75% of  US Firms Seeing Widespread Supply Disruption Due to Virus

75% of US Firms Seeing Widespread Supply Disruption Due to Virus

March 12, 2020
The COVID-19 disruption has led one in six companies to lower revenue targets by an average of 5.6%.

Nearly 75% of U.S. companies have experienced supply chain disruptions because of virus-related transportation restrictions, according to an Institute for Supply Management survey that adds to signs of growing strain in global economic linkages as the outbreak upends activity worldwide.

The challenges have led one in six companies to lower revenue targets, by an average of 5.6%, ISM found in its Feb. 22-March 5 survey of 628 respondents, who were roughly split among U.S. manufacturers and service providers. Firms expecting supply chain impacts anticipated that they would become more severe after the first quarter.

“Companies are faced with a lengthy recovery to normal operations in the wake of the virus outbreak,” ISM CEO Thomas Derry said in the report.

“Organizations who diversified their supplier base after experiencing tariff impacts are potentially more equipped to address the effects of COVID-19 on their supply chai,” Derry added.

The survey also showed that manufacturers with a presence in China report operating at 50% capacity with 56% of normal staff, while more than 44% of respondents don’t have a plan to address supply disruptions from the country.

ISM, which says its 47,000 members manage about $1 trillion in corporate and government supply chain procurement annually, said in the report it will conduct more surveys to track the implications of the outbreak.

Other Highlights:

  • More than 60% of companies that ordinarily travel to China have no plans to do so over the next six months, while almost half note travel to other areas faces extra scrutiny or limits, including Japan and Europe.
  • Average lead times have more than doubled from the end of 2019.
  • 53% have difficulty getting supply chain information from China.
  • 62% are experiencing delays in receiving orders from China.
  • 46% have delays loading goods at Chinese ports.

By Alex Tanzi