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February 18, 2020

Shortages, lack of backup plans: More supply chain disarray in the wake of the coronavirus

The coronavirus continues to disrupt the global supply chain, exposing shortages and a lack of sufficient backup plans. LLamasoft CEO Razat Gaurav talked with Forbes about the possibility of shortages across multiple industries. He said most companies have “buffer” inventories for such disarray but predicts that within the next month, supplies may run out.

“Come mid-March, if we’re still in the same boat there’s going to create shortages in a wide range of industries,” Gaurav said.

He says companies will have to reconsider priorities.

“It's really going to force them to consider tradeoffs between operating on that lean principle and carrying some of that buffer inventory you need during unfortunate situations like this. Those are not very straightforward decisions,” he said.

“As companies rethink the design structure of the supply chain, factoring these sort of risks will become more important. I think companies will invest a lot more in contingency planning. The problem is no one knows the cost of not having a well-thought out contingency plan for a catastrophic situation."

See the complete article here.
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