We just wrote on a similar topic in a past post, but the Coronavirus in China has gained tons of attention in recent months. And it’s no wonder why. The Coronavirus has been spreading, putting many people at risk of obtaining the virus and making it difficult for international travel. However, the effects of the virus extend far beyond individual health concerns – the virus breakout is having major impacts on the global economy and overseas factory productivity.
The Impact of the Coronavirus on Your Supply Chain
Due to the Coronavirus outbreak which has infected more than 80,000 individuals at this time, production facilities are facing major issues. Staff being out sick, as well as the factory lockdowns/shutdowns in the midst of the outbreak are slowing supply chains down around the world and making it difficult to move products internationally. So, amidst all the Coronavirus chaos, how can you effectively manage your supply chain? Here are a few things to keep in mind:
Labor shortages will be major in all affected countries, however, China will most likely remain the forerunner in this issue. The labor shortage is two-fold here – on one hand, you have a labor shortage due to actual employee illness. Those who are affected by the Coronavirus are obviously unable to work, and the number of infections in China is incredibly high right while continuing to grow. On the other hand, there is a labor shortage due to cautionary response on the part of companies and production facilities. Since the virus is spreading quickly, many factories have responded defensively by shutting down or quarantining certain sections of their facilities, creating a labor shortage that’s felt in U.S.- based businesses’ supply chains.
Sourcing and Materials
Obviously, the Coronavirus has made travel difficult, and that goes for both people and products. People traveling via international airports, as well as cargo traveling through ports is all being screened for the Coronavirus for sake of keeping the illness from spreading. However, these precautionary measures make it incredibly difficult for businesses in some industries to properly and efficiently source their materials.
How to Manage Your Supply Chain During the Coronavirus
A supply chain strategy in response to the Coronavirus outbreak should focus on both a short-term and long-term approach. Here’s a quick overview of both:
In the short-term, managing your supply chain during the Coronavirus outbreak should involve actions that are within you immediate control. This involves everything from marketing, to public relations, to client management.
If your company is short on materials, quickly assess the priority of all projects and devote what you can to the projects that are absolutely pivotal for your organization’s success. Evaluate which projects should be completed first based on deadlines and client responsibility.
Have your marketing and PR teams devise unique messaging approaches for informing your client base of the project shortages or shipment delays you may be experiencing for sake of managing expectations. It’s better that all clients are in-the-know early on regarding what to expect rather than leaving everything to apologies later. Clients want to know about complications as early as possible.
In the long-term, your supply chain management strategy amidst the Coronavirus outbreak should be focused on managing the process behind on your supply chain.
If the overseas vendors you are directly working with are greatly impacted by the virus outbreak, it may be time to consider diversifying your products sourcing options. Begin a search for facilities that can cover the needed production within a reasonable timeline.
Also, branch out regarding the carriers and/or freight forwarders you are currently employing. If your freight forwarder is specialized in trade with China, but only works with a particular industry or set of carriers that seam to all be negatively impacted by the Coronavirus, it may be time to look at other options. Reach out to other freight forwarders, such as Interlog, to discuss the issues you’re experiencing and hear of their potential solutions to your problems.
Wrapping It Up
The Coronavirus is impacting a lot more than many of us realize. The global economy and workforce have been greatly affected by both the health complications of infected individuals, as well as the cautionary response of many overseas production facilities. This is increasing the labor shortage, raising prices, causing delays in transit, and making it difficult for U.S.-based companies to efficiently operate their supply chains.
If you are experiencing supply chain frustrations amidst the complications caused by the Coronavirus, reach out to one of our team members! We would be happy to talk with you about alternative routing solutions to find a plan that works for your company.