COVID-19: A Growing Global Concern

As the coronavirus (COVID-19) pandemic spreads, it’s having a far greater impact on global supply chains than originally anticipated. Now, nearly 95 percent of respondents of a recent survey of supply management professionals report they have experienced or expect to experience global disruption due to the pandemic. That disruption can include lack of supply, delays in shipments, workplace and operations issues and loss of revenue.

These findings are from a white paper by Institute for Supply Management^® (ISM^®), COVID-19 and Supply Chains: Increasing Impacts, Decreasing Revenues, released on Monday. It features a second wave of research on COVID-19 impacts, which was conducted March 17-30 by ISM Research & Analytics. The first round of research, released in a March 13 ISM white paper, Supply Management’s Role in Curtailing the Coronavirus Impact, found that 81 percent of respondents expected their supply chains to be affected by the pandemic.

ISM CEO Thomas W. Derry notes that what began as a supply shock due to a production lockdown in China has become a global event that is having severe and increasing economic effects. In the long term, he says, it will alter how we work, produce and conduct business.

Survey respondents already have found their workplaces to be impacted. When asked what they considered the top three impacts to their organizations, more than half of survey respondents (56.7 percent) named telework/remote work. Many also mentioned such other workplace impacts as face-to-face business (mentioned by 10.7 as a top three impact) and reduced employee productivity (11.7 percent, as a top impact). Some respondents remarked that they have had to improve their information technology (IT) structure due to increased teleworking.

Business continuity/planning was mentioned by 20 percent of respondents as a top impact, while supply chain disruption was ranked as such by 16 percent. Severe supply chain disruptions are increasing: Since the first ISM survey, the percentage of respondents reporting severe disruption due to transportation restrictions has tripled (from 6 percent to 18 percent).

Revenue impacts also are a top concern, with 13 percent of respondents citing negative impact on revenue as a top three impact. Many are adjusting revenue targets and capital expenditure plans as a result. Increased lead times, reduced global manufacturing capacity and lower demand for products are among other impacts cited by respondents.

As the pandemic continues to impact organizations and their supply chains, it offers what Derry calls an “overarching supply management lesson” — that overemphasizing cost is myopic.

While a recovery is likely to take 18 to 24 months, respondents say they expect to see some relief later in the year: They project an easing of operational issues by the fourth quarter and lead times by the end of the year.