The coronavirus turns out to be a massive disruptor of global supply chains. For example, ´ the automotive industry óperates still at less than 50% of its pre-virus production levels. Companies producing electronics are operating at 40 to 60% of their capacities. This hits products like smartphones very hard, since the production requires asselmby lines. Apple has already revised their March revenue guidance, so did Microsoft.
This shows how tightly integrated and highly optimized global supply-chains are not as strong as we might think they are. They work extremely well, but are not robust enough to cope with virus outbreaks in the future – and they are going to happen again.
This will certainly force companies to rethink their overall strategy, since strategies like single sourcing do save some money, but might not out outweigh the higher risks that accompany it.
All in all, the coronavirus serves as reminder that it is always good to assume that the worst can happen and it probably will. You cannot optimize Murphy’s Law away.
Source: Coronavirus and the impact on global supply chains – MIT Technology Review Insights