When Uncertainty Becomes Reality

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Supply Chains React to Coronavirus

Many supply chains based in Wuhan, China, and the surrounding areas have grinded to a halt in the midst of coronavirus concerns and uncertainty of the virus’ future impacts. The outbreak appeared on the tail-end of Chinese New Year with lock-downs extending the already week-long down time in production and adding travel and logistics restrictions. Many global businesses are seeing a direct impact to their production and overall operations.

Undoubtedly, the devastating outbreak impacts the stock markets as well.  According to Philip van Doorn, investing columnist for Market Watch, “US stocks are heading toward their biggest one-day losses in several months as the coronavirus spreads from China.”

Industry Impacts

Consumer manufactures with production based in China, like Apple, are preparing for impact. Without concrete information on when production and export will resume as normal, global supply chains waiver in limbo. Bloomberg reported that:

Apple provided a wider-than-usual forecast range for the current quarter because of the uncertainty surrounding the coronavirus. CEO Cook addressed the virus during a conference call with analysts on Jan. 28, saying Apple is following developments. Virtually all iPhones are made by Foxconn’s Hon Hai Precision Industry Co. in Zhengzhou, China, and by Pegatron Corp. at an assembly site near Shanghai. Apple also closed some stores.”

Another Bloomberg report stated some of the other global giants, from the travel industry to food and beverage companies (McDonald’s, Tesla, and Royal Caribbean), are bracing for the impacts caused by this epic supply chain disruption.

Combating Uncertainty with Supply Chain Planning

In times of uncertainty, business leaders rely on their planning teams, processes, and systems to adjust quickly to changes in the market, ensuring they can continue to deliver goods and services to customers despite unforeseen events. Unfortunately, supply chains that rely on manual and siloed planning processes may take months to respond to a change as significant as a week-long halt in production and export.

Supply chain reaction power relies on the seamless integration of people, process, and systems; all planning efforts must be focused on the end goal, while continuously reworking the plans based on real-time data input streams. To learn more about true integrated business planning, and its effect on supply change reaction times, read this paper on supply chain planning maturity.