Posted on: März 12, 2020 Posted by: admin Comments: 0

Covid-19 and the impact on Supply Chains

Supply chain impacts

Systemic supply chain shock isn’t a new phenomenon. SARS, the tsunami in Japan in 2011 and flooding in Thailand the same year all stretched supply chain resilience. What has changed is the reliance on China from the global economy. Back in 2003 during the SARS crisis Chinese GDP accounted for 4% of the global total, today it is 16%. Firms have continued to build on lean and just-in-time manufacturing methods and now carry the bare minimum levels of inventory and stock, preferring to keep it up stream within the supply chain. Another fundamental change is that China no longer simply assembles products; it manufactures the components to go in them too further increasing supply chain risk and inter-connectivity whilst creating a new bottleneck. Supply chain concerns are not just limited to those who directly manufacture in China. Disruption will be felt for those companies who’s raw materials are trapped in China; the vast majority of factories in Bangladesh for example source raw materials from China.

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