It's no secret that disruptions in China's supply chain have been causing issues for businesses worldwide.
As the country's leaders continue to maintain their "zero COVID" policy, coronavirus shutdowns within the country have snared supply chains for everyone from major automakers to small businesses.
If you depend on supplies that require shipping from or via China and the surrounding region, you need to plan ahead.
While other countries have loosened their restrictions and begun to recover, China is still largely in lockdown mode. This means that disruptions to the supply chain are likely to continue for the foreseeable future.
So how can you plan and prepare for disruptions to your supply chain?
At Alta Max, we are committed to helping our clients stay ahead of the curve. Read on to learn more about how to keep your business running smoothly in the face of China's COVID-19 supply chain disruptions.
What is "COVID Zero"?
While mainland China was relatively untouched by the 2020 COVID-19 pandemic, the past year has seen a significant rise in cases in the country.
In response, China's leaders have instituted a "zero COVID" policy, which includes strict lockdown measures and widespread testing and tracing.
This policy has successfully kept the virus from spiraling out of control within China, but it has also had a significant impact on the country's ability to move products in and out.
In fact, while the ruling Communist Party maintains a tight grip on the narrative within the country, many economists see a brewing economic crisis within the country itself - with spillover effects possible worldwide.
In particular, factories in China have been forced to close or operate at reduced capacity, leading to disruptions in the global supply chain. As employees are forced to stay home from factories and shipping ports, goods are not moving as quickly - or as cheaply - as they once were.
How is China’s Policy Impacting Businesses?
If your business relies on goods shipped from China - or if you use Chinese-made parts in your product - it's important to plan for disruptions in the supply chain.
There are a few critical ways that China's COVID-19 supply chain disruptions could affect your business:
1. You may experience delays in receiving goods from China.
First, you can expect delays in receiving goods from China. In some cases, these delays may be significant.
For example, one major automaker has reported that it is facing delays of up to two months for parts sourced from China.
If you rely on goods shipped from China, it's essential to plan ahead and factor these potential delays into your business plans.
2. You may need to get flexible with your sourcing.
Another potential issue is that your usual sources for goods may no longer be available - or they may be unreliable.
This means that you may need to get creative with your sourcing in order to keep your business running smoothly.
For example, you may need to source goods from other countries or from different suppliers within China.
3. You may need to raise prices.
Finally, you may need to raise prices to offset the higher cost of goods shipped from China.
While no one likes to raise prices, it may be necessary to maintain your profit margins in the face of China's supply chain disruptions.
Of course, you'll need to balance this decision carefully. If you raise prices too high, you risk losing business to competitors. But if you don't raise prices enough, you could find yourself in a financial bind.
A Strategy for Overcoming China's Supply Chain Disruptions
While China's COVID-19 supply chain disruptions are certainly a cause for concern, there are steps you can take to mitigate the impact on your business.
Here are a few tips to help you weather the storm:
1. Plan ahead - and expect that supply chain issues may worsen.
As with any potential disruption, it's essential to plan ahead when it comes to China's COVID-19 supply chain disruptions.
This means being prepared for delays in receiving goods and having alternative suppliers lined up in case you need to make a switch.
It also means having a clear understanding of your costs so that you can make informed decisions about pricing in the face of higher shipping costs.
Stay informed of the latest developments in China and the region so that you can adjust your plans as needed.
2. Build up your inventory of products that may be impacted.
One way to offset potential delays in your supply chain is to build up inventory. This way, even if shipments are delayed, you'll have enough product on hand to meet customer demand.
Of course, this isn't always possible - or practical. But if you can afford it, building up inventory is a wise strategy for dealing with China's supply chain disruptions.
If you don't have a large inventory on hand, consider partnering with a company that has already built up stock in anticipation of China's supply chain disruptions.
At Alta Max, we have a wide range of products in stock and ready to ship so that you can stay ahead of the curve.
3. Communicate with your customers and clients.
Fortunately, while shipping delays are undesirable, most customers are understanding - as long as you communicate with them.
Be upfront about potential delays in your supply chain and let your customers know what to expect. This way, they can plan accordingly and won't be caught off guard if shipments are delayed.
In some cases, you may even be able to offer discounts or other incentives to customers who are willing to wait a bit longer for their orders.
4. Find alternative suppliers - even if temporarily.
As we mentioned above, finding alternative suppliers is a key strategy for dealing with China's COVID-19 supply chain disruptions.
If possible, start building relationships with suppliers outside of China now. That way, if you need to make a switch, you'll already have a solid foundation in place.
Don't forget to consider the cost of goods when sourcing from alternative suppliers. In many cases, you'll need to pay more for goods sourced outside of China.
But remember, the goal is to avoid supply chain disruptions - even if it means paying a bit more in the short term.
How Alta Max is Helping You Avoid Supply Chain Disruptions
Alta Max is committed to helping you avoid supply chain disruptions and material inflation.
As a leading provider of security seals and custom military packaging for the US market, we have a long history of working with suppliers in China and across regions impacted by supply chain snags.
In anticipation of China's COVID-19 supply chain disruptions, we've been working hard to build up inventory and establish relationships with alternative suppliers.
So far, we've successfully avoided any major disruptions to our supply chain. And we're confident that we can continue to provide our customers with the high-quality products and services they've come to expect from us.
If you have any questions about how Alta Max is dealing with China's COVID-19 supply chain disruptions, or if you need help finding an alternative supplier, please don't hesitate to contact us. We're here to help you weather the storm - and keep your business running smoothly.