Supply Chain Crisis: What To Know About The Current State

As an unprecedented holiday season quickly approaches, there are many moving parts that companies and their teams must accommodate and overcome in order to deliver the same holiday cheer to their clients and customers in a safe and timely manner. Global supply chains have extensive delays resulting from the impact of COVID-19, as well as the recent introduction of tariffs and enhanced customs protocols. All of these factors have made the gift giving process more complex and created the potential to incur additional costs, such as expedited shipping, rush fees, and storage costs. Being knowledgeable about the right questions to ask any vendor about their supply chain when dealing with gift procurement, will help avoid these costs and ensure a more seamless and enjoyable holiday season.  According to Sarah Clymer, a highly respected professional with over 25 years of experience in the supply chain and logistics field, there are 4 key areas of inquiry when determining which vendor to work with to source gifts.

 

Current Lead Times of Key Suppliers

Due to COVID-19, lead times have increased for suppliers, especially those sourcing internationally. Inquiring about the current expected production and shipping times is crucial when ordering and planning for gift giving this holiday season to avoid costly delays. It is important to establish a realistic time frame with suppliers during this time and having a well-rounded understanding about what is a realistic first step. Although the current crisis is expected to accelerate flexibility and speed in fulfilling demands, this change is not anticipated to show itself for another year, according to a survey conducted by The McKinsey Apparel, Fashion & Luxury Group. In turn, current lead times are expected to be about 40% longer than normal, thus it is essential to take this into account when analyzing the right supplier to satisfy your needs.

 

CTPAT Certification

When working with any vendor, it is always recommended to ensure they hold a CTPAT certification, demonstrating an active partnership with the U.S. Customs and border protection agency. This partnership works “to protect the supply chain, identify security gaps, and implement specific security measures and best practices”, according to the Department of Homeland Security, all of which lower risk and strengthen the vendors supply chain overseas. Vendors who hold CTPAT certification benefit by experiencing shorter wait times at the border, the assignment of a supply chain specialist to the company, and front of line inspection, all of which play a huge role in minimizing the risk of incurring additional costs or clearance delays.

 

Test materials and safety certifications

When working with a vendor who outsources overseas, it is crucial to receive and review all documentation proving their legitimacy and that safety and quality standards are being met in production. One of the best ways to test their credibility is by asking who conducts their safety and quality inspections, as firms who use a third party, accredited inspections service are more reliable and transparent than those who do this in house or not at all. Sarah Clymer shared that asking for all available and relevant documentation regarding safety, quality, and ethical standards will minimize the chances “of clearance delays, poor quality products, additional costs, and demonstrates the diligence of this supplier for defending their products and company”. Being able to see hard evidence that their standards are as high as yours will reduce the likelihood of any delays and costly mistakes later on. A secure supply chain will always have evidence of CTPAT certification, product testing, and supplier verification so it is crucial to include questions about all three of these when deciding which supplier is the most reliable option.

 

Insurance

Asking the vendor about their product liability insurance is crucial for avoiding unexpected costs or assuming liability in the event of an injury. This type of insurance and liability is crucial to verify and ask about when working with vendors involved “in the design, sourcing, and importing of goods”, according to Sarah Clymer. In the event that a product is recalled, product liability and product recall insurance will cover the costs associated with recall, recovery, and defending a product liability insurance, thus eliminating the chance that a very costly incident will become the financial responsibility of your company. Another great topic to cover with any prospective supplier is their willingness to offer a service guarantee; a written document outlining what the expectations for the order are and what the result is if these expectations are not met. Including shipping time and quality standards is a great way to give your company extra insurance and eliminate financial liability should there be an issue down the road.

 

Knowing the most important topics to cover and questions to ask when considering an overseas supplier will save your company time and money by avoiding additional costs and delays down the road. Using these tips will ensure you are receiving all relevant information to make informed, transparent decisions when it comes to choosing the right vendor to meet your needs.

 

 

 

Sources:

“CTPAT: Customs Trade Partnership Against Terrorism.” U.S. Customs and Border Protection, www.cbp.gov/border-security/ports-entry/cargo-security/ctpat. 

Karl-Hendrik Magnus, et al. “Time for Change.” McKinsy & Company, May 2020, www.mckinsey.com/~/media/McKinsey/Industries/Retail/Our%20Insights/Time%20for%20change%20How%20to%20use%20the%20crisis%20to%20make%20fashion%20sourcing%20more%20agile%20and%20sustainable/Time-for-change-How-to-use-the-crisis-to-make-fashion-sourcing-more-agile-and-sustainable.pdf.

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