1 of 21

IMPACT OF COvid-19

On global

supply chain

Presented by Anel Acosta, Diane Baillieux, Everette Durbin, & Qi Meng

2 of 21

Focus RESEARCH countries of covid-19 IMPACT report

4 global regions selected to analyze specific supply chain impacts

China (Qi)
Italy (Diane)
The U.S. (Everett)
Mexico (Anel)

3 of 21

Covid-19 background

Strict public health regulation + worldwide economic shutdown

150 COUNTRIES WORLDWIDE

Deemed “public health emergency of international concern” - WHO (jAN. 2020)

Global pandemic

27 Pneumonia cases in wuhan city, china

4 of 21

CORONAVIRUS BACKGROUND

Observing fast spread of pandemic

SUPPLY CHAIN pROBLEMS

Specific to each country

POTENTIAL SOLUTIONS

Specific to each country

GLOBAL SUPPLY CHAIN: THE FUTURE

A reshaping global economic landscape

OUR FINDINGS

Recommendations from each team member

CONCLUSION & OUR TAKEAWAYS

5 of 21

Covid-19 impacts on manufacturing supply chain in CHINA

01.

6 of 21

IMPACT OF CORONAVIRUS (Jan. 23-Feb)

Employees went back home during Spring Festival.

COVID-19 quarantined most of them in their homewome

Sudden shutdowns decreased revenues of small and medium enterprises.

Many of them went bankrupt.

Roads in severe regions are blocked.

Wuhan as a transportation hub was closed

Inconvenient transportation

Insufficient labors

Ruptured Capital chain

The impacts of COVID-19 to domestic companies can be generally divided into 3 parts,

1. the inconvenient transportations

2.the quarantining labors

3. the broken capital chain

In some severe regions, such as Wuhan, all kinds of transportation are closed. It was hard for companies with large numbers of outsiders to start manufacturing. This caused blocks in transporting needed materials which caused further delivery problems.
Thes reunions in Spring Festival came into collision with the discovering of COVID-19 had not only accelerated the spreading speed of the Coronavirus but also quarantined more employees in their hometown. In the earlier stage, many essential business cannot restart because their employees were quarantined. In the mid-stage, employees still cannot go back to work because transportation was blocked.
The ceased productions caused great capital issues to small and medium companies which are 99% of overall companies in China. The postponed production decreased the potential revenue of companies and caused large penalty charges. Broken capital chain caused many small private companies bankrupt because of their low risk bearing ability with weak capital supportings.

7 of 21

Domestic Solutions (March-present)

3-level checking

Extending payment deadlines

Eliminating certain Mandatory costs

Producing medical supplies

800 Billion ￥

Prioritize urgent orders

Technology

To save the economy and fulfill citizens' basic needs in the priority of safety, the Chinese government wants the whole society to function normally as soon as possible. The central government issued many policies to accelerate the process.

Such like the Three-Level Checking policy, which allows qualified companies to restart.
The central government also permitted the extending dates on certain financial deadlines, eliminated some mandatory social fees, and provided about overall 800 billion RMB reloans to needed companies.

Managers are doing their responsibilities to save their companies too.

Companies prioritized their limited materials to focus on international orders to prevent penalties and more importantly to keep their credibility.
Some big companies started to design and manufacture or buy machines to produce medical supplies. By doing this, companies are not only supporting demands of market but also cover their fixed costs.

The byproduct of the COVIC-19 might be the increased use of technology. To accelerate the healthy recovery of economy, regions are using the health QR code to help differentiate the potential risk of each citizen. More and more workshop managers realize the convenience of having virtual meetings and the reliability of using intellectual machines. These new changes might accelerate the period of Industry 4.0.

8 of 21

PROBLEM (future)

Positive: Its position will not change because of the recovery efficiency; and investors’ needs to maintain cash

What will be the position of China in global supply chain after COVID-19?

PErspectives

Negative: Its position will get worse because of the risk of depend too much on a single hub.

This sudden pandemic disease breaks the balance and order of the current global supply chain, and made many doubted the risk of having their plants in China. Since the situation in China is getting better and the Chinese supply chain system are recovering efficiently, people viewed differently on the Chinese future position in the global supply chain.

Some people positively believed that the integrity and efficiency of Chinese supply chain recovery have made the world inseparable from China at least for a short period.
Others negatively believed that the starting of this pandemic situation from China might accelerate the relocating of many plants to other countries because it is very risky to depend too much on one particular hub.

In my view, I agree with both of the two ideas.

Shortly, I believe the position of China in global supply chain will not change due to its quick recovery and more quality and safety control. Moreover currently many other big manufacturing countries are also under the strike of Coronavirus.
In the long-term, governments of developed countries might reevaluate the supply chain risks of depending too much on China and might intend to move their businesses out of China. Most importantly, after the impact of this disease, companies will consider more on risk management rather than cost management.

