How to make your Supply Chain More Resilient during Covid-19

August 07, 2023
Table of Contents

In mid-February, there was plenty of talk about whether China’s title as “the world’s factory” 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.

The Coronavirus is the biggest global health emergency since the 1918 Influenza pandemic. However, it is by no means a “black swan” 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.

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.

1) Consider Near-sourcing

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’t have to travel through as many countries, so issues like the grounding of passenger planes, which has greatly diminished carrying capacities, won’t hit your company as hard.

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 everincreasing cost of labor in China. Covid-19 has simply made the case for nearsourcing even more compelling.

2) Hedge your Bets with Multiple Suppliers or Sub-suppliers

Don’t 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’t paralyze your supply chain.

The exception to this is if your supplier has different sub-suppliers. Let’s 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.

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).

3) Create Buffer Stock

It isn’t 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.

Having said that, in this mad rush to ramp up production your brand needs to consider the following:

  • Do your current suppliers have the capacity to increase production for you or do you need more/different suppliers?
  • Can they do this, while maintaining quality and social/environmental compliance?
  • With many Chinese workers poised to return to work despite an ongoing, albeit diminished, risk of infection, can your suppliers provide their workforce with adequate personal protective equipment?

Once again, a supplier audit is absolutely critical in helping you answer these questions. You don’t want your brand reputation to take a hit because of a necessary, yet rushed change to your sourcing strategy.

*****

Sadly, it seems as if the Coronavirus will continue to disrupt supply chains—and life, as we know it—for a few more months at the very least. However, if you follow the advice above, you can manage your risk more effectively and minimize the damaging effects on your bottom line.

With over 12,000 TIC specialists, including auditors and inspectors, located in all major sourcing and selling regions, InSpec by BV is perfectly positioned to help you make your supply chain more resilient, so you can weather the storm that is Covid-19.

Got questions about InSpec?
Talk with our specialist.
I hereby certify that I have read and I agree with the Personal Data provision of the Conditions of Service and the Cookies Policy

I hereby consent to the collection and use of the personal data I provide, with the understanding that the personal data could be used by Bureau Veritas Hong Kong Limited, its affiliates, and, where applicable, its subcontractors, for the purpose of performing the services I request.

Personal Data

1. Client’s personal data are collected by Bureau Veritas Hong Kong Limited, having its registered office at 1/F, Pacific Trade Centre, 2 Kai Hing Road, Kowloon Bay, Kowloon, Hong Kong SAR, (“BV HK”) and are subject to computer processing in order to enable Company to provide the Services. When requesting the Services, Client has been asked and has given express consent to the collection and reasonable use of Client’s personal data for purposes relevant to the Services.

2 Client’s personal data are intended for BV HK, its affiliated companies and, where applicable, subcontractors engaged in performing the Services. They will be retained for a period of time as required by the relevant local tax authorities where the Services are performed.

3 If Client’s personal data are collected in the European Union, they may be transferred outside the European Union, on the basis of standard contractual clauses established by the European Commission, and the standard contractual clauses are available on request, by clicking on this link: Contact Us .

4 In accordance with the French Data Protection Act of 6 January 1978 as amended and the General Data Protection Regulation of 27 April 2016, Client has the right to access, rectify and erase any personal data concerning Client, as well as the right to limit the processing, the right to oppose to the processing or the right to portability of your personal data. In addition, since Client has given consent to the collection and use of your personal data, Client has the right to withdraw its consent at any time. In that event, the performance of the Services may be suspended or terminated if the absence of consent renders the performance of the Services impossible or impracticable. Client also has the right to set out general and specific guidelines that define how it intends these rights to be exercised after death. Client can contact us to exercise its rights in this paragraph by clicking on this link: Contact Us Finally, Client has a right to lodge a complaint to the Commission Nationale Informatique et Liberts (CNIL).
Would you like to receive marketing communication from Bureau Veritas