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March 9, 2020

Coronavirus creating inventory shortages in the tech and auto industries

"The novel coronavirus is laying bare a central problem for the global manufacturing industry: China’s shadow has grown so long that even industries that have shifted production beyond the country can’t wriggle free of its grip on supply networks," the Wall Street Journal reports.

As the tech and auto industries face inventory shortages, LLamasoft CEO Razat Gaurav talked with Wall Street Journal about the future impact.

The tech industry carries about three to 12 weeks of inventory, while the auto industry has about two to 10 weeks’ worth, said Razat Gaurav, chief executive of supply-chain software developer LLamasoft Inc. More than 70% of global smartphone output capacity is in China, he said.

“If the current situation continues as we go into the second half of March, I think we’re going to start seeing some massive impact on inventory availability,” Gaurav said.

The article continues, "A persistent epidemic would compound price pressures and weigh on corporate profit as manufacturers refocus their resources on searching for substitutes in the supply chain."

Read the full article here.
Original Source