China‘s initial experience with COVID-19 highlights some important lessons in supply-chain management. Some of key lessons included sources of supply related to materials, having contingency plans for interruption supply, and understanding the capabilities and vulnerabilities of critical elements within the value chain.
Crisis to most affect apparel value chain
In future, the global pandemic will have devastating financial implications for entities around the world, with the apparel value chain being one of the most dramatically impacted. The tight-margin, just in time world will present significant risks and challenges to everyone from retail employees to over 40 million factory workers
Business failures and closures will negatively impact individuals at all levels and leave those at the lowest levels of the value chain most at risk, due to the financial structures of developing-world factories and the limited or non-existent social safety nets in those environments.
Companies to focus on self-preservations
Unlike 2008, the post-pandemic supply chain landscape will not look the same as a significant number of factories will fail, with their workers and capabilities eliminated from the available sources of supply. Companies in the US and Europe will focus on self-preservation by cancelling their orders and delaying shipments and payments.
Hence, there is a need to ensure that companies take into consideration the performance of their factories and suppliers beyond simply price. Ultimately, some of the best partners in the supply chain have invested in critical elements to support the values of their partners be it fire safety, wages or environmental programs.
This is also the time for brands to evaluate the choices they have. They also need to reexamine their choice of partners. Their focus key should be on creating an environment rather than a landfill with creatures in it.