The current coronavirus (COVID-19) outbreak is not only risking humanity’s life, but also the global economy and more specifically supply chain. Although seeking a single supplier might seem like the most viable strategy for many companies, nowadays, multi-sourcing is the smart way of doing business.
We cannot anticipate such situation and we believe that strict measures will be taken by all countries to prevent the propagation of a virus as we are facing with the COVID-19. When a region is affected by such virus, precautionary actions, such as company shutdowns, quarantine, country borders, ports and airports closed, etc., are taken. This affects production and therefore, risks delivery times and contract requirements, causing multi-million dollars losses. It is important to assess your company’s risks and diversify your sources to prevent any inconvenience and be one step ahead of catastrophes and competition. You can also become aware of who supplies your suppliers and have a plan that focuses on your capacity to solve any adversity and continue to deliver your customer’s requirements.
The global pandemic and growing crisis began in China, one of the most important supplier regions worldwide. Many companies have strong dependency to Chinese manufacturers without taking a look on suppliers in other competitive, well positioned, cheap-labor regions. This affects potential business that could be prevented by diversification.
Colombia should be considered as an alternative to Chinese/Asian suppliers for several reasons:
- Its strategic geographical position. Colombia is well located in South America, it is a liking point between North and South America, it has broad coasts on the Atlantic and Pacific oceans, and it borders with Panamá, which has the Canal of Panamá, connecting both oceans.
- It has cheap labor. Colombia has lower salaries than North America and Europe.
- Good logistics. It is a strategic point for air, maritime and land logistics because of its geographical position and good climate conditions.
- Good infrastructure. Many recent investments in the Colombian infrastructure.
At KROM, we are able to support your company to look for Colombian or South American suppliers, and help reduce risks associated with supply dependency. We want you to assess your risks and create a global supply chain network that is preventive, resilient, durable and trustworthy in the future.