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Viruses and Supply Chains

Now, before you run for the hills, let’s take a moment to think about this. In the immortal words of brother Gale Snopes (in the film Raising Arizona), “I’d rather light a candle than curse your darkness.”

There seems to be another one (or four) every day; news stories about large diversified global companies continuing to delay resuming production in their China facilities affected by the coronavirus. Today’s news alone brought word of Honda and Nissan’s continuing delay, a new “ground zero” for the outbreak in Daegu, South Korea, Daimler warning of “significant” adverse effects, and car sales in China falling by 92% for the first half of February.

A few weeks back we started receiving urgent requests from our largest customers asking us to review our supply chains and report back any potential interruption in our abilities to continue to meet release schedules. Hyland’s supply chain has very few “links”, we essentially buy metal and cut it up, so it didn’t take any time for me to report back, “no trouble here!”, while beaming with pride about how great it was that Hyland was well-positioned to forge ahead while the rest of the world struggled. (Hooray for America!) And then, while I was straining my shoulder patting myself on the back, and continuing to read all these news stories, another thought occurred to me.

What happens if (when?) all those large diversified global companies reduce their releases from US as the tsunami of these delays ripples through the global supply chain? If a car is composed of about 30,000 parts, and they can only get 29,937 of them this week, they’re not really going to need those 29,937 other parts for a while. So, for those of us making those 29,937 parts, the risk exposure isn’t from our supply chain, it’s from OUR CUSTOMERS.

Now, before you run for the hills, let’s take a moment to think about this. In the immortal words of brother Gale Snopes (in the film Raising Arizona), “I’d rather light a candle than curse your darkness.”

Remember how I said “tsunami” up there a couple paragraphs back? Did that ring any bells for you? Back in 2011 a major earthquake off the coast of Japan sent a tsunami inland devastating many coastal regions and shutting down many power plants, even causing a major nuclear accident at one. All the news about supply chains sounded the same back then and we got it all sorted out back there 9 years ago, didn’t we? In the intervening years those large diversified global companies put together strategic disaster contingency plans and asked their suppliers to do them too. (Some of us have even had to use ours when tornadoes levelled our neighborhood – but that’s a story for another day!) One of the things they have done to protect themselves against the effects of major disasters is to develop additional sources in their supply chains (like excellent multi-generational manufacturing companies in Dayton, Ohio!)

So, what I’m saying to you is this:

Any disruption like this can offer the opportunity of a lifetime for those of us who make those 29,937 “unaffected” parts I was talking about earlier to step up and help our customers fill in the gaps. In my experience, the best way to solidify a lifelong business relationship is to step up to help put the fires out when they happen. So, pick up the phone, get in the car, write the email, or whatever, and FIND OUT HOW YOU CAN HELP. And maybe bring your sales hat with you, just in case…

Here’s an article about automaker supplies being threatened by the coronavirus crisis.

Here’s the one about Honda and Nissan delaying the restart of some China plants.

Here’s the article about Daimler’s warning about “significant adverse effects”

And lastly, here’s the one about the horrible February car sales in China this month.

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