Almost 95 percent of Fortune 1000 companies are experiencing supply chain interruptions thanks to the spread of the coronavirus, according Fortune Magazine. But our Cleveland 3PL providers know it’s not just companies like Apple and Nike that have been hit. Businesses large and small are seeing their supply chains disrupted by the rippling effects of the outbreak. In fact, those employing companies of less than 100 employees are likely going to suffer the greatest blow.

As recently reported by The Wall Street Journal, firms that rely on Chinese suppliers will obviously be affected, but even those with core operations outside of that country may feel some strain. If the spread of sickness continues, some businesses are going to see delayed goods, unfulfilled orders and unpaid invoices.

Maintaining open communication with both your suppliers and your customers during this time can help safeguard those relationships. This is true no matter what the supply chain challenge. Working with a dedicated 3PL can help lessen the repercussions.

The Ripple Effect of Coronavirus on Industry and Supply Chains

The impact has the potential to be profound, given that China has many tentacles in supply chains globally. Businesses across the world rely on Chinese factories for both intermediate and finished goods. The covid-19 coronavirus, which according to Reuters has so far killed nearly 1,700 people and sickened 68,500 throughout China, has struck areas of the country that are home to 90 percent of its active businesses. That’s according to a recent special report by analytics firm Dun & Bradstreet, which notes this is having an impact on:

• Service. Typically, the Lunar New Years is one of China’s most significant (and profitable) holidays. This year in response to the coronavirus, the Chinese government is postponing the end of the holidays to prevent further spread of the virus. It’s also imposed restrictions on travel. The effectiveness of this approach has been questioned, but either way, service providers are likely to feel the strain.
• Manufacturing. Those in manufacturing are having a difficult time getting raw materials to their facilities and the final product to their customers. Facilities have been closed or severely understaffed because of travel delays/bans and quarantines. 
• Wholesale operations. These businesses are suffering similar impacts as those in the manufacturing sector.
• Shipping. One report by JOC.com reveals unprecedented container shipping disruption owed to the coronavirus outbreak. Carriers were forced to blank 46 percent capacity in the Asia-Europe trade.
• Labor. Both white- and blue-color workers may be in short supply due to quarantines. The Wall Street Journal reported one instance of a Vietnam plant forced to shutter its doors because supervisors were unable to return to their country because they were quarantined in China after holidaying there.
• Logistics. Capacity within established supply networks may be limited. Finding alternate routes and means of transportation is going to be tough.

Although none of this is good news, our Cleveland 3PL trucking & warehouse experts are adept at helping our clients navigate all kinds of supply chain interruptions. We’ve been doing it for years. Companies that work with us have the advantage because we’re able to help them identify risks rapidly (if not ahead of time) and develop quick solutions to help protect their supply chains, business operations and bottom lines.

How a Cleveland 3PL Can Mitigate the Risks

The fact is, supply chain disruptions happen. The best Cleveland 3PL operators are proactive in having risk management processes in place to handle these. We routinely work to avoid supply chain disruptions and bottlenecks on behalf of our clients. Our plans include constantly analyzing the main risk factors, preparing for foreseeable (even if uncertain) risks, working toward flexible capacities and formulating multi-source strategies to help our clients deal with unforeseen supply chain snags.

It’s true that the coronavirus is creating market disruptions in some industries on a scale that’s rarely (if ever) seen. It may get worse before it gets better, given that so many supply chains rely on global partners. But that’s why supply chain leaders need to be preparing now. This is not the first highly-contagious illness to impact global markets, and it isn’t the only setback we’ve seen on these trade routes. However, supply chains are more global and complex than they were even in 2003 when the SARS crisis hit China. Plus, it is likely that we’re gearing up for a risk that is more sustained than those we’ve seen in the past. That means even companies that aren’t affected by this may need to take steps to start preparing.

Perhaps the most immediate concern in this situation is the decrease in productivity and the lack of access to staff in affected areas. We also can’t discount the impact that this will have on the public’s willingness to buy goods or products made with raw materials from this area.

It will be important for companies to have a plan for monitoring and responding to issues if they rely heavily on suppliers or carriers from the affected regions.

Businesses should be carefully assessing the supply-demand balance and building up a buffer stock if possible. Diversifying suppliers to reduce the kind of supply chain risks that can cripple operations may need to be a top priority – even if you aren’t directly impacted at this point. (If nothing else, it’s a good opportunity to review and address any supply chain weak spots.)

Although we don’t know the full scope of how (or for how long) coronavirus will impact stateside supply chains, we do know that even when it passes, there will inevitably be another crisis on the horizon. We work to make sure our clients are ready for every “next time.” We can help clients develop supply chain risk mitigation plans that incorporate alternative sources, routes, inventory and financial reserves.

If you have questions about our Cleveland 3PL services, contact On Time Delivery & Warehouse by calling (440) 826-4630 or send us an email.

Additional Resources:

Commentary: Supply-Chain Risks From the Coronavirus Demand Immediate Action, Feb. 18, 2019, By Yossi Sheffi, The Wall Street Journal

More Blog Entries:

Factors in Calculating Cleveland Warehouse Lease Rates, Jan. 27, 2020, Cleveland 3PL Blog