Given the recent outbreak of the Novel Coronavirus (nCoV), authorities have advised their citizens to avoid traveling to China, along with international airlines suspending or altering their flights. With the global rise in fear and uncertainty, what kind of impact should businesses with suppliers based in China expect?

Now and then

Since the first global pandemic, SARs, struck in 2003, the World and China’s place in it has vastly transformed. 

Back then China had just joined the World Trade Organization (WTO), gaining access to markets around the globe and harnessing its supply of workers to produce cheap consumer goods. Today, China is the world’s biggest manufacturer, accounting for 13% of global exports (source: World Trade Organization). 


Between 2003 and today Over this time China’s annual economic output has multiplied more than eightfold, to nearly $14 trillion, according to the World Bank. It’s share of global trade has more than doubled, to 12.8 percent last year, according to Oxford Economics, and as such the knock on effects are going to be much greater on the global economy.

But the effects of Coronavirus on supply chains, which have grown in complexity, are harder to anticipate. Even though supply chains can administer temporary measures in the short term, it is impetuous to predict the full extent of consequences in the longer run. Furthermore, Chinese New Year holidays have been extended in some Chinese cities until the 9th February as a result of the Coronavirus outbreak, so the impact on production and global supply chain will only become apparent later, but delays in supply are expected.

Futureproofing your Supply Chain

Supply chains face unpredictable disruption — from digital transformation to unforeseen emergencies such as the Coronavirus outbreak. Simultaneously, small & medium sized enterprises require an ongoing supply of goods and products to maintain cashflow. So what can SMBs do to futureproof?

  1. Digital technologies offer an opportunity to predict and manage risk by future-proofing operations with increased visibility, agility and efficiency. QuickBooks Commerce enables you to gain control of your inventory, orders, and supply chain ecosystem - from production through to fulfillment. The ability to aggregate data from different sales channels and systems into a single digital platform allows suppliers to automatically provide end to end visibility on stock levels, preventing issues of stockout.

  2.  Work with, and guide, your suppliers in building their capabilities. Increased scrutiny placed on progressively transparent supply chains and meeting growing customer expectations will be required in order to ensure long-term success.

One theme is clear - companies that pursue digitization will be more resilient and well-positioned for long-term success.


Over communicate with customers

If your supply chain has been disrupted in any way, it is business critical to reach out to your customers. Here are 3 ways to effectively manage customer expectations:

1. Be open & transparent
Reasonable expectations are often born from trust.

Customers with the knowledge of what’s going on will know what to expect and are more likely to be sympathetic to delays, so be realistic.

tradegecko-impact-coronavirus-supplychain0-032. Provide a timeline:
Under promise so that you can over deliver.

Most customers don’t mind waiting (a little, at least) — as long as they understand why. Customers are aware that glitches and challenges do come up. But they expect you to be honest about the impact on them.

3. Don’t forget the follow up
Contact customers with updates on progress and when the order is fulfilled, ensure there is a further follow up in order to get feedback on how they feel the matter was handled.

Longer term

tradegecko-impact-coronavirus-supplychain0-04If your supply chain has been disproportionately impacted, perhaps it is time to consider diversification. Some companies are thinking how they can regionalise their supply chains to mitigate risk and dependency on any one geography.

Read our Supply Chain Management guide for a deeper look at principles, strategies, overall risks and challenges in SCM. 


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