COVID-19 has proven to be a great disruptor. First it caused the national shutdown of China as factory after factory turned the lights off, sending Western firms scrambling for goods of all kinds. Next the disruption spread globally, causing a shutdown of consumer spending in the West, and sowing confusion on all sides of the supply chain.<\/p>\n
As China factories resume operations, the risks to the global supply chain and opportunities for reducing those risks have become clear.<\/p>\n
The first phase of COVID-19 served as a wake-up call for Western firms that were overly dependent on China. As province after province and industry after industry shut down, it became clear that many Western firms could not manufacture their products without China, at least not in the quantities required. Supply sources that could easily be moved to other countries had mostly already relocated. Garments and consumer electronics were in this category. \u00a0Supply chain directors faced the challenge of finding alternative suppliers of critical parts overnight, in the midst of a growing global health crisis. We saw clients trying to relocate assembly lines to places like Vietnam or Thailand, only to discover that factories in Southeast Asia also depended on parts from China. Indeed, factories in that region are mostly owned by Chinese entities.<\/p>\n