HomeOPINIONBuilding coronavirus immunity for our supply chains

Building coronavirus immunity for our supply chains

Danielle Dadello, country manager for Unleashed Software, shares some observations on how Covid-19-hit retailers can respond to the challenge.

Overseeing inventory for companies of all shapes and sizes in New Zealand and the world, the impact of Covid-19 has been unmistakable. From a Kiwi metalwork manufacturer facing major supply shortages, through to a renewable energy manufacturer that has had to halt production altogether, the long fingers of the virus have found ways to impact industries across the board.  

While the sudden, ubiquitous presence feels entirely unprecedented, it is perhaps the best time to hunker down and engage best practise for your company’s supply chains. After speaking to customers from around the world, we’ve put together some key recommendations for managing the ongoing fallout. 

There are plenty more fish across the sea (or right on our own coast) 

For people and companies alike, it can often take a crisis to step back and take stock of what they’re doing wrong. One thing that’s become crystal clear for New Zealand businesses as the country continues to suffer from the economic fallout of this pandemic, is that many companies have failed to apply the age-old investment principle to their supply chains: diversify, diversify, diversify.

In today’s global economy, many Kiwi retailers’ supply chains involve a slew of international manufacturers and delivery points. These 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 temporary factory closures and quarantine zones in China and elsewhere take their toll on New Zealand businesses relying on these international manufacturers and warehouses.

While Covid-19 lays this out to bare, the truth is that companies relying on low-cost countries to fulfil orders were always subject to the inherent risks of currency volatility, corrupt governments, unexpected shipping fees, among other potential issues. Long term, manufacturers in New Zealand’s retail space relying on Chinese supply chain sources can benefit from casting their net wider, to build a variety of suppliers based in different regions altogether. They can also sacrifice some cost savings to look at domestic suppliers that might be able to help fulfil current orders, which has the added benefit of supporting the local economy. 

Building geographical diversity is another way of increasing resilience to a crisis. If all of your suppliers are concentrated in one city or region, when disaster strikes there’s naturally going to be a higher risk your back-up suppliers will be impacted too. Beyond coronavirus, this could be events as unpredictable as crop disease, earthquakes, floods, or power outages.

Going viral with your communication

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. Also take the time to 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 New Zealand, retailers should look to prioritise stock allocations based on their most important and highest-value customers, ensuring the chances of selling this stock are maximised, and loyal customers remain satisfied. 

Kiwi 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. 

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