Coronavirus Outbreak Reveals the Weakest Links in the Supply Chain

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Coronavirus Outbreak Reveals the Weakest Links in the Supply Chain

As a result of the outbreak of COVID-19 in many firms staff is working from home and people use teleconferencing instead of face to face meetings. For manufacturers the situation is different: With investments in automation they can reduce the need for staff on assembly lines – but they still need to receive raw materials. The global and unpredictable impact of Coronavirus outbreak causes a supply chain shock and will substantially cut into the worldwide manufacturing revenue of US $ 15 trillion that was forecasted for 2020 by tech market advisory firm ABI Research.

The virus will have short- and long-term ramifications for manufacturers.

Initially, plant managers and factory owners will be looking to secure supplies and be getting an appreciation of constraints further up the supply chain plus how much influence they have on their suppliers,

explains Michael Larner, Principal Analyst at ABI Research.

In the longer term, manufacturers will need to conduct an extensive due diligence process as they need to understand their risk exposure, including the operations of their supplier’s suppliers too.

To mitigate supply chain risks, manufacturers should not only not source components from a single supplier but also, as COVID-19 has highlighted, shouldn’t source from suppliers in a single location,

Larner advises.
In software applications in the manufacturing setting, the company forecasts that the supply chain impact of Covid-19 will spur manufacturer’s spend on enterprise resource planning (ERP) to reach US $ 14 billion in 2024. While many ERP platforms include modules for inventory control and supply chain management, in light of the outbreak, many manufacturers will also turn to specialist providers. Larner adds,

Supply chain orchestration requires software to be more than a system of record and provide risk analysis and run simulations, enabling manufacturers to understand and prepare for supply chain shocks.

Industry 4.0’s focus has been on the activities inside the factory gates.

But investments in robotics or IoT sensors and the like assume that assembly lines receive a steady flow of raw materials. COVID-19 demonstrates that manufacturers need to be as focused on their supplier’s capabilities as they are on their factory floor,

Larner concluded.

Author: Tim Cole
Image Credit: Pixbay

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