Sometimes it takes a crisis for a company to really notice what they’re doing wrong. One thing that’s become crystal clear for Aussie business as the country continues to suffer from the economic fallout of coronavirus, is that many companies have failed to enact the age old investment principle to their supply chains: diversify, diversify, diversify.
In today’s global economy, most retailers’ supply chains involve international manufacturers or delivery points, with products sourced overseas. International supply chain processes might link retailers to better and cheaper options, but retailers need to remember that global supply chains are subject to global events. In the unfurling coronavirus scare, we’ve seen business closures and quarantine zones in China take their toll on Aussie businesses relying on Chinese-based manufacturers and warehouses. Some of our customers have even had to halt production while they wait for scheduled deliveries stalled in China. In times of crisis like this, the value of strong, diversified supply chains can’t be underestimated.
Branch out and diversify
Diversified supply chains see retailers’ manufacturing and supply chain points based in different global regions. This ensures retailers can continue to source goods and decrease risk, across different geographies when crises like coronavirus strike.
In the wake of coronavirus, companies can work to get around disruptions with diverse supplier networks. For example, manufacturers in the retail space using Chinese, Vietnamese and domestic Australian supply chain sources can benefit from using a wider variety of suppliers based in different regions altogether.
The ripple effects of coronavirus have hit Southeast Asia hard, with many Vietnamese and Cambodian warehouses, and even some of Toyota and Hyundai’s Southeast Asia manufacturing sites slowing down or ceasing production.
In the meantime, the worst affected Australian retailers should set their sites on suppliers based locally, Europe, or further afield, who are less likely to have operations affected due to coronavirus concerns.
Coronavirus crisis comms
Companies experiencing supply chain hold-ups can take additional steps to alleviate the effects on bottom-line business.
With significant delays in shipping from, to, and around China, keep talking to your suppliers to gauge realistic expectations around when delayed products will finally leave the dock. If your stock will be delayed for a very long time, you can decide on next steps, and look at finding alternative suppliers. And, talk to your customers directly to see how you can service them in other ways. For example, customers who’ve placed large orders might be happy for these orders to be divided into smaller amounts sent over a longer period of time.
For existing stock already in Australia, retailers should look to prioritise stock allocations based on their most important and highest-revenue customers, ensuring the chances of selling this stock are maximised, and loyal customers remain satisfied.
Aussie retailers can’t predict how coronavirus might continue to affect their international supply chains, but they can put into place strong strategies now to keep business running as best as possible. Ultimately, coronavirus is making one thing very clear: strong and diverse supply chains will grow evermore important as businesses increasingly take their production lines global. If your global supply chain is weak, don’t wait until it’s too late.
Danielle Dadello is country manager for Unleashed Software Australia