Since physical interaction causes the most stir in the new coronavirus epidemic, having a digital presence has become paramount for every institution and organization.
The new virus is affecting the economy at all touchpoints. Filing tax reports online, paying bills via apps/websites, shopping online, getting groceries delivered, and attending conferences and school courses online have become the lifeline of keeping everything afloat.
This is perhaps the first time many can appreciate the impact digitalization has on their lives. Staying informed, keeping in contact with everyone, and working from home are just a few benefits of a digital world.
The ability to track the status of COVID-19 creating extensive dashboards to envision the propensity of the disease and using resource-allocation software to tackle challenges that arise are just a few options that can help companies, states, and hospitals better fight global epidemics.
So how can data science help companies manage the supply chain and keep it from collapsing when everything is being delayed?
There are numerous reports all across the industry that the supply for raw materials, components, or factory delivery has been disrupted due to the coronavirus.
Supply Chain Analytics
While it is true the supply chain is more transparent than ever and companies can track their deliveries better than ever, this new crisis has proved to be a challenge for many businesses and industries.
Optimized routes, minimal redundancy of factory orders, and minimal marginal costs have had a positive impact on supply chains, but unexpected shocks disturb the balance. Even the most fine-tuned systems can crash when too much stress is applied to one of its components.
The coronavirus epidemic has tested supply chains all over the world. And its showing weaknesses within the system.
According to recent market reports by the Institute for Supply Management (ISM), the new virus has impacted the supply chain for about 75% of companies in the U.S.
The global production out of China fell to an all-time low last month, with freight and shipping significantly declined as the virus drastically impacted factories and ports.
Nearly 75% of companies report supply chain disruptions in some capacity due to coronavirus-related transportation restrictions, and more than 80% believe that their organization will experience some impact because of COVID-19 disruptions. Of those, one in six companies (16%) report adjusting and decreasing revenue targets by an average of 5.6%.
“The story the data tells is that companies are faced with a lengthy recovery to normal operations in the wake of the virus outbreak,” said Thomas W. Derry, Chief Executive Officer of ISM.
“For a majority of U.S. businesses, lead times have doubled, and that shortage is compounded by the shortage of air and ocean freight options to move product to the U.S. — even if they can get orders filled.”
Below, we’ve enclosed ISM’s study findings:
- 57% of companies noted longer lead times for tier-1 China-sourced components, with average lead times more than double compared to the end of 2019.
- Manufacturers in China report operating at 50% capacity with 56% of normal staff. More than 44% of respondents do not have a plan in place to address supply disruption from China. Of those, 23 % of respondents report current disruptions.
- Of the companies expecting supply chain impacts, the severity anticipated increases after the first quarter of 2020.
- Six in 10 respondents (62%) are experiencing delays in receiving orders from China.
- More than half (53%) of respondents are having difficulty getting supply chain information from China.
- Nearly half (48%) are experiencing delays moving goods within China.
- Almost half (46%) of respondents report delays loading goods at Chinese ports.
The supply chain analytics market is expected to grow from $3.6 billion in 2018 to $7.1 billion by 2023 at a CAGR of 14.6% during the forecast period. Increasing volume and velocity of data, the need to enhance operational and supply chain efficiencies, and the advance of artificial intelligence (AI) and machine learning into supply chain management would drive the market growth.
What Can Be Done?
Diversifying the supply chain can help start mitigating risks associated with delivery disruptions. The expression “don’t put all your eggs in one basket” is also true for supply chains.
Companies from all over the world are starting to reconsider their supply chain design. Events such as the coronavirus outbreak, Brexit, or trade wars, have clearly shown that the assumption that goods flow freely and globally is not entirely consistent.
Companies could also use predictive analytics solutions to run outage scenarios, in order to assess the possibility of unforeseen negative effects on their supply chain and distribution. Creating an operational center in the same way governments assemble workgroups can also help handle disruption situations.
Knowing your suppliers is a must. However, companies must have a comprehensive dashboard with alternative means of getting their necessary goods or services when disruptions occur. Having alternatives and mapping those alternatives for such events is never a bad idea. Organizations need global sources, but also local alternatives.
All of this data should be handled the same way that any valuable data is managed in a company. This is part of a contingency plan that can be deployed and queried quickly to truly make a difference. Organizations should also do a critical audit on their own operations to assess their vulnerabilities and take steps toward mitigating risks and possible damage.
Although it is impossible to foresee events such as the coronavirus epidemic, preparing your organization for any possible scenario should be a priority. We could help you uncover your analytics needs and help manage your data efficiently so that no matter what comes your way, you’ll be ready.