January 18, 2016

It is somewhat of a coincidence that I’ve heard a few presentations about China recently (thanks to international attorney and China guru John Tulac as one of these experts) which synced up with the stock market plunge in China – and in the U.S. (and thus globally).  Of course, that has also spurred on other conversations about China.  The bottom line is that manufacturers and distributors should be weary and on alert.

It is very likely that if you are a small to mid-size business, the quality you receive from China will suffer eventually.  It is less likely to affect companies like Apple but it is very likely to affect the rest.  Lowering quality levels is one potential impact of the slowdown.  It is also possible that suppliers could go out of business if their owners lose a bundle in the stock market.  There could be many impacts……the key is to be on the alert and thinking ahead of time about your specific supply chain and potential impacts.

One tip to implement this week:
As one of my consulting colleagues said, this is no surprise.  He had been warning his clients for years about this outcome.  With that said, it is easy to be lulled into thinking the present will continue into the future.  Instead, before it is too late, take action.  Start by making sure you have solid relationships with your supply chain partners.  You’ll less likely to be impacted if you have good relationships.  Next, no matter how great your relationships, you should have backup suppliers, backup plans and metrics to track progress.  You’ll want to catch issues early.

The most successful supply chain partnerships I’ve seen are when you are upfront with all supply chain partners.  This means you cannot keep a backup that you never use until you are desperate. It also means you cannot pretend as though you don’t have a backup.  Solid supply chain partners understand the value of having a strong supply chain and monitoring its health.  Take steps to make it so!