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Industry Perspective: COVID-19

Industry Perspective: Supply Chains under COVID-19

Supply Chain Vulnerabilities under COVID-19

Researchers: Christopher Cummings, Breton Johnson, Sunil Chopra, Hani Mahmassani

How is COVID-19 impacting US supply chains?

To answer this critical question, researchers at Northwestern University Transportation Center surveyed members of the Business Advisory Council. Results and report updates are provided below, starting with the latest...

 


 
Survey 2

The goal of the second survey was to see how the performance of supply chains evolved during the middle two weeks of April as the various stay at home orders took effect and people got used the new norm. The survey obtained 21 responses and main findings are listed below:

  1. While most sectors have seen a further drop in asset utilization in April, some are seeing increased demand for their assets. About 62% of respondents (13/21) reported a drop in asset utilization in April with about 29% seeing a drop in utilization of over 10%. About 24% of the respondents reported an increase in demand for their assets in April.
  2. While most respondents did not experience shutdowns or labor shortages in April, a significant minority experienced both. About 19% respondents experienced a shutdown in April and about 24% of respondents experienced labor shortages.
  3. About half our respondents experienced an inventory shortage in April.
  4. Respondents continue to worry about supply shortages from Asia (55%) and labor shortage (50%) as future sources of vulnerability.
  5. While many respondents felt their supply chains had become more vulnerable in April, a few felt that they had improved resilience. About 38% respondents felt that their supply chain had become more vulnerable in April and about 14% of respondents felt that their supply chain had become more resilient.
  6. While most respondents felt that their supply chain became more financially vulnerable, a significant minority felt that their financial position did not change in April. About 60% respondents felt that their supply chain had become more financially vulnerable in April and about 40% of respondents felt that their financial position had not changed in April.
  7. Respondents became more pessimistic in April about how long it would take for the situation to return to normal. Whereas 45% respondents felt in March that things would normalize within 3 months, only 15% felt this way in our April survey.

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Survey 1

NUTC researchers surveyed 65 members of the Business Advisory Council between March 30th and April 3rd. The survey obtained 29 responses and main findings are outlined below:

  1. While most sectors are seeing a significant drop in asset utilization, some are seeing increased demand for their assets. About 70% of respondents (20/29) reported a drop in asset utilization with about 40% seeing a drop in utilization of over 10%. About 15% of the respondents reported an increase in demand for their assets. As a result, there is plenty of idle capacity in the system with about half the respondents reporting more than 10% idle capacity.
  2. The greatest vulnerability of supply chains is at nodes such as DCs, ports, and production facilities. The major causes for the vulnerability related to shutdowns (about 64%) or labor shortage (32%) related to COVID19. The other major cause was the absence of inventory because of lack of supply (43%).
  3. Companies are improving supply chain resilience by reallocating capacity across markets (31%) and strengthening existing relationships (21%). As a result, 3PLs are seeing an increase in business.
  4. Companies are improving financial resilience by delaying capital expenditures (31%) and reducing overall capacity (21%).
  5. Major future vulnerabilities relate to shortage of supply from Asia (48%) and Europe (31%) and continued labor shortages (45%).

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