supply chain (2)

“The greatest danger in times of turbulence is not the turbulence, it is to act with yesterday’s logic.” – Peter Druckerrenowned management consultant, educator, and author.

Many businesses learned a hard lesson during the early days of the Covid-19 pandemic, especially those who relied heavily on China.  Counting on one supplier, especially one on the opposite side of the globe, can backfire in a big way.  Manufacturers saw production screech to a halt when vital components could no longer be delivered and were left scrambling to try and find replacements, often to no avail. This, unfortunately, is only the latest example of how the single-sourcing model leaves companies vulnerable to a supply crisis.  The Fukushima disaster in 2011 had a less substantial but very real impact, and more and more the tide has been turning as these risky sourcing models are being placed on the chopping block.  Early last year, well before we had even heard of Covid-19, 50% of multinational corporations stated they were expecting a major shift in their supply chains.

Investing in a more diverse and resilient supply chain is not just a smart choice, it is rapidly becoming a necessity for anyone wanting to avoid a potential shutdown or disastrous interruption in their output generation.  Making the shift out of China and establishing a network that greatly increases utilization of domestic suppliers along with less saturated markets closer to home such as Mexico, will go a long way to help secure production against future worldwide shortages.

Besides just the diversification of your supply chain, building a collaborative relationship with your suppliers is a major way to assemble systems that cut down on waste, and foster information sharing that can help buyers and suppliers make long term plans that benefit both parties.  The adversarial relationship of the past, that consisted mostly of the two fighting back and forth for their own best interest, is no longer sustainable. Companies should be asking themselves if there is potential for building a stronger relationship with who they are currently working with.  If not, they would do well to be moving towards more like-minded suppliers that they can trust to work towards their shared goals….rather than just their own bottom line.

As we move on from the Coronavirus, businesses in America that have not yet made the switch are facing an important choice. They can do nothing, and gamble on the hope that this is the last time a major disruption destabilizes the supply networks. Or, they can decide to learn from what happened, and rethink the way they look at their supply chain.