February 17, 2020
I was talking with a Los Angeles Times reporter about the coronavirus a few days ago, and it spurred several thoughts about down-the-line impacts beyond the obvious. According to the Epoch Times, the coronavirus impacts will hit within the next few months. This makes perfect sense since lead times are typically between 2-3 months for our clients; thus, current shutdowns will start impacting in a few months. Although you should obviously spring to action if impacted, you should be thinking about future-proofing your supply chain regardless!
Listen to my video about the coronavirus, establishing backup plans and future-proofing your supply chain. I’d love to hear about your situations, your ideas and plans so we can exchange ideas. Please email me.
What Should We Consider and/or What Impacts Could Arise?
As discussed in the video, unfortunately, most of the time, it is “too late” when disasters strike. Whether its the coronavirus, a hurricane, or political unrest, if products and services are held up, there is little you can do if you haven’t future-proofed your manufacturing and created a resilient supply chain. When I was a VP of Operations and Supply Chain for a mid-market manufacturer, our main production facility was shut down due to a hurricane. Thank goodness, the plant wasn’t harmed because it was built on a hill; however, because no one could get in or out (employees, suppliers, customers), we were shut down for several days. Fortunately, there were some backup plans in place although we were still affected.
A few years later, there were port disruptions in getting a critical raw material from our supplier in Brazil. It would have created a disaster for our customers as well as our end customers (patients in hospitals and at home care) if we didn’t have a backup plan in place. Fortunately, our proactive Director of Procurement kept a backup supplier on the east coast who turned up production as soon as he called. The reason the supplier did this is because we constantly purchased from the backup supplier (even though they were more expensive which our private equity backers weren’t very thrilled about), and they knew the reason we were purchasing from them was for just this type of situation since we were upfront and consistent. Are you willing to invest in backup plans?
Start by re-evaluating your manufacturing and supply chain road map and think through related impacts. These topics certainly relate to our new LMA-i, LMA-Intelligence series including the Amazon Effect, the Resilient Supply Chain and Future-Proofing and contact us if you’d like an assessment path-forward plan to accelerate your bottom line and customer performance.