Some of the first real indicators of the impact of the global-wide COVID-19 Coronavirus impact on U.S. based multi-industry supply chains stems from recently published data from both the Institute of Supply Management (ISM) and the National Retail Federation (NRF).
ISM COVID-19 Survey: Impacts on Global Supply Chains
This week, ISM released highlights of: COVID-19 Survey: Impacts On Global Supply Chains.
This survey was conducted between February 22 and March 5, and reportedly involved 628 respondents representing both manufacturing and services organizations. The survey is weighted more toward organizations with less than $10 billion in revenues, with respondent profiles weighted toward: “…experienced practitioners, managers and directors in a supply chain management role.”
Among the key findings of this survey were:
- Nearly 75 percent of companies reporting supply chain disruptions in some form, with more than 80 percent believing that their organization will impact some impact related to the virus-related disruption.
- Upwards of 57 percent noting longer lead times for Tier 1 China sourced components, with average lead times more than doubling over 2019 levels.
- Manufacturers in China reporting operating at 50 percent capacity with 56 percent of normal staff. (at the time of the survey)
- More than 44 percent of respondents indicating no plan in-place to address supply chain disruption from China.
- More than half of respondents having difficulty in obtaining information from China suppliers.
- Nearly one-half (46 percent) reporting delays in the loading of goods at Chinese ports.
Commenting on the report, ISM CEO Thomas Derry indicated: “we’re seeing that organizations who diversified their supplier bases after experiencing tariff impacts, are potentially more equipped to address the effects of COVID-19 on their supply chains.” Derry additionally indicated: “The story the data tells is that companies are faced with a lengthy recovery to normal operations in the wake of the virus outbreak.”
National Retail Federation (NRF) Report Data
Earlier this week, the NRF indicated that: “The coronavirus outbreak is expected to have a longer and larger impact on imports at major U.S. retail container ports than previously believed as factory shutdowns and travel restrictions in China continue to affect production.”
That conclusion was drawn relative to the latest Global Port Tracker report produced By NRF and Hackett Associates.
Noted in the summary of this latest report are statements: “There are still a lot of unknowns to fully determine the impact of the coronavirus on the supply chain,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold indicated. “As factories in China continue to come back online, products are now flowing again. But there are still issues affecting cargo movement, including the availability of truck drivers to move cargo to Chinese ports. Retailers are working with both their suppliers and transportation providers to find paths forward to minimize disruption.”
Hackett Associates Founder Ben Hackett indicates in the summary, a stated optimistic view that some sort of normalcy will have returned to global trade by the end of March or early April.
The Port Tracker report is in addition to a separate NRF survey of members that found 40 percent of respondents indicating they are seeing disruptions to their supply chains from the virus and that another 26 percent expect to see disruptions as the situation continues.
Supply Chain Matters Perspective
As reflected in this ISM and NRF survey data, the supply chain management community is obviously already feeling the initial effects of this ongoing and unprecedented disruption.
Keep in mind the timing context of the surveys, and that the real impacts of the China supply network disruption are yet to be felt and more likely will become more evident in the next 2-3 weeks. Further, survey data is reflective of China based disruption, and as this blog and many other industry and business media has noted, as the virus continues it’s ongoing outbreaks across Europe, certain Middle East countries and the United States, the magnitude of the dual disruptions is yet to be experienced.
As many versed in supply chain management strategy have stated, the disruption that is unfolding is dual fold, involving both product demand and supply network disruptive elements. The ISM survey data is reflective of the supply management side while global equity markets and individual businesses warning investors speak to the potential combination of product demand, revenue and profitability impacts of the disruption. In goes without stating that this week’s severe downturns in global equity markets is very concerning.
All of that stated, there should be little or no doubt at this point that the global supply chain management community is about to experience it’s most challenging and unprecedented period.
With data indicating challenges in directly communicating with suppliers, inability to travel to impacted areas because of widespread travel bans, and with ongoing measures to reduce further global virus community spread requiring many workers to take more precautionary measures, patience, fortitude and resolve are important. Now is the time to leverage existing technology investments in gaining visibility, conducting online collaboration, making more context aware decision-making. Focus on keeping sales and operations planning and senior management executives up to date on the best information available and on likely ranges of scenarios.
Our community will all get thru this disruption with a keen eye on prioritization of the most important business and community needs and with the understanding that healthcare delivery supply networks have the highest priority right now.
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