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CONSUMER PRODUCTS AND RETAIL E-SSENTIALS

Your regular update for technical and industry information

Building Resilience in Global Supply Chains

According to the World Trade Organization (WTO) China is the leading exporter of products and services in world merchandise trade, topping $2,500 billion (USD) in total value in 2017[1].  Indeed, over the past decade, global manufacturers and retailers of consumer goods and other types of products have shifted much of their production to suppliers based in China in their efforts to source finished goods, components and materials at competitive prices. But recent threats of tariffs and other forms of trade retaliation between China, the U.S. and other nations have left many companies scrambling to find alternatives to their China-based supply chain partners.

Aside from exposure to increased costs related to tariffs and trade sanctions, global supply chains can also be impacted by a variety of other factors, including adverse weather, unplanned outages of critical infrastructure, or unanticipated disruptions in normal transportation networks. In fact, a recent report by the Business Continuity Institute notes that unplanned IT or telecommunications outages and adverse weather such as hurricanes and typhoons consistently rank as the top two causes of supply chain disruption over the past 10 years[2]

Against this backdrop, it’s hard to overstate the critical importance of taking steps to build and maintain supply chains that are both resilient and flexible. This is especially the case for manufacturers and retailers of a wide array of consumer products, where access to competitive supply chain partners is greater than that for highly regulated products such as medical devices. 

Here are four actions that your organisation can take now to help make your current supply chain strategy more resilient:

  1. Think long-term — Disruptions of supply chain operations should not be viewed as rare anomalies but rather as an inevitable consequence of supply chain complexity. As such, it’s essential to develop contingency plans to help ensure business continuity under multiple disruption scenarios.
  2. Evaluate supply chain alternatives — Part of advanced contingency planning involves identifying and evaluating potential supply chain partners in diverse countries and geographic regions . For example, in the Asia-Pacific region, India, Bangladesh and Vietnam have strong and rapidly growing apparel and footwear industry capacity, while India and Vietnam are also reliable sources for gift items, home décor, toys and furniture.  
  3. Reduce your dependence on single-source partners — Nothing is worse during a supply chain disruption than being held hostage to a single supply chain partner. A diversified supply chain that includes multiple suppliers for the same product can ensure the continued flow of essential inventory. And, having multiple suppliers offers more negotiating leverage when it comes to pricing, delivery times, etc.
  4. Remain flexible — There are few constants in global supply chain dynamics. Economic factors, labour force availability, access to raw materials and other issues are changing with increasing frequency, resulting in a continuously evolving supply chain landscape. Therefore, supply chain strategies must mirror this reality, and supply chain planning should be an integral part of an organisation's ongoing strategic planning efforts.      

One final action that organisations can take to effectively deal with global supply chain dynamics is to partner with a trusted, independent third-party, one that possesses in-depth knowledge and expertise of both global regulatory requirements and the unique characteristics of local markets. TÜV SÜD is present in nearly 20 countries throughout the Asia-Pacific region, with more than 25 laboratories capable of supporting the testing requirements of the vast array of consumer product industries, including apparel and footwear, furniture and household goods, electronics, toys and children’s products, and food, health and beauty products. Our expansive operations throughout the region and extensive knowledge of international, regional and local regulatory requirements provide timely and essential support to major consumer product brands and retailers around the world that depend on global supply chains to meet their customers’ expectations.

By taking these actions, every organisation can help to reduce the risk of supply chain disruption, regardless of the cause, and work more effective to build and maintain supply chains that are both resilient and flexible.   

 

[1] “World Trade Statistical Review, 2018,” World Trade Organization. Available here (as of 20 May 2019). 
 
[2] “Supply Chain Resilience 10 Year Trend Analysis,” report by the Business Continuity Institute, May 2019. Available here (as of 20 May 2019).
 

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