The COVID-19 crisis is the first supply chain disruption of its kind in the history of ecommerce business. Over the past decade, natural disasters like the Japan earthquake and tsunami, floods in Thailand, volcanic eruptions, hurricanes, and more have inflicted similar damage to behind-the-scenes business operations. You’d think we’d be better prepared for the catastrophic effects to business that are only just beginning to emerge.
This global lockdown in response to the coronavirus pandemic isn’t causing just a mere disruption to business with a near end in sight. Instead, it has led to an almost complete shutdown of any business that produces non-essential items, which is nearly everything we consume outside of food. And no one knows how long lockdowns will continue. We’re at war with a virus, and the best thing any of us can do is nothing. That’s a hard pill to swallow for small business owners who are watching their company’s net worth dwindle by the hour.
The world is in dire straits right now, so if you’re feeling the heavy panic as a small business owner, you’re not alone. We’re here with you. Our goal is to inform and inspire you to take this opportunity to examine your manufacturing and supply strategy (or lack of) more closely now that some startling vulnerabilities have been exposed to the light. We’ll start by saying that any “COVIDious” disruptions to your supply chain are not your fault and do not reflect the success of your business. Rather, they bring your attention to areas of your business operation that require strengthening and fine-tuning.
Right now, access to parts, labour, and space are severely limited. There’s a massive demand for health products, specifically masks and hand sanitiser, and resources for producing them are severely low. But collective efforts are in full effect. Certain industries may step up to help increase production of needed supplies. Elon Musk, for example, manufactured ventilators in his gigafactory for New York hospitals experiencing a severe shortage. In many cases, though, we’ll continue to experience those and other shortages. It’s one thing to produce a product similar enough to your area of specialisation in times struck by crisis but entirely another to break new ground. It’s a bit like calling on crèches and daycare centres to lend a hand in manufacturing ammunition.
Individual manufacturers and small business owners are among the hardest hit by the lockdowns. If you have an online business in the health care(ish) industry, you’re winning right now. You’re probably experiencing a spike in sales and may not be able to keep your supply sufficiently stocked to meet demands.
If you’re in any other industry, you may be experiencing a plummet in sales. While we don’t want to point out the painfully obvious, business has likely become dangerously slow, forcing you to lay off staff, put business on hold, or shut it down altogether. This is especially true if you source your products from anywhere in the US or Europe, with China towing the herd (that’s essentially the whole world). And all of this is happening alongside the fact that you’re also faced with 24/7 family togetherness––there’s never been a higher time to remind ourselves to be careful what you wish for.
If you’re scrambling to locate a new supplier right now, you’re joining the masses. Some business owners spend weeks trying to find a supplier, and that’s under normal circumstances. According to one e-commerce business owner, suppliers in the US operate like it’s the ‘80s (if we can imagine for a moment that e-comm existed back then), requiring business owners to go to trade shows or meet in person. Many of the ones that have joined the 21st century are under government orders to supply masks and gowns as an emergency response to the coronavirus.
South and Central America don’t provide many options either. While suppliers exist, they don’t seem to be chomping at the bit for new business. South Asia, like India, Pakistan, and Bangladesh are all vying for business, but there are big question marks attached to quality, reliability, and compliance.
It’s becoming glaringly obvious, necessarily so, that China is not the only place on the planet to get your product made, especially right now. Finding suppliers in your target country or region may be your best option, if possible, at least for now. Overall, many small business owners will agree that it might be wisest to accept the delay and put your efforts into generating new insights and action plans for future preparedness.
COVID-19 will be the catalyst for transformation on many levels, including supply chain and distribution models. Indeed, it has exposed the vulnerabilities in existing models, especially those that rely heavily on China. For large-scale companies, Sunil Chopra, IBM Professor of Operations Management and Information Systems at Northwestern University, suggests that regional supply chains can decentralise and avoid concentrating production and storage to one area. This kind of structure contributes to greater agility and preparedness if disaster strikes one production area (source). The parallel for small-business owners is to diversify suppliers, such as one in China and one in the UK.
While this may seem obvious, a good supplier isn’t so easy to find, and you may find yourself arriving at the point of good enough. Always look to reviews, feedback, references or testimonials, and company credit checks to determine accountability, which may be as important as location. Ensuring suppliers have the appropriate production capacity is key too. They may claim to have rigorous procedures and skilled staff, but the truth is that you have no idea what’s actually going on without a visit or an audit, or whether they can manufacture a product that meets your standards. Check out Importify for connections to trusted manufacturers and suppliers.
The word of the day here is transparency. When you’re managing several moving parts, connection and visibility are crucial to monitoring activity and responding more effectively to disruptions. For large companies or those using a range of suppliers, mapping your supply chain can be time- and resource-intensive. Still, it can go a long way in securing the integrity and flexibility of your business when unforeseen crises occur. Natural disasters and microorganisms have the potential to not only remove critical links in the supply chain but to wipe out entire businesses completely. Check out this quick guide on supply chain mapping for small businesses.
As tumultuous as our current global situation may be, there is an abundance of support for small business owners. Check out the following resources: