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Supply chain disruptions rise due to coronavirus: survey


Tempe, AZ — Nearly 75 per cent of companies report supply chain disruptions in some capacity due to coronavirus-related transportation restrictions, and more than 80 per cent believe that their organization will experience some impact because of COVID-19 disruptions, according to a survey by the Institute for Supply Management (ISM).

Of those, one in six (16%) companies report adjusting revenue targets downward an average of 5.6 per cent due to the coronavirus.

“The story the data tells is that companies are faced with a lengthy recovery to normal operations in the wake of the virus outbreak,” said Thomas W. Derry, Chief Executive Officer of ISM. “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.”

Primary reported supply chain impacts include the following:

  • 57 per cent noted longer lead times for tier-1 China-sourced components, with average lead times more than doubling compared to the end of 2019.
  • Manufacturers in China report operating at 50 per cent capacity with 56 per cent of normal staff.
  • More than 44 per cent of respondents do not have a plan in place to address supply disruption from China. Of those, a majority (23 per cent of respondents) report current disruptions.
  • Of the companies expecting supply chain impacts, the severity anticipated increases after the first quarter of 2020.
  • Six in 10 (62%) respondents are experiencing delays in receiving orders from China.
  • More than half (53%) are having difficulty getting supply chain information from China.
  • Nearly one-half are experiencing delays moving goods within China (48%).
  • Almost one-half (46%) report delays loading goods at Chinese ports.

“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 Derry.

More than 60 per cent of companies that ordinarily travel to China have no plans to do so over the next six months. Additionally, nearly one-half (47%) note travel to other international areas is subject to extra scrutiny or limitations, with the most mentioned areas being Korea, Italy, Japan, broadly Europe, Hong Kong and Singapore.

Conducted between February 22 and March 5, the survey’s 628 respondents largely represent U.S. manufacturing (52%) and non-manufacturing (48%) organizations, 81 per cent of which have revenues of less than US$10 billion. Respondent roles range from emerging practitioner (4%), to chief procurement officer (6%), with 73 per cent being experienced practitioners, managers and directors in a supply chain management role.

 


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