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New type of coronavirus pneumonia (COVID-19, commonly known as Wuhan pneumonia) is spreading around the world. Experts worry that the shortage of components and raw materials caused by the virus is far more serious than expected. Most American companies do not even know that they will be affected by Chinese factories. Affected by suspension of operations.
The Financial Times reported on the 8th that although most companies are paying close attention to the most direct suppliers (such as the operating conditions of the Foxconn plant), they have turned a blind eye to the upstream of the supply chain. Peter Guarraia, head of Bain & Co.’s global supply chain department, estimates that as many as 60% of business owners know only the first-line supply chain, and they don’t know anything about supplies beyond the second line. The truth is that most large companies have only just woke up. China has had no data at all for 2-3 weeks, which scared many companies.
Resilinc, a U.S. supply chain comparison service provider that tracks more than 3 million components, points out that about 1,800 components originate from Hubei Province, China’s main quarantine area. Resilinc Chief Executive Bindiya Vakil warns that as capacitors and resistors begin to run short, many companies may have to face harsh realities in the coming months.
According to Vakil, the most terrible thing is that the parts and components produced in Hubei Province and nearby areas are very small capacitors, resistors, thermal elements, plastics and resins, and sheet metal that are too small to be noticed. Supply chains can be disrupted for up to 6 months, and companies need to be mentally prepared. In the past, neglected areas (such as consumer packaging) were more important than expected and even led to supply shortages.
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