Survey: Supply Chain Diversity Helps Blunt Coronavirus Sting
Did your organization begin to diversify its supply chain last year in response to the U.S.-China trade squabble? If so, congratulations: You might find that you now have a bit of a leg up on other organizations that weren’t or couldn’t be quite so proactive.
““We’re seeing that organizations who diversified their supplier base after experiencing tariff impacts are potentially more equipped to address the effects of COVID-19 on their supply chains,” said Thomas W. Derry, CEO of the Institute for Supply Management (ISM).
But don’t let it go to your head if you are one of those fortunate companies. As Derry pointed out, “[U.S.] companies are faced with a lengthy recovery to normal operations in the wake of the virus outbreak. For a majority of U.S. businesses, lead times have doubled, and that shortage is compounded by the shortage of air and ocean freight options to move product to the United States, even if they can get orders filled.”
In other words, this will not be easy for anyone. A recent ISM survey found that “nearly 75 percent of companies report supply chain disruptions in some capacity due to coronavirus-related transportation restrictions, and more than 80 percent believe that their organization will experience some impact because of COVID-19 disruptions.” One in six companies reporting a negative impact are already adjusting their revenue targets downward,” ISM reported.
ISM’s findings are similar to those reported by other organizations, including S&P Global Market Intelligence. At the time of its survey, ISM found that manufacturers in China were operating at only 50 percent of normal capacity.