--- title: Is the Coronavirus threatening your Supply Chain? description: The global Supply Chain (SC) is profoundly disrupted. You cannot forecast the escalation of a pandemic like this, but you can get your SC ready to have more choices when disruption hits. image: https://blog.prophetic-technology.com/hubfs/fusion-medical-animation-EAgGqOiDDMg-unsplash.jpg --- [hello@psdtohubspot.com](mailTo:hello@psdtohubspot.com) [+91 8874569874](tel:+91%208874569874) Hours : Opens 10:00 AM To 07:00 PM [![logoHD](https://blog.prophetic-technology.com/hs-fs/hubfs/logoHD.jpg?width=2500&name=logoHD.jpg "logoHD")](https://www.prophetic-technology.com/) - [Home](https://www.prophetic-technology.com/home) - [Subscribe](https://www.prophetic-technology.com/pt-blog-subscribe-opt-in-consent?hsCtaTracking=174cc371-9cdc-4b94-a32e-9007f0ac4dea%7C0776642c-2604-4695-8e3f-f7a74f10031a) - [Contact Us](https://www.prophetic-technology.com/contact-us-old) - [supply chain](https://blog.prophetic-technology.com/topic/supply-chain) - [risk](https://blog.prophetic-technology.com/topic/risk) - [disruption](https://blog.prophetic-technology.com/topic/disruption) # [Is the Coronavirus threatening your Supply Chain?](https://blog.prophetic-technology.com/is-the-coronavirus-threatening-your-supply-chain) The Chinese government confirmed on January 7, 2020 that they had identified a new virus “Coronaviru... [Read More →](https://blog.prophetic-technology.com/is-the-coronavirus-threatening-your-supply-chain) - [supply chain (286)](https://blog.prophetic-technology.com/topic/supply-chain) - [technology (138)](https://blog.prophetic-technology.com/topic/technology) - [logistics (81)](https://blog.prophetic-technology.com/topic/logistics) - [procurement (69)](https://blog.prophetic-technology.com/topic/procurement) - [optimisation (65)](https://blog.prophetic-technology.com/topic/optimisation) Posted by [Dave Food](https://blog.prophetic-technology.com/author/dave-food) on Apr 13, 2020 5:35:52 PM ![Dave Food](https://app.hubspot.com/settings/avatar/9fa060d35f0f962fafafe972c24035ae) Find me on: [Facebook](https://www.facebook.com/davefood) [LinkedIn](https://www.linkedin.com/in/davefood) [Twitter](https://www.twitter.com/davefood) The Chinese government confirmed on January 7, 2020 that they had *identified a new virus* **“Coronavirus,”** now called **COVID-19**.  *It proliferated* across a vast region in China; nowadays, it is worldwide.   Given that it is a *viral* disease and that there is an exponential factor, it has gone uncontrollable; antibiotics are NOT advised, and there is *no vaccine* found so far; we are talking about months to get through it. Authorities have taken rigorous measures to *stop people* from *entering* or *leaving* their country.  Families were *confined to their homes*, bus/taxi services *were shut*, and only *essential stores* were allowed to remain open.  Flights are being *sent to bring citizens* abroad back to their countries, *cruise-ships* had to stay at sea due to the closing of ports.  Convention centres and hotels *turn into temporary hospitals*; governments are calling for a *quarantine* for **Coronavirus** *hotspots* to *decrease* the spread of the pandemic. **The Coronavirus and the Supply Chain** The global **Supply Chain** **(SC)** is profoundly disrupted. You *cannot forecast* the escalation of a pandemic like this, but you can *get  your* **SC** ready to have more *choices* when *disruption hits*. The Chinese economy is *impacting the* *global economy* as well, as numerous enterprises around the world are China *commercial partners*.  As the virus persists, companies have clearly understood the *underlying*-**SC** *disorder* the **COVID-19** represents, the *alternatives they might have*, and the *short-term actions* to take *to prevent customer disruption;* therefore, it's all about *being ready* and proving the agility to respond promptly.   **Economy areas affected by COVID-19** **The threat to global SCs** Complex **SCs** that broadly *depend on* Chinese-produced *components* or *sub-assemblies* often *comprise essential parts* from impacted areas; from **LCD** panels, textiles, clothing, digital tech and much more.   **The shutdown of Production Lines** *Automotive manufacturing* has already been interrupted mainly in China, Korea, Germany and Japan.  A **USA** automotive manufacturer alerts that the production of trucks might have to stop due to parts shortages, or possible closing factories in other parts of the world.  Apple has informed disruptions caused by **Coronavirus** that are affecting *sales* and the *forecast of revenue.*   **Reduction in consumer and industrial demand** Businesses are *expecting a decline* in *industrial* and *consumer demand,* as supplies are focused on controlling the epidemic. The current effects in China and many other countries can be felt due to businesses remaining closed, consumers still staying at home, and the need for remote work. **Supply shortages due to disruption of level 1 and 2 suppliers** There is a significant *risk of supply shortages* because numerous suppliers are located in *regions impacted* by the *pandemic*.  Studies on **possible impacts** bring to light that *thousands* of American businesses have suppliers *in-crisis-areas* of China, as numerous global companies do too.     **Reduction in global Gross Domestic Product (GDP)** Global economy anticipates for even harmful consequences as *the virus ranging to other regions* will cost the world economy trillions in lost income and will hinder global growth for 2020.    **Drop-in oil prices** Oil prices *dropped sharply* in the first quarter of 2020.  Prices are *not expected to grow* much while demand *remains low*, especially as China's restrictions on travel remain.   **Pharmaceutical shortages** Any disruption in the supply of Chinese *pharmaceutical ingredients* could hit many countries like **the USA** that has a well-defined dependence on active ingredients produced in China.    **A significant drop in international tourism** As **Coronavirus** is *on the rise*, there will be a complete *collapse in tourist travelling* to regions affected by the pandemic around the globe, since flights, trains or cruse-ships *into* and *out* countries are cancelled.  Even if it is contained, it is expected that the travel industry will lose billions in 2020, and the coming years. **The economic wave effects** The industrial wave effects go further than China, with **SC** disruptions upsetting numerous businesses globally.  The *sports* sphere has gone through this crisis too. Olympic Games were cancelled or postponed affecting athletes who were pressed to cancel attendance, and organisers who are losing considerable amounts. **Risk of a Bullwhip Reaction** Customer *demands will drop*, triggering off the *reduction of inventory*, the manufacturing processes will slow down, and so on, consequences *cascading* onto *every layer* of the **SC. ** When sooner or later demands *come back*, the *reverse outcomes occur*.  It is known as a Supply-Chain Bullwhip, in which fluctuations *put tension* on suppliers, and could cause many enterprises *to withdraw business*. **How should companies transform this situation to their advantage?**  - To protect our workforce by implementing *home-office* or *remote-work,* and focusing on the *development of the team* whilst enhancing *collaboration*. - To *cut* manufacturing lines. - To enhance *online sales*. - To *deliver* products *directly to customers*. - To implement *additional cuts*, aim to avoid *job loss*. - To *map* the *flow* of supply-base to grasp company effects. - To *plan* for the unpredictable. - *Incorporation of suppliers* on planning. - To build *worst-case-scenario* for planning and mitigation. - The comprehension of *geographical-flow of products*, knowing *countries* and *ports destination* to monitor **SCs**.   **SUMMING UP:** those businesses with *effective-**SC-**resilience approach* will be all-set for such kind of disruptions.  If *not counting on* it, soon they would be impacting the *bottom-line* of the business.  The main point is to *comprehend* your **SC** *entirely* and have a *precise mapping* of it to rely on a *better concept* of the risk organisations are facing.    Businesses can turn the **Covid-19** outbreak into an *opportunity* *by building* a relationship among the company and its workforce, *strengthening* their *business culture* to become *reciprocally constructive*.   **Dave Food** [Prophetic Technology](https://www.prophetic-technology.com/) **Subscribe to our emails & exclusive free content.** **[I want to subscribe](https://blog.prophetic-technology.com/cs/c/?cta_guid=0776642c-2604-4695-8e3f-f7a74f10031a&placement_guid=174cc371-9cdc-4b94-a32e-9007f0ac4dea&portal_id=2979069&canon=https%3A%2F%2Fblog.prophetic-technology.com%2Fstop-to-consider-the-benefits-of-erp&redirect_url=APefjpGc9fcvO2eA0xX-JhT3IDlQR7TJDNjpKCYQl3q-NOqmTh_FIEsN9oUu0RtombcHJlcAp_DMMtgJndM_Jlangh072bL_hR6E7Iy9FOTfvXe6pWcO2aZl4-P7iboa5It5N7m515ptJu0OnJAFW8cswNCwmNd9wouZQEQOOTeUM1KcOd9XdHkRopKz9K7jp9j18Dcl6XyK6Rl08Jd__TZxof7VBXzRX12R9MHQsgTocK9ixVyuUA-JzPBuh5ZdoG2jMywVXFZkZs-9cb5yAMcAMuGQxK1lX709eOqqkbGBc4wItS6MMZavS6w7lC0Em3pjzrw0GAJS&click=efffab60-8f86-44ea-a931-fe9f34b343db&hsutk=9724d4a2324e477c9e07bd5bc116a679&signature=AAH58kGoMvD8C4d4ldm04qzEGNyLwI_NpQ&utm_referrer=https%3A%2F%2Fblog.prophetic-technology.com%2F&pageId=27424351218&__hstc=108876957.9724d4a2324e477c9e07bd5bc116a679.1556898525657.1585604108596.1585850765355.102&__hssc=108876957.2.1585850765355&__hsfp=2088064629&contentType=blog-post)**   - [supply chain](https://blog.prophetic-technology.com/topic/supply-chain) - [risk](https://blog.prophetic-technology.com/topic/risk) - [disruption](https://blog.prophetic-technology.com/topic/disruption) - - - ## Post Your Comments Here #### About Us Prophetic Technology is a team of dedicated people that combine their expertise in business domains with a passion to release potential.s every page it appears on. 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