Even a Little Bug Can Take A Bite Out of Effective Supply Chains

While Zika continues to dominate the news in the U.S., it's recently been put under the microscope when it comes to its impact on the global supply chain.

Recently, China announced a requirement of certificates of fumigation for each container originating from the US. Some fear that this will elongate the supply chain process and add cost. With all the noise about this, it is shocking that so many really miss the most crucial point in this conversation. It's critical to keep in mind that both China and the U.S. have strong interests in keeping trade flowing, therefore there is a desire on both sides to keep the supply chain working efficiently and effectively.

Most of the pain will come from irrational decision-making—not from container certificate requirements. This will get worse as Zika continues to spread rapidly. Here are some decision-making logical fallacies that are much more difficult to compensate for:

1. Supplier/customer shut downs: What happens when one worker misses a day of work due to catching the Zika virus or caring for a family member? The other workers panic and stay home, or go on strike to demand a safer workplace. It's going to happen in China and elsewhere because the virus is already spreading rapidly in Singapore, a country with an amazing ability to respond to such events.

2. Irrational demands: People don't understand the Zika virus. When people don't know, they adopt the “do something, because doing something is better than doing nothing” mentality. Examples of irrational ordering behavior include stockpiling, refusing to enforce quality with suppliers out of fear of “rocking the boat”, or supplier switching because the supplier's country had its first (or 101st) case of Zika.

3. Friction increases: What does your boss do when he hears about the Zika virus? He asks that you keep him informed of what's going on, because he has to monitor it for his boss or other stakeholders. This causes friction, simple decisions that you used to make without supervision all the sudden become time-consuming—with no improvement to outcomes.

What can you do? Firstly, be proactive: have a plan when the boss walks in, or the customer wants to stockpile “in case” Zika requirements slow down freight flows. Secondly, communicate – keep key suppliers and customers in the loop on what you're doing so that you can generate synergies and develop mutually reinforcing decisions.

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