Global Supply Chains Are In Jeopardy BY TONY NUZIO
how businesses react to these problems and opportuni- ties during these business disruptions often makes the dif- ference between success and total failure. Supply Chain Challenges The Coronavirus could turn out to be the “mother of all supply chain disruptions,” at least as far as we have seen in recent years. Global supply chains are already reeling from its effects, starting in China where it is reported that China now accounts for a third of the world’s GDP growth, up three percent from 2000. Also, according to the World Bank, China accounted for one third of global trade in 2018. If there are extended fac- tory shutdowns, and that could be a real possibility, there are estimates it would result in increased costs worldwide to the tune of over $1 trillion. That is a significant increase in costs for all companies doing business in China. The real question will be, how can these companies possibly absorb additional costs of that magnitude; is it even pos- sible? With that being said, here are some real challenging supply chain questions for businesses to answer today as it relates to the outbreak of the Coronavirus: • How does a company make any plans not knowing how long factory closings will last? • What if the factories are shuttered for several months, what does a plan “B” look like; is there even a possibil- ity of a plan B? • Can a company instantly shift production “on the dime”
The effects of the Coronavirus outbreak, (COVID-19), which were first thought to be a global pandemic, then were
downplayed, principally by the Chi- nese government, is in fact a global pandemic. And now COVID-19 is get- ting incredible attention from gov- ernments and businesses from over 140 countries around the world. Supply Chain Managers and their “C” Level executives all over
Tony Nuzio
the world are working diligently trying to determine what can possibly be done to keep their supply chains flowing without major disruptions. To say the least, they are truly concerned. At this point, no one really knows where all of this is go- ing to lead us. However, the one thing we do know is that we are in a very fluid situation right now and circumstanc- es have been changing by the day. And as such, business- es will be challenged to make some very hard and often quick decisions to ensure not only the safety of their em- ployees, but also the survival of their supply chains. As with any business disruption challenge, there are combinations of problems as well as opportunities. And,
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April 13, 2020
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