Global business leaders who remember dealing with previous virus outbreaks likely realized early how disruptive the novel coronavirus might be to their operations. SARS and other past crises spurred some multinational companies to create policies years ago that were designed to minimize supply chain disruption in Asia and other regions in the event of a pandemic or natural disaster. But those policies may be out of date—and some companies’ supply chains are vastly different, and more complex, than they were at the height of the SARS outbreak in 2002–2003.
Moving early to mitigate risks to supply chains has been key to navigating the current COVID-19 crisis. Still, even the best-prepared leadership teams at fashion and apparel companies are learning on the fly as they deal with this new outbreak and its cascading effects, which have included the cancellation of numerous fashion week events and trade shows in various cities.
With production temporarily halted or slowed in parts of China—where approximately half the population was affected by some quarantine or travel restrictions at one point—and in other countries, logistics operations have become increasingly tangled. For multinational fashion and apparel companies with sourcing and manufacturing exposure in countries reeling from the outbreak, daily communication and coordination across regions is crucial to minimizing disruption, helping staff avoid getting sick, and keeping production and goods moving, even if at a delay.
Global leaders must coordinate daily not only with their regional corporate teams and C-suite peers, but also with local factory managers, suppliers, logistics partners, customers, and, of course, employees. Those who do so effectively will face fewer challenges and slowdowns, and recover more quickly, as well as learn what they can do better the next time a crisis hits.
Communicating and coordinating daily to capture information
Leaders who don’t have the information they need cannot act or pivot effectively in a crisis. Here are some of the main groups senior global executives should communicate with daily to gather insights and help steer their organizations through this trying time:
Regional and country managers: Navigating any crisis requires collaboration among different country heads. International operators should be holding daily video or audio conference calls with senior managers from each major region and country in which they have operations to solicit and share information, track progress and capacity, determine priorities, create solutions, set strategies and assign and monitor progress on tasks.
These calls can surface problems early. For example, executives outside China might not have realized there was a shortage of face masks in China in the early weeks of the outbreak if they hadn’t been speaking daily with their peers inside the country. In some cases, employees were required to wear face masks on the job due to quickly enacted local containment policies, so getting masks to those employees was crucial to keeping offices and factories running. Leaders who moved early were able to quickly source masks in other countries and ensure employees received them as swiftly as possible.
Heads of manufacturing: Companies that know how many people are showing up for work at each factory, and which production lines are running and at what capacity, are better prepared to manage their end customers’ expectations and needs, and potentially shift some production to other facilities if warranted.
The crisis emerged during the Lunar New Year celebration when millions of Chinese workers typically take a long holiday and travel to their home town to celebrate with family. With new travel restrictions in place, including canceled flights and train services, road closures, and lockdowns, many migrant factory workers have faced delays as they have attempted to return to work in the big cities, affecting factory production in multiple regions. Factory managers know how many employees are absent each day and how local policies are affecting their operations. That information, too, is crucial for senior executives to have to plan appropriately and manage customers’ expectations.
Third-party suppliers: Executives need insight into how many people are coming back to work at their suppliers’ factories, too. They need to know if they should expect any delays in fabrics, finishing materials, packaging or finished goods. They also need information on which transportation routes are affected to identify where there are gaps in their supply chain. Leaders in daily dialogue with their suppliers can make quicker, better decisions about things like temporarily switching to a different supplier for a particular feedstock.
Local partners: Shipping partners in Asia might be alerted to route and port closures in their region before they take effect. When a port has closed, a local shipping company might know of nontraditional route truckers could use to avoid any roadblocks and get orders from a factory to a different port that is still open. The change on the fly may cause a delay of a few days in a shipment, but at least it won’t be a few weeks, or worse, result in a canceled order. A shipper’s good guess about an alternative route could mean a customer still receives their goods much faster than they would from other suppliers. But executives have to prioritize daily communication with their partners to benefit from their insider knowledge.
Customers: Transparent, frequent communication with customers can build trust and strengthen relationships and goodwill, and hearing, “We’ll get your order to you. It will be a little late, but we will get it there,” is highly preferable to hearing nothing, as it allows the customer company to make its own contingency plans. Executives at companies that produce input materials also need information from their customers’ factories to gauge capacity and make optimal decisions. If a garment factory isn’t running on time, the end customers—the retailers—won’t get their goods on time, and executives who know that early will be better able to manage all of their end customers’ expectations.
Employees: Just as global executives must communicate daily with their regional leaders, local managers must communicate appropriately with their teams every day. Those communications may range from alerts about factory or office closures or re-openings, to temporary work-from-home policies for those in or returning from affected regions to training on proper hand-washing techniques and reminders about what employees should do if they are experiencing specific symptoms. It’s also important to remember that some staff and their families may have already been personally affected by the virus, either financially or health-wise. Global leaders can set the tone for their organizations by communicating with appropriate sensitivity and transparency.
Multinational companies that immediately acknowledged the supply chain risks the new coronavirus presented in January have been better able to act with the urgency, humanity, flexibility and speed the situation demands. Daily communication and coordination with colleagues and partners across the globe is crucial, and companies that are capturing the learnings from this challenge will be best positioned to protect themselves in this continually changing world.
As managing director and president, worldwide, of Chargeurs*PCC Fashion Technologies, Angela Chan oversees all operations and business functions for the world’s leading interlining company, a division of France’s Chargeurs Group. Prior to joining Chargeurs in February 2018, she served as chief sourcing officer and SVP of global business development at Destination XL, an international multichannel men’s apparel retailer. Her previous experience includes executive positions with major clothing companies such as Rocawear and Redcats and several years as a consultant with Gerson Lehrman Group, where she performed analyses of retail and fashion companies for corporate financial investment firms.