A Little Background
A-ONE started operations in 2003 under the name D&D Electronic Services. Initially, we established a factory, here in Guangdong, producing cables. We had a partnership with a German entity and we supplied various Siemens units in Europe with cables assemblies and harnesses.
In 2006, the industrial complex in which our workshop was located was re-purposed and re-zoned for a residential housing project and we were faced with the challenge of rebuilding or relocating. Having made significant investments; which quickly became a severe burden, we decided to make a switch from direct manufacturing to a sourcing platform. The experience gave us an important lesson regarding our ability to operate autonomously. It was time for a re-organization and we concluded that issues such as inventory, work in progress, production/quality loss, and personnel management were huge distractions. We could be much more agile and responsive if we let the factories do their job and we could focus on supplier development, quality, and procurement.
Today, A-ONE manages a team of twenty procurement specialists, project managers, and quality inspection personnel. 90% of our 100+ manufacturing partners are based in Southern China, within no more than a three-hour drive from Dongguan, our headquarters.
The Approaching Storm
In December 2019, my colleague mentioned news of an outbreak of a flu-like disease, primarily located in a wet market. I was reminded of the SARS epidemic, which we weathered in 2003 – 2004. SARS also started in a market, yet I did not really give it that much thought. China is a huge country, with a giant population and isolated outbreaks of disease are common.
The leadup to Chinese New Year, when the country shuts down for approximately two to three weeks, is always chaotic. As much as we remind our partners in the West of this yearly tradition, there are typically three or four clients who simply cannot accept the fact that we will be off the radar and we are under compelling pressure to finalize projects, provide samples and make shipments. This is a period during which we are working 16 hour days, Saturdays and Sundays, rushing to finish product, inspect, make bookings, and arrange courier shipments.
This year was even further impacted by the fact that we had a team of product engineers from the US, who had been with us in China developing and launching new products and our resources were that much more pressed.
It was during the run-up to Chinese New Year that the news was building that there really was an issue in Wuhan. The government messaging was tempered and everyone was vigilant but we had no idea of the depth of the problem.
It was during the new year holiday when we learned of the lockdown in Wuhan and the threat of a lockdown across the board. I was at my wife’s parents’ home for the holiday, as we usually do during the Spring Festival, and we dropped everything and went back to Dongguan. I was in daily contact with Lorne Smith, our director of business; we were planning and strategizing, but the information was not consistent and we did not have any idea as to what to expect. We simply had to sit it out.
The government announced an extension of Chinese New Year, which we had predicted, by one week in order to reduce the traffic that typically ensues when everyone comes back to work. This “one week” effectively became four weeks. It is important to note that the majority of workers in Guangdong do not come from Guangdong. Most of the people involved in manufacturing down here are from Hunan, Hubei, Henan and Guangxi. Trips home can be a two or three-day affair, and with more than 300 million people on the move, it is a frantic and congested time under normal circumstances.
Lockdown and Uncertainty
Eventually, when we realized that we were not starting up business anytime soon, our thoughts first went to our employees. Were they safe? Were they accounted for? We contacted everyone by phone and on social media. All were safe and sound. 14 of our 20 employees were under lockdown, with one in Wuhan.
The next step was to assess our own obligations, as a company, based on the constantly changing rules being tossed about by the local government. Despite what many people in the US assume, the central government does not play a significant role in the day to day life, and those duties are left to local, district committees.
We were obliged to report to the local government on a daily basis, trying to keep up with the regulations that were being updated constantly. We had to register all of our employees, note their present location, improve our office space and employee dormitory with PPE (personal protective equipment), temperature stations, hand cleansing stations, and documented waste protocol. Eventually, we were approved by the government to return to work.
We have some employees who live in Guangdong and we have several employees who stayed in Dongguan for Chinese New Year. We put together a skeleton staff and started the next stage: monitoring our supply chain.
“Under pressing times, one can recognize an individual’s strength and that of a group.”
