The COVID-19 pandemic has thrown a wrench into many supply chains around the world. It first disrupted businesses with manufacturing hearts in the Wuhan region of China, but today this is a global problem and many eCommerce businesses are scrambling to replenish dwindling stock.
To help you out, we did a little research on the state of manufacturing today, and where you can start to look to diversify your supply chains moving forward.
No country is immune to outbreaks, but here are some techniques and suggestions to keep your manufacturing chain healthy even during a crisis.
1) Spread supply chains across multiple countries
Look into spreading your manufacturing sources to more than one country. It may still make sense for many to work with factories in China primarily, but you can also look at sources in Indonesia, the Philippines, and other SE Asian countries to see if they can support a smaller percentage of your stocks.
The country you choose may differ depending on your product. For example, China still leads in textile manufacturing, but you can also look at Vietnam, India, and Bangladesh. Many companies do this already, such as Nike and IBM, who rely on multiple countries for their workforce and products.
If you can’t go as far as two countries, even diversifying across regions could help shield you from a sudden blow to your supply chain. And you don’t have to do it all right away. You can get one supplier ready, ensure they’re running efficiently, and then start looking into where you should source your alternative supply.
2) Ask your current contacts when they will be back in business
China shut down much of their manufacturing sector in the quarantine, causing giant economic losses for both China as well as many companies that outsourced to China.
If your supply chain is stuck today amidst our ongoing pandemic, then you should keep in regular contact with your supplier and see when they estimate being back in business. This is important because it helps you plan for future interruptions (although we’re all hoping this doesn’t happen again).
Look at how quickly your supplier responds and how good they are at taking precautions. How prepared were they? How quickly did they act to protect their workers, which would allow them to get back to work as quickly as possible later on? All of these questions will give you a better understanding of whether you can rely on this supplier’s foresight and responsibility in the long-term, or if you need to start looking at new options as soon as possible.
The good news is that some factories in China are starting back up thanks to heavier containment efforts showing some results. This means that the companies who were affected the earliest (those with supply chains rooted in (or passing through) China may be some of the earliest to see supply coming back. There are still new and stringent health and safety measures in place around the world, which may affect your delivery times, but at least some companies are moving back towards normal life.
3) Diversify your channels and SKUs
This may sound counterintuitive, but the more channels you have and the more SKUs you stock means the more ways your business has to stay afloat when one SKU dries up.
Being on multiple marketplaces, and having your own website means that (in addition to more sales), you normally stock a larger number of items. In an emergency, you can divert inventory to your highest priority channel, such as your own Shopify store.
Having multiple SKUs means selling different products that you may source from different places. If a few of your manufacturers have to shut down, your business may still be able to weather a storm with the SKUs that haven’t been affected. At the very least it will help with overhead costs, even if those SKUs weren’t your bestsellers.
We hope these tips will help all of our merchants stay prepared for anything, make the most of this unfortunate situation today, and maybe even provide a little bit of hope for the future.