In concluding my part. Though companies are still facing many scheduling hardships, I believe that as pandemic situation getting better by doing good epidemic prevent and control, stabilizing capital chain, and maintaining constant supplies, they could survive until the end of this pandemic situation. In addition, based on Chinese companies' efficiency of resilience, with more safety control, Chinese supply chain will be fine in the short future.

9 of 21

Impact of coronavirus on Italy’s supply chain

02.

10 of 21

First european country to suffer from the coronavirus

197,675

26,644

Number of coronavirus cases.

With concerns of a global supply chain disruptions.

Number of deaths caused by the coronavirus

11 of 21

FAC supply chain challenges through the years

2020-2021

APril,2020

DEC, 2019

The company sold 420,000 vehicles.
FAC was still the leader in Italy.
Their stock market was nearly 12 Eur

Closed four plants
Lockdown
MTA, the biggest supplier closed
Small supplier failed
Health measure
Stock market fell to 5.81 Eur

How will the supply chain operate in the future?

12 of 21

Solutions

Government funding

New health measure

Reopen step by step

Having good informations

Trust specialists

Vaccine

Technology

MTA, big supplier

Vaccine

13 of 21

Coronavirus and United States Healthcare supply Chain

03.

14 of 21

Corona virus and united states healthcare supply chain

During

Before

Economic Strength
Preparation for Outbreak

Economic Strength
Understand Supply Deficiencies
Private Help
Government Intervention

Economic Strength

Monthly labor review projected 2.3% increase in gdp from 2009-2019.
Third quarter of 2018 3.4% Increase. Fourth Quarter 2.6% increase.
According to The Survey of current business The growth in GDP was from consumer spending and inventory investment.
Strong economy and Strong healthcare supply chain.

Preparation

Europe and China had first so we knew it was coming.
Harvard Business review article “ Prepare our supply chain for Coronavirus”
Start with people
Maintain skepticism
Run outage scenarios
Understand the whole supply chain and mitigate risks.

Redesign with second sources.
Source locally

Economy

First time in the 114 months leading up to COVID-19 that U.S economy didn't grow.
Three weeks before April 4 16 million americans filed for unemployment. People are critical to supply chain so this spells supply chain dirsruption.

Supply Deficiencies

According to leading officials in healthcare the 160,000 ventilators that the U.S has access to will not be sufficent.
Geographic considerations
Number compared to U.S population
Masks now at risk for lack of supply.

Private Help

Ford is collaboration with 3M a leading mask manufacturer to make masks in their transmission plant.
Ford is working to make gowns from airbag materiel.
Innovative and necessary as these items are critical to those on frontline.

Government Intervention

President Trump took control of U.S supply chain.
Gave federal government power to control production and distribution of health protective gear.
Trump has been meeting with private firms.

15 of 21

MOVING FORWARD

Uncertainty

Analyze Supply Chain

Understand Human REsources

Supply CHain INsurance

Maintain Skepticism

Embrace unconventional and innovative methods

16 of 21

COVID-19 IMPACT ON MEXICAN MANUFACTURING

04.

17 of 21

Transportation industry controversy with fuel standards (Ultra-low sulfur diesel) - SEMARNAT

NEARSHORING

U.S companies looking to open manufacturing in Mexico

Compromised production schedules from import delays

Mexican factory closures

Mexican supply chain disruptions causing complications in the U.S

What’s Happening Since

PROBLEMs identified

18 of 21

MEXICO’S APPEAL AS PRIME LOCATION TO MOVE OPERATIONS TO

Faster and cheaper

FAST and C-PAT allows for expedited processing

USMCA and NAFTA economic relationship

Strong IP laws & smaller language barrier

Increasing Chinese tariffs

Manufacturing capacity less expensive + more efficient

Low cost manufacturing

GROUND TRANSPORTATION INTO U.S.

Existing trade relations

NEARSHORING

19 of 21

SOLUTIONS + moving forward

TRANSPORTATION INDUSTRY

Focus on Domestic production

SEMARNAT and ANPACT collaboration needed to alleviate ultra-low sulfur diesel shortage

Incorporating disruption-related metrics in supplier evaluations

Supply chain mapping efforts

Help to mitigate delays in production scheduling, sourcing raw materials, and operations coordination

20 of 21

Student Learnings

EVERETT, International Business and Entrepreneurship

Focus on growth
Embrace uncertainty, innovation, and unconventional measures.

ANEL, Supply Chain Management

Supply chain analysts must assess risk strategies with supplier contracts
International dependency
Domestic production vs. excessive outsourcing

QI, Accounting, Supply Chain Management and Religion

To cover fixed costs, a company should keep production.
Decrease risk will decrease efficiency and increase cost.
Companies need emergency backup plans.

DIANE, Finance & International Business

Global business impacting the world
Financial issues coming from supply chain issues
Will take time to find a sustainable solution
Adopting new measures doing Business

21 of 21

THANKS!

Any questions?

TEAM 3

CREDITS: This presentation template was created by Slidesgo, including icons by Flaticon, and infographics & images by Freepik