24.02.2020 // Politics

BME: German buyers arm themselves against the coronavirus

The association advises its members to form task forces, to streamline their risk management and to search for alternative suppliers at an early stage.

Major challenge for procurement, logistics and supply chain management: the coronavirus epidemic in China. Photo: pixabay.com Major challenge for procurement, logistics and supply chain management: the coronavirus epidemic in China. Photo: pixabay.com

German buyers, logistics and supply chain managers are currently arming themselves against the negative effects of the coronavirus epidemic in China with a whole bundle of measures. "In many of the affected companies, task force units are being set up to quickly detect and promptly remedy possible disruptions in the supply chains," said Riccardo Kurto, China representative of the Association for Supply Chain Management, Procurement and Logistics (BME), in Eschborn.

The purchasing department is aware of its responsibility. That is why he is spending a lot of time on the intensive review of procurement activities in China and East Asia as part of his risk management. "Some companies reported to us that, together with their Chinese suppliers, they identify existing or imminent supply bottlenecks in the People's Republic and develop suitable emergency plans," Kurto continued. This includes a precise analysis of the extent and possible duration of the epidemic. They also examined how long it would be possible to wait for missing or delayed shipments of raw materials and production materials without major financial losses. A further to-do was to examine alternative modes of transport in order to counteract transport failures or delays in good time.

The BME learned from its network of members in China that alternative sources of supply are currently being developed in other parts of the world. To this end, the companies are in close contact with their Chinese supplier base. Business partners of the BME "told us that their stocks are now reaching a critical point. That's why they occasionally order missing production material from alternative suppliers outside China - for example from suppliers in Europe," Kurto explained. However, this approach has an impact on the logistics and supply chain of the customer that should not be underestimated and must be taken into account.

When asked by the BME, several German industrial companies confirmed that their business activities in China had been disrupted - if not massively, then at least sensitively - by the coronavirus epidemic. Factories that had already been closed would only be restarted very slowly due to the quarantine regulations - and only with a limited workforce. Most suppliers were not working at full capacity. Production figures would therefore have to be reduced. Some companies reported that they could not send personnel to carry out release inspections, which further delayed deliveries to Europe. Some companies kept large quantities of the industrial raw materials needed for production in stock. Whether serious supply bottlenecks would occur in the near future would depend on the duration of the epidemic. In any case, this situation will lead companies to conduct a fundamental analysis of their supplier structure as well as the inventory management of the raw materials and components required for production.

Kurto emphasized that both the understanding of German and European companies for the dramatic situation in the world's largest economy and their solidarity with the Chinese people are very great. The Chinese suppliers would do everything in their power to cope with this situation.

Editor: Frank Rösch, BME

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