What started in China has spread globally, closing high streets, slashing demand and creating supply chain bottlenecks. We consider the challenges and short-term solutions.
When China extended its Lunar New Year Holiday in late January, it halted manufacturing, affecting importers, brands and retailers globally, slashing sales projections.
Disruption in the supply chain means a delay in speed-to-market, and the largest segment that will feel the impact is trend-led fast fashion.
For this segment, speed across the supply chain is heavily compressed (with much shorter lead times), and delays jeopardise the timing of new launches. This leaves retailers little bandwidth to race against time, because trends, despite the outbreak, will continue to shift quickly.
Fashion’s seasonal operation doesn’t help either, because if the shortages in production continue, it’ll further impact newness for the incoming seasons.
For most businesses its about re-evaluating current supply levels and identifying the affected links, to assess any short-term or long-term implications based on the severity of the impact.
Possible short-term implications include missed deadlines, inadequate product levels to launch new lines or logistics challenges.
Longer-term implications could be cost impacting or issues in demand-planning, if production is extensively tied to areas suffering the worst pandemic impacts.
Determine the statuses of key stakeholders. This includes manufacturers, tier 1,-2 and 3 suppliers.
Identify which factories are currently operating, which are under restricted activity or are temporarily closed.
Factories in China have returned to operation, but raw materials may be subject to rationing due to low supply and back-orders may provide further delays.
Factories are also likely to prioritise production based on the size of the order, which means bigger brands will be prioritised over smaller retailers.
Pre-book freight at the earliest opportunity, or provide PO’s so that a booking schedule can be maintained and optimise network channels to avoid missing deadlines.
Ramp up transport across all modes, with many currently resorting to air freight to expedite international deliveries.
Alternative near-shore suppliers, for example in Turkey, may support more rapid responses and faster lead times and avoid disruptions in China.
We are seeing brands and retailers expanding their e-commerce channels quickly, with resources directed to expanding order and fulfilment capabilities, ensuring e-platforms are fully-functional, stable and equipped for performance monitoring.
We scale the logistics, warehousing, order fulfilment and last-mile delivery to accommodate the largest growth in online sales.