The Institute for Supply Management released a survey March 10 on the impacts of COVID-19 on business and supply chains. Almost 75% of companies surveyed reported supply disruption, and 16% of those companies have adjusted their revenue targets downward.
In countries other than China, 57% reported longer lead times for tier-1 components sourced from China. On average, lead times more than doubled from December. About 62% of respondents are experiencing delays in receiving orders from China, and 53% report having trouble even communicating on supply chains with China.
ISM CEO Thomas Derry noted that companies surveyed were particularly concerned with the length of time it would take to recover. “The story the data tells is that companies are faced with a lengthy recovery to normal operations in the wake of the virus outbreak,” he said in a statement. Troublingly, despite the already-dismal figures in the survey, companies affected by supply chain impacts anticipate the situation will only get worse after the second quarter of 2020 ends.
While the number of active cases coming out of China is dropping, factories that responded to the survey have been slow to catch up. Respondents in China report a workforce limited to 56% of normal numbers running at 50% capacity, and nearly half of companies (48%) experience difficulty moving goods within China itself. Of companies who normally travel to China regularly, more than 60% have cancelled all such travel plans over the next six months.
Some companies are hurting less, thanks to their supply chain arrangements. “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. Companies with less flexible supply chains are left without options: more than 44% of respondents reported that they didn’t have a plan in place to handle a supply disruption with China, and more than half of that 44% are reporting current disruptions.
The data in the report was collected between February 22 and March 5. 52% of respondents represented U.S. manufacturing companies. In light of the virus outbreaks’ developing nature, the ISM is planning on collecting and releasing more data to show how manufacturers and other firms are adapting.
