The impact of COVID-19 on supply chains and manufacturing around the world is substantial. Some manufacturers have ceased production completely, some have seen greatly reduced demand, and others have seen a huge increase in demand. The research team at ROI Research on Investment and Gazelle.ai has put together this infographic that examines impacts on North American manufacturing. This data gives us deeper insight into the state of manufacturing as this crisis unfolds. Below are some key findings: 

Overview of the Global Supply Chain Crisis

– As reported by Deloitte, China’s dominant role as the “world’s factory” means that any major disruption puts global supply chains at risk. Highlighting this is the fact that more than 200 of the Fortune Global 500 firms have a presence in Wuhan, the highly industrialized province where the outbreak originated, and which has been hardest hit. Companies whose supply chain is reliant on Tier 1 (direct) or Tier 2 (secondary) suppliers in China are likely to experience significant disruption, even if, according to the most optimistic reports, conditions may approach normalcy in China soon.

– The Institute for Supply Management (ISM) found that 57% of respondents in a recent survey had experienced longer lead times for orders sourced from tier-1 suppliers in China. And 44% of respondents do not have a plan to address supply disruptions from China, of which the majority have experienced disruption.

– In China, as some factories come back online, the country’s March purchasing manager’s index (PMI) came in at 52%, up from nearly 36% in February, according to the National Bureau of Statistics of China. This could benefit U.S. businesses needing to restock dwindling inventories.

– Coronavirus impact highlights the need to transform traditional supply chain models. The full impact of COVID-19 on supply chains is still unknown. COVID-19 may be the catalyst for companies to revisit their global supply chain strategy and accelerate the adoption of Digital Supply Network models and capabilities.

– 1 in 2 U.S. Manufacturers Now Seeking Domestic Sources of Supply: The recent Thomas survey showed a reduced desire in sourcing internationally (from 43% to 34%), and an increased number of respondents (47% from 43%) are now looking to source in North America.

Current Performance Indicators, Industries Most Hit, & Industries with the Most Growth

– The March 2020, Manufacturing ISM Report On Business showed that the manufacturing PMI index experienced the biggest drop in orders since 2009. The index fell to 49.1 last month from 50.1 in February, signaling considerable contraction. Readings under 50% indicate more companies are contracting instead of expanding. The activity was driven down by a steep decline in new orders and production.

– According to the recent report by The Institute for Supply Management, of the 18 manufacturing industries, the 10 that reported growth in March — listed in order — are:

  1. Printing & Related Support Activities
  2. Food, Beverage & Tobacco Products
  3. Apparel, Leather & Allied Products
  4. Wood Products
  5. Paper Products
  6. Chemical Products
  7. Computer & Electronic Products
  8. Primary Metals
  9. Miscellaneous Manufacturing
  10. Plastics & Rubber Products

– The six industries reporting contraction in March, in order, are:

  1. Petroleum & Coal Products
  2. Textile Mills
  3. Transportation Equipment
  4. Furniture & Related Products
  5. Fabricated Metal Products
  6. Machinery

Coping Strategies and Top Concerns

– Creative Coping Strategies Starting to Emerge: From increasing capacity to support customers impacted by degraded supply chains to using live feed cameras to deliver machinery acceptance tests.

– Increased Concerns on Price Surges: The Thomas survey indicated a significant drop in concerns for disrupted shipping and logistics from 71% (February) to 42% (March). The concern over offshore factory suspension and production restrictions are also easing down from 55% to 36%, respectively. However, there is a significant rise in concern (from 12% up to 22%) regarding price surges for the cost of goods

– Financial Impact: The Thomas survey showed that over half (55%) of manufacturers expect their revenue to decline as a result of the coronavirus, and 31% expect it to remain the same. This is a stark departure from February survey results, which found that only 34% anticipated their revenue to decline and 53% expected it to remain the same.

 Here is a condensed version of the key findings in one informative infographic.