Is your glove line made in a single country or factory? What about your raw materials ...When events like the 2011 floods in Thailand, the recent violence in Vietnam, or even the port slow down on the West Coast of the US. occurs ...
How would disruption to your manufacturing supply chain impact your business?
And, more importantly, can we avoid this risk through better planning?
Here are 3 questions you can ask, to identify and plan for hidden risks.
Hidden Supply Chain Risks
We've all read about the movement of some manufacturing to South Asian countries beyond China, as sourcing professionals seek ways to lower costs and respond to margin pressures.
China still accounts for the lion's share of global exports, but lower labor costs have caused manufacturing to flow to Vietnam, Thailand, Bangladesh and elsewhere.
This week, events in Vietnam remind us of hidden risks and costs in the supply chain, no matter how well diversified: For example:
- Thailand: In 2011, extreme flooding shut down thousands of factories, damaged inventories and disrupted manufacturing and distribution. Today, martial law was declared in response to political rioting.
- Bangladesh: Safety violations have resulted in terrible accidents, loss of life and brand reputation damage for brands doing business in substandard, non-compliant factories.
- Korea: Instability in worldwide leather prices have caused many leather tanneries to go bankrupt.
- Vietnam: Politically motivated violence burned hundreds of factories and disrupted the flow of goods, as hundreds of Vietnamese workers torched Chinese owned factories in anger over a territorial dispute.
One of our clients manufactures 3 of these 4 countries!
Fortunately, his goods were out of harms way in Thailand and Vietnam, although the disruptions in leather supply did cause this buyer some gray hair, when a second source of a unique leather had to be fast-tracked.
3 Strategic Sourcing Questions to Ask Your Suppliers
Are you as vigilant about asking your suppliers questions about planning for supply chain risks, as you could be?
Develop a sourcing plan that anticipates and mitigates the risks as much as possible.
For instance, ask your factories, agents or other intermediaries:
Other Strategies To Avoid Supply Chain Risks?
What steps are you taking to anticipate and mitigate supply chain risks?
We'd like to hear what your business is doing to build flexibility and avoid disruption.
Sourcing professionals should SHARE strategies and ideas around this topic. Because one thing is for certain: The next unforseen event is just beyond the horizon.
If we take better steps to prepare, hopefully we can avoid painful and costly disruption.
Oh, and by the way ... that client we mentioned? Last year, they had a full container on a ship that sank off the coast of Africa. Sometimes you have to be prepared ... and lucky.
Free Glove Manufacturing Checklist: 10 Questions to Ask Your Supplier
For these and other questions you should be asking a current or prospective glove supplier, download this free checklist: