Today, the Institute for Supply Management (ISM) released a survey assessing the impact of the novel coronavirus, COVID-19, on global supply chains. The survey found that roughly 75% of companies have had some supply chain impact resulting from COVID-19, with more than 80% expecting further impacts down the line.
Key findings include:
- 57% of companies report longer lead times for Chinese components, around twice as long on average
- Manufacturers in China report operating at 50% capacity
- Over 44% of respondents do not have a plan to address supply chain disruption from China, and more than half of those companies are already reporting active disruptions.
- The severity of anticipated impacts increases after Q1 2020
- 62% of respondents are experiencing delays in orders from China
- 53% of respondents are having difficulty getting supply chain information from China.
- Nearly one-half are experiencing delays moving goods within China (48%).
- Almost one-half (46%) report delays loading goods at Chinese ports.
What does this mean?
It’s further evidence that supply chain transperancy is critical to business continuity and resilience, especially in times of great crisis. Interos has written previously on the need for businesses and organizations to increase their understanding of their supply chains, particularly in regards to China.
Without an understanding of sub-tier relationships, companies’ ability to understand their level of exposure to the ripple effects of the coronavirus is limited, as is their ability to take meaningful action that will hasten much-needed economic and industrial recovery.
Solutions that are reliant on manual supplier discovery and assessment are not able to adequately scale to meet severe, global challenges like COVID-19. Businesses need a solution that can discover their supply chain’s exposure to the coronavirus rapidly, and keep them appraised as the situation changes.
To learn more about how your business can increase resilience and deepen their supply chain awareness immediately, visit our Coronavirus Risk Operations Center.
February 17th, Apple warned their investors that it will fall short of their guidance due to impacts of the COVID-19 coronavirus on both iPhone manufacturing and overall Apple sales in China. When a company as massively resourced as Apple brings their supply chain issues to light, the rest of us are best warned to take a look to see how we might be impacted. Unfortunately, many companies will find themselves looking only at the first tier of their supply chain, the company that they contracted with for goods or services, unable to see whether the companies that their first tier suppliers depend on have extended supply chains in China or other affected countries.
The ugly truth is that the Coronavirus’ brutal world tour is not over yet nor are the supply chain disruptions caused by the virus – this is what Interos calls the Ripple Effect – the proliferation of disruption through the supply chain, from the 3rd, 4th, 5th tiers and beyond. Examples include drug companies reporting (Wall Street Journal) interruptions to their supply chain, and reports of stockpiling by other countries that are part of the US drug supply chain (Modern Healthcare). The ripple effect is not necessarily the first thing companies think about when discussing supply chain interruption, but understanding it is an essential part of minimizing impact and accelerating recovery.
The root of the problem is that – except for our customers, no CEO, chief procurement officer, chief risk officer, chief operating officer knows as much as they need to know both about risks they think are managed or about unmanaged risk in their supply chains. While many 10k reports attest that adequate supply chain risk management is in place, it takes Coronavirus to make clear that what they think they know “…ain’t so”.
So set your alerts on Interos. I’ll be posting about 4 short term steps to improve your supply chain risk posture to get ahead of the ‘next’ Coronavirus.
Tomorrow we’ll get started with this 4-part posting focused on ‘Know your suppliers and their supplier and so on, and so on….’
Today’s celebration of International Woman’s day is in the forefront of conversation because it is a global celebration by government, NGOs, charities, corporations, academic institutions, women’s networks and media hubs.
For those of you that know me, you have seen my company, Interos, achieve success following 15 years of focus on bringing AI to supply chain (or third party) risk management. In a world where Carta (2019) reported that ‘only 1 in 3 people in venture-backed companies is a woman, and women are granted less equity on average’, I’ve been in the fortunate position that 2 blue-chip Silicon Valley venture capital firms believed in me enough to invest. A humbling and inspiring experience.
I’m often asked what made the difference for me to find myself in this growth position. Two things come to mind: (1) I learned in Year 2 not to be afraid to ask for help and (2) I never lost focus on the purpose of Interos.
Asking for help is often difficult until you start doing it. I’ve found that people will come out of the woodwork to help if they can. Which is not to say all your wishes will be answered, just that getting past any negative connotation that you cannot succeed by yourself – and knowing that you REALLY CAN’T succeed by yourself – is both freeing and enabling at the same time.
Another key is purpose – which does not mean the path to get there won’t change. I can point to five different points in Interos’ history where I had to make a difficult decision to make it to the next milestone. I predicted 30 years ago that the global economy would rely on a supply chain of interconnected companies and countries around the world, and that would create both risk and incredible opportunity. The Novel Coronavirus (COVID-19) news coverage is riddled with concerns over the supply chain, and Interos has the best market position to help our customers.
I’m proud of the successes and mistakes I’ve been able to make in getting Interos to the market position it now occupies. Along the way, I’ve had the opportunity to give back to women business owners in the US as Chair of Women Impacting Public Policy and as a part of the global women’s entrepreneurship movement through the Women 20 (W20) engagement group under the G20.
As we celebrate another International Women’s Day and female accomplishments throughout this month, I hope each of you feels empowered to accomplish whatever you want in life. I believe that you, too, can experience people looking out for you and helping you – you just must find your purpose and believe!
Brand New Look, Brand New Features
We’ve given the world’s only multi-tier, multi-factor, real-time risk management platform a new user experience, and beefed up the technology powering our risk rating and continuous monitoring functionality. Interos v2.0 gives businesses unparalleled insight into their extended supply chains, discovering the hidden ripple effects of events from around the world as they happen.
With Interos v2.0 the following features have been fully implemented in the platform:
- Multi-Tier, Multi-Factor Risk Scoring: A comprehensive, summary view of your entire ecosystem with scoring along five key risk factors, providing rich insight at a glance.
- High Risk Outlier Detection: Machine learning parses 85,000 data sources and provides a continuously updated view of your highest risk suppliers with customized alerts for risk events, enabling truly continuous risk monitoring.
- Advanced Visualization: See your ecosystem how you want with a risk scorecard, network, hierarchy and geospatial views.
- Multi-Facet Filtering: Filter suppliers by country, risk factor, industry and tier.
- Detailed Risk Insights: See individual company risk profiles with detailed summaries of risk-relevant information backing up risk scores.
Check out the new look:
To learn more about Interos v 2.0 please see our press release or request a demo.
Share your details and we’ll be in touch to show you how Interos is shaking up third party risk.
Photo by sarayut from Getty Images Pro
Recently, Yossi Sheffi, Director of the Center for Transportation and Logistics (CTL) at the Massachusetts Institute of Technology (MIT), appeared on Bloomberg TV to discuss his views on the impact of coronavirus on global supply chains. Mr. Sheffi primarily focused his analysis on three topics: the bullwhip effect, supplier and customer evaluations, and business contingency planning.
At the beginning of the segment, Mr. Sheffi is asked about how coronavirus will impact companies’ inventories. In response, he references a supply chain phenomenon known as the bullwhip effect. Bullwhip effect is the increasing variation in demand as a supply chain disruption makes its way up a supply chain.
According to this analysis, Mr. Sheffi views small and medium sized upstream suppliers as being the most vulnerable to supply chain disruption because they are unable to take the hit of declining orders for an extended period.
As suppliers and customers alike will be impacted by rapidly decreasing demand, Mr. Sheffi recommends business evaluate both upstream and downstream to discover points of vulnerability. He advocates larger business partner and potentially even take a financial interest in their critical suppliers that do not have the financial resiliency to survive a long-term disruption in demand.
Finally, Mr. Sheffi concludes by discussing what options organizations have with regards to business contingency planning. Although it may be too late for companies to find alternative suppliers or stockpile critical components, there is still time for boards to discuss how they will handle potential outbreaks in areas where they maintain operations. The health and safety of employees is paramount to the survival of a business and developing a plan of action before it is needed will promote level-headed and practical thinking rather than rashness and panicking.