Despite significant efforts to contain the spread of the virus, COVID-19 has already spread globally. The full impact of the virus itself is still unknown, however one thing is for certain- it will have global, economic and financial ramifications that will be felt through global supply chains.
China's role and importance to global trade has grown significantly-as a primary producer of products and components. Even for those companies that are not directly reliant for production or suppliers in Wuhan and surrounding impacted areas, logistics within China have been affected. Wuhan is home to the largest inland port in the country and serves as the transportation hub for many industries.
Some companies are better prepared than others to mitigate the impact. These companies have developed and implemented supply chain risk management and business continuity strategies. They have also diversified their supply chains from a geographic perspective to reduce the supply-side risks from any country or region. Other companies are scrambling and are overly reliant on a single geography or a single supplier for key products. The question to ask is, "What can be done going forward to provide some level of assurance that future supply chains will perform better under stress than they do now?". There are two primary approaches to increase the certainty of your supply chain, specifically having a Plan B or a Contingency Plan in your overall sourcing strategy.
What is a Plan B?
Plan B's are back-up strategies where a customer has other pre-defined potential sources of what they buy and have had discussions with those suppliers to confirm they are capable of producing the needed parts or products.
What is a Contingency Plan?
With a contingency plan you have multiple sources supplying your company with the same product. Most companies that that employ a contingency plan consider it a form of insurance. There is the up front investment of tooling and fixtures needed to manufacture the part, but provides a cushion with the dual sourcing.
Having a backup plan is especially necessary if you source overseas, ensuring you have both an overseas supplier and a domestic one. It is important to find a supplier like Reflective Concepts that has the overall capabilities and can offer competitive pricing. Also, having the reaction flexibility to meet increased demand.
It has always been important to have a backup supply or supplier for any goods or components that you source from overseas. We are fully equipped to handle short-term bridge orders and long-term transitional orders. Ultimately, we are here to make it easier for you to move product from one vendor to another. At RCI, we are here to help, we are experts in helping you avoid unexpected delays or disruptions in your supply chain due to unforeseen events.