Novel Coronavirus (2019-nCoV) and the Global Supply Chain

As the Novel Coronavirus (2019-nCoV) spread from its emergence in Wuhan, governments and businesses have been assessing its possible impact on the rest of the world. The effect is firstly on the health of individuals, but secondly on its impact on the global economy. The health impacts are still under review. The disease has already killed more than the SARS outbreak in 2002. Early indications are that the majority of those infected will only develop a mild case (approx. 82%) with a further 15% developing a severe case and 3% having a critical case.

The latest figures indicate a mortality rate of just over 2% (780 deaths from 34,800 cases BBC News 9/2/2020). People with the disease may be infectious even before their symptoms appear, which makes it difficult to control. The incubation period is up to 14 days, so quarantine of suspected cases is now being used. This will have a significant impact on global supply chains as the effects of quarantine regulations take hold.

Wuhan, with a population estimated at between 9-11 million, is also a center of hi-tech and traditional manufacturing. Almost half of the world’s 500 largest companies have operations there. 

Pharmaceutical industries may be particularly affected. It has been stated that 15% of the manufacturing capacity for active ingredients for 370 essential drugs will be affected.

Peugeot-Citroen has a joint venture faculty in the region, so the automotive industry may also feel effects from the disease outbreak.

Tier one suppliers often have the most impact on manufacturing organisations, so such a large amount of suppliers affected will lead to many supply issues around the world.

Supply chain organisations need to understand potential risks and ways to mitigate those risks.

GLOMACS offers courses in risk management and supply chain management to help companies analyse risks and evaluate risk management practices to minimise the likelihood and impact of supply chain risks.

To be continued …..