International supply chain focus has evolved beyond reducing cost and being “lean” to how to mitigate the risks inherent in the international manufacturing arena. When a natural disaster, supplier failure, or political upheaval arises shippers must act quickly to maintain uninterrupted supply.
A company may become vulnerable to a supply chain disruption if it lacks visibility with offshore suppliers and risks ruining its brand value which could ultimately result in lost business. If not handled effectively, a glitch in the supply chain can have devastating long-term effects. Below are several tips for shippers to mitigate their risks, and ensure the resiliency of their China manufacturer’s supply chain.
Recognize Critical Risk Factors
Current knowledge of social, political, and environmental conditions can help companies form a contingency plan. Visibility through a 3PL partner, or internal controls, can help companies see problems before they become major.
Consider Geographic Diversification
One factor that can influence a company’s outsourcing strategy is the individual components needed to manufacture their unique product(s). When a mission-critical part is involved, a single-source strategy could present a problem if, for whatever reason, the China manufacturer has an issue with that particular part, or shuts down production altogether. To succeed, companies must assess the vulnerabilities they would face if that critical part suddenly becomes unavailable. One solution is geographic diversification. ITI Manufacturing has the experience and expertise to ensure continuing production by securing reliable production in multiple locations.
Increase Transport Flexibility
Global supply chains must have the flexibility to change modes and routings, and to stockpile inventory when the need arises. A solid risk management program has built-in redundancy. One example would be having the partnerships and infrastructure necessary to route shipments of custom products through an alternative port to avoid a dock strike. Direct negotiations with carriers can lock in capacity, but it can also limit the shipper’s flexibility to shift its capacity when a problem arises. With help from ITI, freight routing can be more flexible, and shift among different intermediaries in response to disruptions in international transportation systems.
Use Social Media and Technology as an Information Source
One of the primary benefits of social media is its ability to gather and verify important information in real time. Some of today’s China manufacturers are using cloud-based social networking to predict problems before they affect customers. Networking offers a method by which facilities affected by disruptions can resume normal operations more quickly, as well as bring in new partners as the need arises.
Outsourcing’s original focus was to cut costs. As global sourcing becomes more sophisticated, managing the associated risks inherent with international supply chain interruptions has come more into focus. ITI Manufacturing has the resources, professional experience, and knowledge to implement contingency plans and mitigate risk. Contact us today and let’s discuss how we can mitigate your risk.