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ISM: COVID-19 Disrupting Supply Chains

The coronavirus (COVID-19) continues to wreak havoc on businesses. In the first round of survey results from the Institute for Supply Management (ISM), released earlier this week, roughly three-fourths of companies said they have experienced disrupted supply chains due to COVID-19 from transportation restrictions.

"The story the data tells is that companies are faced with a lengthy recovery to normal operations in the wake of the virus outbreak," said ISM CEO Thomas W. Derry in the release. "For a majority of U.S. businesses, lead times have doubled, and that shortage is compounded by the shortage of air and ocean freight options to move product to the United States—even if they can get orders filled."

More than 80% of respondents said they expect impacts to business because of the outbreak. About 16% of those said they have adjusted revenues downward by an average of more than 5%. China is at the center of most of the turmoil.

More than 60% of respondents said they have delayed orders from China, while just over half said they are having problems getting supply chain information from the country. There are delays for moving and loading goods in China as well. It is reported that manufacturers are only operating at 50% capacity and with just over half the normal staffing numbers.

"We're seeing that organizations who diversified their supplier base after experiencing tariff impacts, are potentially more equipped to address the effects of COVID-19 on their supply chains," said Derry.

However, more than 44% of businesses don't have a plan in place to address disruptions in Chinese supply chains. Furthermore, about a quarter of those said they have current disruptions.

-Michael Miller, managing editor

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Monday, 30 March 2020