Coronavirus: Impact on the supply chain, business and employee safety.

The Coronavirus (2019-nCoV) outbreak that originated in Wuhan, China has taken at least 2.000 lives and has put the world under a global state of emergency.  This impacts the lives of people and businesses, chains like Starbucks and McDonald’s have closed their shops all across China. Companies are implementing flexible schedules for their workers and governments are tracking the evolution of the virus.

This year China’s GDP was looking at a 6% growth but, after the outbreak, Oxford Economics is predicting a 0.6% drop, which is impressive taking into consideration the magnitude of this crisis.

The travel and tourism industry is taking a big hit. Travel bans have been imposed by many countries, the hospitality industry is suffering, and prevention is the key to mitigating the impact of the pandemic.

There’s a shortage of supplies ranging from sanitary to electronic items. Recently Apple announced that they wouldn’t meet the revenue guidance provided to investors last month as a result of store-closings and supply constraints. Even though the supply chain interruption is temporary, Credit Suisse forecasts iPhone shipments will decrease by 50% in Q1, compared with Q4 2019. 

Foxconn, Apple’s main supplier and the world’s largest electronics manufacturer, expects a hit to their total revenue in 2020 due to the disruption of their China-based manufacturing operation. This is a clear indication of the scale of the outbreak’s impact on the global technology supply chain. 

According to D&B there are around 22 million businesses within the areas affected by the coronavirus outbreak, this impacts directly in at least 56,000 companies around the world that rely on suppliers either directly or in the first and second tiers.

The full impacts of the Coronavirus outbreak won’t be felt for probably a few months, so it’s important for businesses and supply chain leaders to closely monitor the trends so they can implement contingency measures. 

It’s important to consolidate the inventory outside of the affected areas, many corporations are rethinking their supply chain, ships carrying refrigerated cargo containers from the U.S. to China are being diverted to ports in Hong Kong, South Korea, Taiwan, and Vietnam.

This is mobilizing audits from China to Southeast Asia and Taiwan, where inspections from US brands grew 9.7% compared to 2019 and 37% in South Asia.

While this crisis unfolds, it’s important to keep the focus not only on the inventory but also the logistics and labor. Many hubs and ports are experiencing limitations, so even if the stock is available, sometimes it is hard to transport because the hubs are operating at full capacity or have limited resources.

As for the labor, the availability of workers is limited especially around quarantined areas. Companies should do everything in their power to keep their employees safe, this includes the implementation of technology for remote work and clear health guidelines for traveling personnel, as well as comprehensive insurance that covers pandemics and trip interruption.

The good news is that most companies are reacting accordingly to the severity of this situation. At Rene we experienced high growth in comprehensive travel policies sold to corporations, this helps prevent the spreading of the pandemic as well as safeguarding the integrity of the employees.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>