Coronavirus impact on Supply Chains, And What You Can Do About It.

Crises of great magnitude, be it epidemics or natural disasters, have the potential to upend business as we know it. The ongoing coronavirus pandemic has dealt the most devastating blow to supply chains in the US and Europe in recent years. It also doesn’t help that the earliest hit was taken by China, the country where almost all supply chain processes originate.

Around the globe, companies that are dependent on China for their materials or parts are severely affected. China’s coronavirus crisis has damaged its position as a manufacturing hub for the world. It is likely to remain that way for several months. From iPhones to bridal wear, anything and everything manufactured in China for assemblage or sale around the world is impacted and supply will be erratic or nonexistent in the coming months.

According to Dun and Bradstreet, a commercial data and analytics company, there are around 22 million businesses (90% of all businesses currently active in China) within the coronavirus-struck regions. They estimate that this will impact at least 56,000 companies worldwide. 

Since the SARS epidemic hit in 2003, China’s GDP in the world context has steadily grown over fourfold; from 4.31% to 16%. The mortality rate and spread of COVID-19, the disease brought about by the coronavirus, is enormous and catastrophic compared to SARS. The damage to supply chains is similarly huge. 

In general, companies always maintain some reserve inventory on hand to tide them through the initial stages of a crisis, to keep about 15-30 days’ worth of supply going. Since the coronavirus hit around the Chinese New Year, a prime shopping period, it is possible that companies that upped those numbers have bought themselves some additional time. But beyond five weeks, a lack of materials or supply would make manufacturing grind to a halt. 

 

How can Automation and Artificial Intelligence help?

 

Automation and AI can help in getting businesses back up sooner. 
When implemented from the beginning and made part of the system, it can help in these critical areas:

It definitely helps to use automation to figure out where all of your stock is and how best to move it to the right warehouses and fulfillment centers.

The best way to do this, of course, is to use computer vision to estimate existing stock across your warehouses. This can significantly speed up the process of auditing stock at a time when any delay can cost you mightily.

On the other hand, they should know the risks of single-sourcing from China (dealing with only one vendor for a cost-benefit or to secure their supply), and always have backups. 

When scaling up operations to meet increased demand, it is imperative to provide workers at manufacturing units with adequate PPE (personal protective equipment) too.

That’s not all, though- risk comes also in the form of direct infections and the risk of spreading the virus through a large, enclosed space. At the same time, manually enforcing restrictions doesn’t always work. You can use a tool like Saara’s computer vision tool to help you understand which workers are following the laid procedures and who is flouting them, at scale. 

What are you doing to mitigate the crisis?

These are just a few ways of mitigating a crisis that is expected to role the economy for at least a year to come. How are you weathering the storm? Do you have any tips to share with fellow supply chain professionals? Tell us in the comments.