Coronavirus Update: March 3, 2020

As the coronavirus continues to spread around the world, businesses are working steadily to adapt to the ongoing crisis. While shipping lines from China typically return to full capacity by mid-March, experts are now predicting much longer for this to occur. Adapting supply chains to other markets has also proven difficult for many businesses as other major production regions in Southeast Asia struggle to procure parts and raw materials from outside China. At this critical time, many businesses are reconsidering how to mitigate risk as much as possible to prepare for the next inevitable disruption. In this article, we explore some of the expert opinion this topic.

James B. Rice, Deputy Director of MIT Center for Transportation and Logistics

Writing in the Harvard Business Review, MIT Center for Transportation and Logistics Deputy Director James B. Rice stresses the importance of knowing all of your suppliers. “Map your upstream suppliers several tiers back. Companies that fail to do this are less able to respond or estimate likely impacts when a virus erupts”, he writes. Other key tips include properly looking after personnel, knowing the vulnerable points in your supply chain, and redesigning your supply chain to have secondary and/ or local sources.

Flexport Recommends

A recent article in Flexport offers tips to help companies best manage the impact of the outbreak with regard to shipping. They recommend planning early and doing research to avoid risks, including checking if your company offers free port storage during the crisis and that invoices are non-diputable (see our article on force majeure below). They also recommend budgeting for a variety of services, including looking for alternate routes and using premium services like fast boats, or even air freight. Finally, Flexport recommends maintaining good communications with partners by keeping them updated on financial and other developments.

The value of a third party inspection company

When exploring supply chain options, it is always best to work with a local third party inspection service provider – especially as travel restrictions make doing crucial on-the-ground work more difficult. A third party inspector can determine ability to new suppliers to deliver during a crisis period and can also conduct important loading and unloading inspection services before your goods are sent to you. Most importantly, these companies are aware of the local business climate and are able to communicate with your suppliers in their own language to ensure your expectations are understood at every step of the process.

About HQTS

With over 25 years of experience in quality assurance, HQTS is ready to help your business build strong and meaningful supplier relationships across Asia. Our many service locations are ready to be your one-stop shop for your inspection needs, including  factory audits, production monitoring, pre-shipment and sorting inspections, and everything in between. This will allow you to know exactly what’s happening on the ground and keep close tabs on your suppliers.

Further Reading:

James B. Rice: Prepare Your Supply Chain for Coronavirus

https://hbr.org/2020/02/prepare-your-supply-chain-for-coronavirus

Flexport Blog: New Coronavirus Impacts

https://www.flexport.com/blog/new-coronavirus-impacts-how-to-protect-your-supply-chain/

HQTS Blog: Force Majeure

https://www.hqts.com/force-majeure-how-it-can-affect-your-supply-chain-during-the-coronavirus-outbreak/