abilities, everyone pitched in but the world was looking at China because of it's experiences in manufacturing. If China had falter, during this period, the outcome would of been different for many countries.
Today, after 1 year since Covid-19 started, many manufacturing countries are still fighting against the Covid-19 due to a combination of low vaccine availability or the surging Delta variant (Covid-19 mutation).
The recent July news (2021) has been covering how Covid-19 is disrupting other manufacturing countries. Which continues to put pressure on the supply chain, as economies are trying to open again.
Here are some latest news we been reading.
During the initial Covid-19 time period, questions was based on how vulnerable are you in China because China’s dominant role as the “world’s factory” means that any major disruption puts global supply chains at risk. But today the companies who did not move out of China are thriving but other countries are not so lucky. Which leads to a story, I want to share because your probably wondering, how does any of the information you wrote above assist with the readers wanting to know "Managing your sock suppliers and what to do for the next disaster?". So let's get on with it.
The story "Old client left, Old client come back"
To answer the question, I want to share a story on how choosing the right supplier and working together can achieve greater results. In this event, we don't want to laugh at other countries mis-fortunes but we want to share a story how working together is the best way to minimize impact to your supply chain. This is the tip in this article. Sounds simple right? It is because my story will show how something so simple but yet sometimes people forget, can make a world of a difference. I am sure other manufacturers/suppliers have similar stories.
We had a client who has been working with us for many years. During the USA/China tariff event, this client was required to look at distributing some of their products to non-china manufacturing. It made sense, they were worried what may happen in the future and wanted to look at their options. However this client took the approach of transparency.
The client could of just dropped their product line with us and not tell us anything. But this client communicated what their plans was, how they were going to do it and assured us we will still produce X amount at with us. Business is business. We thanked this client for being upfront with us. While we weren't happy losing any business, but we thankful for the respect and transparency in this direction.
About 1 month ago, this client contacted us for an emergency order for products they moved. Their supplier in Vietnam was being forced to close by the local government due Covid-19 delta variant. Our schedules was full for this upcoming holiday, but because of the transparency from the previous discussion. We adjusted our schedules, made some calls to our raw material suppliers and we were able to successful produce the order and ship out on time. Everything was perfect for the client, they avoided a disaster in their product planning. This client was at risk of being charged a large sum of money for not fulfilling an order to their clients and anybody who works in this industry, knows the chargeback could of been huge.
The moral of the story is, this client still kept a good relationship with us and we still kept a good relationship with them. We understand after the issues are resolved in Vietnam, the client can choose to go back to Vietnam. We really do not know what will happen afterwards but as a responsible supplier, we didn't turn our client down when they needed help. We understand an event like this, we should do our best to assist everyone, especially when they were transparent with us.
So what's the conclusion? As the supply chains get shaken up due to political events or a new black swan event , the one simple thing you can do besides all the strategic planning is talk to your supplier. Be transparent what your doing, stress how important your existing suppliers are and keep your communication open. Your supplier, manufacture, agent in China, Vietnam, India or any where else in the world will respect you for being transparent. It's kind of funny, I have heard about stories, where clients talk about how un-transparent their suppliers, agents or manufactures are. So as the saying goes, "treat others, how you want to be treated yourself"
This simple action, may save your project from the next major disaster. In the last 2 years, I have heard many stories about clients dropping manufacturing just because of "cost savings in another country or spreading out their risks to multiple countries with no transparency to the supplier who has been with you through the good and bad times. So remember, communication and managing expectations with your supplier is the key to solving many potential future issues.
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