The super typhoon Nepartak struck Taiwan earlier today, causing flooding, power disruptions and damage to homes and other structures. There are also reports of extensive damage to Taiwan’s agriculture industry, with initial losses topping $18 million. How exactly the storm will impact other industries as well as businesses that rely on suppliers in Taiwan has yet to be seen. However, supply chain and procurement organizations that work with partners in the country should take these five steps to prepare for, and potentially mitigate, the impacts of the supply chain disruption.
Rob Cheng, head of growth at Elementum, a software company providing supply chain management solutions that offer real-time insight and analysis of possible disruptions, gave his insight on how organizations around the globe can prepare and respond to Nepartak.
1. Get in Touch With Your Suppliers Now
Taiwan is the center of many "kill shot" risks for electronics supply chains that lack robust alternate sourcing plans. If you don't have systems in place that have already proactively alerted you to potential impacts, reach out to your suppliers and logistics partners immediately to see who may be affected by the Typhoon.
2. Don’t Forget Single-Source Suppliers
Start your outreach with single-source suppliers and those with long recovery periods after disruption (e.g. those that require highly customized equipment).
3. Prepare for Labor Disruptions
Make allowances for the disruption to the labor force. Flooding may prohibit employees from getting to the factory, so make sure you have adequate inventory levels in the right places to satisfy your key customers’ needs during any downtime.
4. Keep an Eye Out for Counterfeiting
Beware that counterfeits entering the supply chain after disruptions are a major problem, especially when leveraging suppliers or distributors not on your approved vendor list (AVL). Make sure to keep the quality team aware of new vendors and apply extra testing throughout. (Counterfeiters are known for providing actual products at the beginning and end of a reel, while replacing the middle section with counterfeits.)
5. Test Yourself
Even if there are no major disruptions to your supply chain this time, take this opportunity to test your issue management capability. How long did it take to identify the potential problem, assemble a team with the right knowledge and connections, then analyze and triage potential disruptions based on level of product and customer impact? Leading supply chains should be able to have a good sense of potential impact within a few hours, and a mitigation plan in motion within a few days at the latest.