Impact of Coronavirus on Supply Chains

Impact of Coronavirus on Supply Chains

Impact of corona virus on supply chains industry has severely disrupted the logistics of all the Asian countries. With over 69,000 cases and 1700 deaths, the risk has been considered profound in 90% of the companies that are in the China main land. Due to the corona virus impact, The supply chains industry is now facing delay and shortages in many parts across the globe.

Impact of corona virus on supply chains industry:

The disruption due to impact of corona virus on supply chains industry affects the prices and the flow of many products especially fast food brands. As per reports, it is said that the effect of corona on the supply chains could be felt for 2 years and can cost up to 400 billion dollars. While the short-term impact can’t be avoided, the long-term consequences are difficult to predict. The impact is due to interrupted movement of the shipments, reduced labor availability, and removed international workers.

The industries that landed huge risk are hardware and tools, electronic appliances, auto parts, building products, diversified chemical and industrial specialties. The other industries to be affected are telecom, automobiles, computer hardware, and industry conglomerates. Since the incident of Fukushima nuclear disaster, many companies started assessing and addressing the impact of corona virus on supply chains and associated risks. While not having multiple suppliers can be a concern, not having enough capacity is another point of concern. The travel ban and business shutdowns, that sometimes leads to closure due to supply shortages.

3 primary areas for improvement companies must focus on to avoid supply chain risks:

Those companies which identify supply chain risks and manage them can find solution or at least work to mitigate the impact of corona virus. The best thing is to know the company’s supply chain risks. Fortunately, the supply chain visibility tools have increased that helps to analyze the risk and address it with proper solutions over the period of time.

Irony is that, the industry already has technology to solve most of these inherent supply chain risks. New technologies are being built for transparent, sustainable and agile supply chains. For the reduction of
future impact of corona virus on supply chains, companies must focus on 3 primary areas for improvement.

  1. Not opt for a single geographical strategy.
  2. A self-driven supply chain solution, with robust technologies like AI, Machine learning, Block chain.
  3. Modernization of internal operations.


As the out-break is still on, the manufacturers need to develop and execute a supply chain responsive system, to reduce the risk and address the interruption of their operations. The companies should communicate with the critical suppliers, to determine the level of inventory that is being carried, or that could be on short supply, and also deploy resources on alternative suppliers.

The companies must also prepare for the increased costs, and for the provisions of their contract and its enforcement. The customer obligations are to be complied; contractual payment terms are to be reviewed. Allocation requirements and other obligations have to observed for proper backup.

The insurance policies have to be reviewed for maximum coverage in the case of business disruption. Employment concerns in relation to Employee and State health laws, have to be addressed properly. Market intelligence is one utmost factor where the information has to be carefully noted in case of these severities. Recover the assets or supply tools that you have supplied to a supplier under license.

Image for post

For short-term remedy, it is important to monitor the disruption and responsive system of supply chain and the inventory has to be kept in the reach. Then the focus should include the balance of demand and supply, including the building of safety stock. The supplier ecosystem and risk management system of the company needs to be analyzed. Once the initial impact of corona virus on supply chains industry is mitigated, the next scenario can be planned and the action plan can be established accordingly.

It is very important for the manufacturing industry to take on more steps to mitigate the risk of negative impact of Corona virus on supply chains. By ensuring that a digital technology runs in the product life cycle, managing complex supply chains can become easier.

Leave a Reply

Your email address will not be published. Required fields are marked *