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Firms See Capacity Challenges Amid COVID-19 Outbreak

March 30, 2020

With employee work restrictions in place to combat the COVID-19 crisis, just 29 percent of companies can continue to be fully operational with employee work restrictions in place and 57 percent expect to be partially operational, according to the international “RapidRatings State of Supply Chain Survey”.

To understand the extent of the damage wreaked on global supply chains by the COVID-19 outbreak, RapidRatings surveyed companies both in the initial group of impacted countries (Italy, China, South Korea and Japan) as well as those in Europe and the U.S. which are now bearing the brunt. The findings represent frontline insights on supplier business continuity measures and anticipated disruptions to global supply chains as the pandemic unfolds.

“We are only just starting to feel COVID-19’s impacts on supply chains,” said James Gellert, CEO at RapidRatings. “Despite business continuity measures in place, many companies expect significant degradation in their ability to deliver in the foreseeable future. These survey results give a first-hand perspective on the difficulties private companies around the world are facing, and they are extreme.”

In the U.S., “lean” inventory management—whereby companies maintain the lowest amount of inventory necessary to serve their customers—has amplified concerns over ongoing disruption and post-pandemic recovery times. For example, 59 percent of U.S. companies say they don’t have enough inventory reserves on hand to continue shipping more than two weeks after ceasing to manufacture.

Small businesses with revenues in the $10 million to $100 million range are bearing the brunt of the work-from-home disruption, with 76 percent unable to continue operating at full capacity. Of those companies which have already closed their facilities, 42 percent are not expecting to open them again for another two to four weeks (and 15 percent for at least another month).

Additionally, while many companies have successfully made the switch to home-based work, the survey found that 29 percent of companies could continue to be fully operational during the COVID-19 crisis, despite 64 percent saying that they have a pandemic response policy in place. In Italy, only 43 percent had a response policy.

Other key survey findings include:

Of the private companies surveyed, 32 percent have already experienced supplier disruptions of their own

In China, only 26 percent said they could be fully operational while working from home as compared to 37 percent in North America. However, in China only 7 percent said they could not operate at all, as compared to 15 percent in North America.

There have been challenges at 27 percent of companies in acquiring masks or cleaning supplies. In Italy, 44 percent reported challenges.

82 percent of companies in the U.S. reported that their customers were being helpful with COVID responses, higher than in Italy and China who were both at 63 percent

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