Manufacturing Supply Chain Stress

Over the last several weeks, leaders of major manufacturers have stated that COVID-19 related shutdowns will cause material impacts to their operations and financials. While our hearts are with those affected by this illness, we as supply chain professionals must continue remain vigilant and mitigate potential impacts. Please click here for a complimentary copy of our Manufacturing Supply Chain Stress Report.

• COVID-19 Fallout - With operations in some areas suspended for more than a month, manufacturers are facing an unprecedented challenge. Major manufacturers, such as Automotive OEMs, have cut all US production capacity—plans on when to restart production have been delayed several times through public announcements.

• Near Term Criticality - Companies should review their supply base for critical components from plants that have or might shutdown, have low safety stock levels, and are under financial stress.

• Supply Risk - Companies should review their supply base for critical suppliers that will lose large amounts of revenue and have low cash levels. Suppliers’ approaches to COVID-19 risk mitigation should also be reviewed. In addition to financial risk, companies with low cash levels may have additional difficulties rapidly reopening.

• Production Restart - Geographic clusters of restart dates will require suppliers to prioritize production timed to each OEM and production lines.

• Supplier Financial Risk - Companies will undergo varying degrees of stress if operations remain suspended over the next few weeks and months. Public and Private suppliers’ financials should be reviewed to determine exposure to the industry, cash reserves, and available means of mitigation.