COVID-19, more popularly referred to as Novel Coronavirus/Coronavirus, is creating havoc all over the world. While we are not sure how long this unforeseen circumstance is going to continue, one thing is quite evident – this crisis has a lot to teach the procurement and supply chain fraternity.
Before we delve into the insights, let’s look at the immediate measures your team can take to keep the situation under control.
Impact on European Industries
In Europe, manufacturing industries that heavily relied on suppliers from COVID-19 affected areas seem to be the worst hit. According to an HBR article, “the world’s largest 1000 companies deal with more than 12,000 facilities in these regions that include China, Italy, and South Korea”1. As more and more data emerge, these industries have taken the brunt of it: Automotive, Industrial and Heavy Machinery, Consumer Goods, Consumer Electronics and Semiconductors, Life Sciences and Medical Equipment.
For instance, electronics manufacturer MTA stated that “all the subsidiaries of Fiat Chrysler (FCA) will shut down production if its 600 employees in Northern Italy are not allowed to return to work”2.
On the other hand, some of Europe’s largest ports are impacted by Coronavirus too. For instance, the CEO of Rotterdam harbour states that “the number of departures from Chinese ports has decreased by 20%”3. Also, the activity at the French port of Le Havre is expected to drop by 30% in the coming days3.
Supplier Risk Management Insights from Coronavirus
It all boils down to the basics of Supplier Risk Management and how efficiently an organization can use its supplier data to sense dangers, gauge the impact and look for corrective measures in a short span of time and avert the looming crisis.
COVID-19 is indeed a wake-up call for supply chains which often tend to ignore supplier-related risks.