Welcome to Part 3 of our series!
China, A Ray of Hope?
Coronavirus cases in China are declining. China is starting to get back online with warehouse capacity on manufactured goods. The whole world hopes to follow suit sooner rather than later. But now, the global supply chain faces an aftermath of logistics problems…
“When the pandemic ends, the problem won’t.”
–Shamelessly swiped from an article in Supply Chain Brain last Friday
Every day, the focus of this series changes because change is our reality. At the risk of being Capt. Obvious here, it’s a cluster %&*!
Today we decided to list our (sort of) highlights reel of top logistics impacts that Coronavirus is having on supply chain. Maybe ‘highlights’ is the wrong word. Sounds exciting. But let’s be very CLEAR. It’s devastating. Our hearts go out to the millions of families impacted by this unprecedented pandemic.
This list is important to supply chain because understanding the impact and risk might help us find solutions faster. Together.
If you have anything to add to this list, please reach out now and be heard. For this segment of our series, it’s not so much advice as simply trying to get a handle on reality.
So with that, here are 7 logistics impacts of Coronavirus on supply chain, based on what we’re hearing in the field today:
1) Inventory Lock-Down
Companies can’t get shipping containers out of the countries that are on lock-down. Moving around China and other affected countries is still an extremely tall order. It’s a domino effect. Since each party relies on another party, the supply chain industry is only as strong as the weakest link.
2) Scant Replenishment
Suppliers may halt production. Manufacturing facilities could be retooled to produce critical-need items like medical supplies. Replenishment of run-down stockpiles may not be possible right now.
3) Higher Costs
Transportation costs are up; inventory is down. There may be alternative fulfillment capabilities, new movement restrictions and continued truck driver shortages to anticipate. It’s gonna cost ‘ya.
4) Seasonal Disruption
People are already wigging out about availability of goods for the 2020 Christmas/holiday market. The ripple effect will touch every sector… pharmaceuticals with allergy season already here; the fashion industry, with fall season right around the corner; etc. For virtually ALL sectors – predicting seasonal demand inventory will be extremely challenging. As if it wasn’t already!
5) Sick Lips Sink Ships
Not literally. But very unfortunately for a large number of ship operators, Coronavirus outbreaks have hit container vessels hard, causing inventory paralysis. Even airfreight out of China is down. Some immediate nearby ports are off limits, leaving empty containers stranded in the wrong places. Companies are considering placing pre-emptive orders from suppliers in currently unaffected areas, before prices rise everywhere.
6) Warehouse Storage & Security
Warehousing capacity is down due to “unfinished business” where products in assembly plants are waiting on components from overseas. Parts keep rolling in, posing security concerns.
7) [Even More] Delivery Pressure
Commitments for customer delivery will get even tougher on same-day/two-day delivery. So you better get a back-up plan.
What are your thoughts?
What have you experienced? What solutions have you tried in these early stages? Reach out to us.
NEXT UP IN PART 4: Managing Coronavirus: Forecasting Tips for Un-Forecastable Lead Times