The Slow Crawl Back to Normalcy
Throughout this period, we were in contact with our major manufacturing partners. Some were back to work quickly, some were at half capacity, and everyone was understaffed. Not one of our partners was ever on the brink of closure but each workshop had its own, unique difficulties. The most common theme was the lack of operators.
The next variable was the back-end of the supply chain. Material distributors, who commonly extend their Chinese New Year break under normal conditions, were not available; therefore, even those who did have personnel capacity, did not have material available to manufacture.
We maintained vigilance on project schedules, mitigation plans, and resource allocation. Our customers and partners in the US and Europe needed to have project follow-ups and we needed to act on new, sometimes improvised, methods of implementation.
Slowly, our employees trickled back. By March 1st, the entire team was back in Dongguan, with the notable exception of one – the employee in Wuhan. He did not get back down here until early April.
All employees were asked to quarantine for 7 days, despite the fact that they had already been on lockdown previously. In an abundance of caution, we did not want to re-commence office activity without absolute confidence in the health of everyone.
Quality in Everything that we Do
As China slowly got back on its feet, we had to shift our focus and help our supply partners on a much more intimate basis. Since many factories were short-handed, we pitched in and provided support – primarily in quality control and inspection. A-ONE inspects on a 100% basis; however, during unpredictable times, we felt a need to tighten up process control and work on inspection during production as well. Our engineers worked with supply partner engineers in tooling design and CAD work. Our quality team stepped in on some of the manufacturing processes, and we tried to alleviate pressure on production lines and improve supply to our customers.
A slow path to completely normal operations was achieved mid-April. There were challenges on the logistics front as everyone was in a rush, struggling to book vessel space, dealing with the reduced air freight availability and rising costs.
As we approach the middle of the year and we look back, it seems like an eternity.
What we Learned from this Series of Events
Under pressing times, one can recognize an individual’s strength and that of a group. Our team has worked extremely efficiently and effectively during this crisis. We have been tested, but our processes and controls have been proven successful. During certain key employee’s absence, due to COVID-related restrictions, we have picked up for them and allocated resources accordingly. Time to market, on-time delivery, and transparent communication have been key to unfettered service to our customers. We have proven to be proactive, and act on the best interests of our business partners in the US and Europe, when they may not be able to even leave the house.
Having a team on the ground, under Western management and scrutiny, has been vital to ensuring that our customers, who are now undergoing the same social control measures that we witnessed in January and February, can rely on us to accommodate to changes in design, planning, shipment, and associated issues arising from virus related disruptions.
We have recognized the resilience of our supply chain and that of China as a whole. Say what one may think about the government, it appears that China employed control mechanisms that may seem draconian from afar, yet acutely successful in the long run.
The real test for China, as a whole, was the May Day Holiday.<.a> This socialist “workers day” is usually a week-long affair. This was the first extended holiday since the pandemic started in Wuhan and we have now returned with a solid 2-weeks. With the exception of a cluster in the northern province of Jilin, it appears that the disease has been effectively controlled.
In terms of our supply partners, they are taking a close examination of material supply and improvements in efficiency.
Most factories will re-analyze their material supply chains, perhaps choose partners closer to their location, and keep a buffer stock for potential future disruption.
As China has grown since we started the business here 17 years ago, costs have risen astronomically and the trend to improve processes, diminish waste, and employ value stream mapping and associated tools have been vital. Now, having experienced a period of severe lack of operators, it appears that production equipment efficiency and application of robotics has gained traction.
Update: June 21st
The outbreak in Beijing has reminded us that the virus has not left; yet, life and business in China have returned to normal. We are on the move now, visiting workshops, enjoying functions, and breaking bread with our business partners. Although facemasks are still ubiquitous, they serve more as a reminder than an actual preventative tool. The only vestige of COVID remaining is a still shuttered border and no idea as to when we can move in and out of China freely.