Coronavirus: Dealing with Supply Chain Disruption

Reaction to the threat from Coronavirus (COVID-19) has already imposed significant economic costs on China and the rest of the world. Hopes for a short sharp shock, characterised as a V-shaped dip and rapid return to business as usual are rapidly fading. Business should brace for second and third round effects.

As the world’s second-largest economy and leading trading nation, the disruption experienced in China is spilling over into the global economy. In this report, we look at the major impact COVID-19 has had on global demand and supply chains, and what organisations to can do to manage disruption to their supply chains.

Losses in demand - From international air travel to conferences and events to other major industries such as shipping, all are feeling the impact of lessening demand.

Disrupted supply - With factories in China shut down or operating at reduced capacity, assembly lines in the rest of the world are beginning to run short of essential components. Retailers are also affected with China being a major source of supply for many of them. China also supplies key construction materials across Asia Pacific making it difficult to find replacement products if the disruption continues.

Imbalances in capital markets - Global stock markets experienced the biggest fall in value since the 2008 financial crisis in the last week of February 2020, with many central banks saying they will take appropriate measures to combat any fallout from the spread of COVID-19.