Coronavirus impact felt by 86% of supply chains


The effects of the coronavirus outbreak are being felt by 86% of supply chains in the UK, according to a survey by the Chartered Institute of Procurement & Supply (CIPS). This has prompted a major rethink of supply chain strategies, with 58% already considering moving away from a single-supplier approach to minimize the risk of delivery disruption in the future.

Products manufactured in China are integral to the supply chain of three-quarters of the 80 procurement and supply chain professionals surveyed by Supply Management (the official publication for CIPS members). Therefore, it comes as no great surprise that almost nine out of ten companies are feeling the effects of the pandemic which originated in China around the start of this year.

Almost two-thirds (62%) of respondents were contacted by a supplier to warn about the impact of coronavirus on their supply chains, according to the survey. However, 37% didn’t find out until a supplier failed to deliver. The majority of buyers have now increased their communication with suppliers: 58% communicate regularly with their key suppliers, and 34% have extended communication to all tiers of their supply chain.

The survey also found that 24% of the companies lacked adequate supply chain risk mitigation plans to deal with the severe disruption resulting from the virus outbreak. 61% of buyers have since conducted risk analysis, and 49% have found alternative suppliers in the case of disrupted deliveries. Above all, the current health crisis has prompted buyers to rethink their future supply chain strategies. Close to 58% intend to mitigate risk by moving away from single sourcing, while 47% are considering holding more inventory in the future.

In terms of the business outlook, 58% of the respondents have already noticed price for goods and services rising in recent weeks, and the same number expect an economic downturn over the next six months.

CIPS has published 10 ways to minimize the impact of coronavirus for procurement and supply chain professionals.