US firms report supply chain disruption as coronavirus continues
By Hannah Abdulla | 18 March 2020
Three-quarters of US companies polled in a recent survey say they are experiencing supply chain disruption in some shape or form due to the coronavirus (Covid-19) outbreak.
The first round results are from a survey by the Institute for Supply Management (ISM) into the business and supply chain impacts of the coronavirus disease 2019 which showed many companies are now factoring in the potential impact of the outbreak into their financial results.
One in six companies surveyed is adjusting revenue targets downward an average of 5.6% due to the virus.
75% of survey respondents report supply chain disruptions in some capacity due to coronavirus-related transportation restrictions, while 80% believe their organisation will experience some impact by disruptions from the outbreak.
"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 Derry, CEO of ISM. "For a majority of US 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."
The survey was conducted between 22 February and 5 March and features 628 respondents that largely represent US manufacturing (52%) and non-manufacturing (48%) organisations.
Primary reported supply chain impacts include:
57% 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% capacity with 56% 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 ten (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 organisations who diversified their supplier base after experiencing tariff impacts, are potentially more equipped to address the effects of Covid-19 on their supply chains," adds Derry.