Events surrounding the recent outbreak of a strain of Coronavirus are cascading daily after reports of the initial outbreak occurring in the Chinese city of Wuhan, the capital of central China Hubei Province.  Thus far the virus is believed to have infected upwards of 4500 people and the latest death toll is reported as 132 persons and rapidly climbing.  The infection continues to spread and so are the potential implications.

The timing of this outbreak is unfortunate, coming at the very end of the Lunar New Year holiday, a period when many Asians are traveling back to their work or personal residence locations. Thus, the infection is continuing to spread to other Chinese provinces, and to other countries stretching to other parts of Asia, Europe, North America and other countries.  Total travel bans and quarantine condition now exist for the entire city of Wuhan and adjacent cities., along with other provinces across China.    Coronaviris screening

On Saturday, Chinese President Xi Jinping warned that the spread of the virus presents a “grave situation” and according to the state run Xinhua news agency, called for the government to take maximum measures to make people’s lives and health a top priority including the establishment of a central committee to oversee response and mitigation efforts.

The government has already extended the end of the Lunar New Year period to February 2, in order to curtail nationwide travel.  Some domestic and foreign manufacturers have taken the measure to extend production shutdowns to February 9. In order to further mitigate added spreading of the virus.

The World Health Organization (WHO) is yet to declare a world health emergency but officials are now on the ground in the impacted areas to make detailed assessment on the overall scope and veracity of this virus. Such a declaration may be imminent.

The U.S. State Department has dispatched a plane to the impacted region to evacuate U.S. citizens, and has further issued a directive that essentially bans all non-essential travel to China for U.S. residents. The screening of passengers arriving from China has been expanded to 20 U.S. airports, while many other countries have initiated similar airport screenings.

There are already reports of potential industry supply chain disruptions.

The most prominent being amplified are reports from the South China Morning Post and Bloomberg indicating that the supply network ecosystem of Apple that is resident across China is bracing for likely production disruptions as plans for ramping-up a newer lower cost model of the iPhone was scheduled to begin in the February and March time period. While Apple provides immediate headline visibility, chances are that there are many potential looming impacts, depending on what occurs over the coming days.


Supply Chain Matters Perspectives

The ongoing Coronavirus outbreak is obviously concerning, and the timing is significantly troublesome. Yesterday, news of the outbreak triggered the Dow to drop 500 points on the day. Today, the market recovered a portion of that loss.

Governments, investors and supply chain leaders are obviously concerned, and for good reason. The first priority is obviously virus containment.

We are the current view that the impacts of the outbreak on multi-industry customer demand customer demand and supply networks are yet to be definitely determined.

On the demand side, 3M Corporation, manufacturer of protective respiratory masks has already announced a stepped-up production schedule to meet event-driven added demand. That is an obvious response.

Other manufacturers and retailers are likely in the process of assessing specific conditions within impacted areas to determine either short or longer-term impacts to either product demand or supply networks.

Indeed, the many businesses and their supply chain management teams have well defined supply chain risk management and mitigation plans are now activating measures of sensing and response to potential areas of exposure or disruption. Those with embedded predictive and prescriptive analytics capabilities will be in the position to quantify and assess specific implications for products, product supply and financial implications.

This remains a period of assessment and preparation along with activating active online communications linkages to various impacted areas. Insure your employees and those of your suppliers are informed and safe. Temporarily reduce all non-essential international business travel. Actively monitor events and consequent developments.

The time for action may be shortly at hand but it is best at this point to let local and global health officials perform the immediate task of virus containment.


Bob Ferrari


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