Coronavirus Survey Results Show Impacts of Global Supply Chains
Institute for Supply Management study reveals COVID-19’s supply chain effects.
On March 11, the Institute for Supply Management (ISM) revealed the first-round results of a survey focused on coronavirus disease 2019 (COVID-19) business and supply chain impacts.
Notably, almost 75% of companies report supply chain disruptions in some capacity because of coronavirus-related transportation restrictions, and more than 80 percent believe that their organization will experience some impact because of COVID-19 disruptions. Of those, one in six (16%) companies report adjusting revenue targets downward an average of 5.6 percent because of 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,” says Thomas W. Derry, CEO 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 percent noted longer lead times for Tier-One China-sourced components, with average lead times more than doubling compared with the end of 2019.
- Manufacturers in China report operating at 50 percent capacity with 56 percent of normal staff.
- More than 44% of respondents do not have a plan in place to address supply disruption from China. Of those, a majority (23% 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.
- Almost 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,” Mr. Derry says.
More than 60 percent of companies that ordinarily travel to China have no plans to do so over the next six months. Additionally, almost 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 Feb. 22 and March 5, the survey’s 628 respondents largely represent U.S. manufacturing (52%) and non-manufacturing (48%) organizations, 81 percent of which have revenues of less than $10 billion. Respondent roles range from emerging practitioner (4%), to chief procurement officer (6%), with 73% being experienced practitioners, managers and directors in a supply chain management role.
Has the coronavirus directly affected your shop? If so, tell me about it: lbeckman@productionmachining.com.
