Supply-Chain Disruption Is Widespread
Survey shows one in six companies has already lowered revenue targets, and most respondents expect impact to worsen after the end of Q1.
Nearly 75 percent of U.S. companies have experienced supply-chain disruptions because of transportation restrictions related to the Covid-19 coronavirus, according to an Institute for Supply Management (ISM) survey that adds to signs of growing strain in global economic linkages as the outbreak upends activity worldwide.
The challenges have led one in six companies to lower revenue targets, by an average of 5.6 percent, ISM found in its survey of 628 U.S. manufacturers and service providers, conducted between February 22 and March 5. Firms expecting supply-chain impacts anticipated that they would become more severe after the first quarter.
“Companies are faced with a lengthy recovery to normal operations in the wake of the virus outbreak,” ISM CEO Thomas Derry said in the report released Wednesday. “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.”
The survey also showed that manufacturers with a presence in China report operating at 50 percent capacity, with 56 percent of normal staff, while more than 44 percent of respondents don’t have a plan to address supply disruptions from the country.
ISM, which says its 47,000 members manage about $1 trillion in corporate and government supply-chain procurement annually, said in the report that it will conduct more surveys to track the implications of the outbreak.
Other Highlights from the Report
- More than 60 percent of companies that ordinarily travel to China have no plans to do so over the next six months, while almost half note travel to other areas—including Japan and Europe—faces extra scrutiny or limits.
- Average lead times have more than doubled from the end of 2019.
- 53 percent have difficulty getting supply-chain information from China.
- 62 percent are experiencing delays in receiving orders from China.
- 46 percent have delays loading goods at Chinese ports.
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