How that's Plan "B" for your China Supply Chain?
Part 2 - Coronavirus (COVID-19)
Volume 3 | Number 2 | February 2020
I started with, "Let's start with the realization that plan "A" to relocate operations to China had a major flaw. If you moved manufacturing to China, India or any other low-cost producing country with the intention of importing goods back to North America or Europe (half a world away), then your plan was unsound!" The primary focus was on inventory velocity, total cost of ownership and the ethics of investing. Now we are in the middle of a S^&% storm of COVID-19 with world-wide impact to supply chains and the global economy.
Currently, many air carriers have stopped flying to China. Manufacturing and services in the impacted areas are closed or only starting to operate again, and many ports are still closed. Imagine your business not being able to receive product from China for months. How will this impact your customer's loyalty, profits and corporate valuations?
Apple, GM and many others announced significant impacts to their supply chains that will delay manufacturing with the potential of shortages on retail selves.
I don't want this to be about how to contain, and the triage of the current situation. All enterprises have created teams to minimize the impact of COVID-19 related supply disruptions. We are great at crisis management.
Let's become great at preventing the inferior solution. So that being said... how is the Plan "B" for your China supply chain coming? Like many, you have been ignoring the warning signals: now there is a "burning" platform. Are you ready to take action? Use this event as your "All Hands on Deck", "Battle Cry", or Winston Churchill moment.What lessons can we learn?
Don't ignore the warning signs.
Focus on long-term and not quarterly profits.
Avoid group think. Just because other organizations are "doing it" does not mean it's a good idea. As the guardian, of an enterprise there is a requirement to think beyond the current frame of focus.
We need to think regionally.
Focus on inventory velocity, part and process quality, and become a zealot for total cost of ownership.
Software providers have done an excellent job of "selling" integrated supply chain solutions. However, how integrated can your enterprise be with 90 to 120 days of total pipe line inventory?
Manufacture products regionally for regional customers.
The stewardship of low cost country sourcing.
Imagine customer loyalty when your enterprise keeps products and services flowing when others can't?
We are in the early stages of this new global threat. I hope and pray for a quick recovery. Those of you who know me well, know I'm an optimist. However, if we don't take action now to protect our enterprises from the next threat, it could just be the BIG one.
I would hate to have to say I told you so, again. What is your Plan "B"? Don't be afraid to ask for help!
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