The public health Emergency as novel COVID-19 has caused the product flow to be changed around the global and it caused the disruption of the supply chain network to a great extent. The most important manifestation of globalization is the Economic integration. The Coronavirus outbreak caused the disruptions to every aspect of life but considerably to the economy of every country and the global supply chains.
The economy wheel is the fluctuation of the economy between periods of expansion (growth) and contraction (recession). When we think about the disruption or disturbance of the supply chain network by COVID-19, it will be impacted in four ways.
First, problem in production of new products e.g. Demand for sanitizers and tissue papers have tremendously risen these days but racks are empty in the stores due to the production constraints. Due to this epidemic the whole supply chain network got disturbed.
Businesses and companies are facing lack of workforce and world governments ordered lockdowns in their countries. People are advised to stay at home and strictly follow the social distancing rules to prevent the spread of Coronavirus. However, employees are asked to work from home. Now working from home is not effective for many businesses and companies. As a result, the businesses are helpless in providing services.
Second, the prices rose as companies need to spend more money on production. Businesses have to bear the additional costs of productions with limited resources and then shipping for the products to stay in the market.
Third, products of daily use are stocked at home as people fear the shortage of everything they need. Demand of the products is high than its production and supply. The limited supply at the backend due to factory lockdowns is leading to the loss of market shares for different companies as the customers are looking for the substitutes as well, due to the shortage of products in the market due to this pandemic outbreak.
Fourth is the ”customer satisfaction’’. In this period of higher uncertainty people are looking in order to fulfill their needs. They are looking for the substitutes of the products no matter if they have a brand loyalty for certain brand or products. All this has changed due to the shortage of the products and rising uncertainty in the market.
The spreads of COVID-19 have pushed the pause button on the world’s economy. China has the world’s largest economy behind the United States. One of the main reasons of its rising economy is the massive network of different factories in china. China dominates one third of the world manufacturing and is the world’s largest exporter.
As of 28 March 2020, over 650,000 cases of COVID-19 have been reported resulting in approximately 30200 deaths across the world. Due to the vigorous spread of virus globally it has impacted every business and every country directly or indirectly. In an effort to stop the spread of Coronavirus, businesses, markets and factories are completely sealed off.
The Hyundai Motors in South Korea had stopped their production in early February due to not getting its parts that they usually import from China. Chinese Car sales dropped drastically by 86% in last month and other companies like Tesla and Geely are start selling cars online as consumers stay away from showrooms.
On the other hand, most of the components of iPhone are manufactured in China so it relies heavily on China for its production. China suggested to Apple that the Coronavirus problem may be more worsen in future. As there is the steep decline in the iPhone sales in February that is 61%.
The Investors in US stock market suffers their worse week in February after the Global finance crises since 2008. Investors fear the spread of the virus will destroy economic growth of countries. Banks in many countries including the United Kingdome has slashed down the Interest rates. European automotive crises deepen, as plants have been closed temporary and demand likely to fall up to 20% this year.
Travel Industry has been badly impacted by the outbreak of Coronavirus. In order to halt the further spread of this virus as Airlines cutting down their flights and tourists cancelling business trips and holidays and the Government around the world have imposed travel restrictions. Restaurants, bars, and other social places have been closed down and this is causing huge losses to industries such as food production, dairy products, fish farming, foods and beverages, wine and beer production; and what not.
The oil market continually suffers losses, because of the travel restrictions which limits the use of jet fuel and moreover, the slowdown of supply chain network, lockdowns, less mobility, shutting down of factories have direct effect on the oil consumption. In late January projections the oil consumption would decline by approximately by 800,000 barrels per day (bpd) over Quarter 1 and by 200,000 (bpd) over the entire year eclipsed by International Energy Agency (IEA).
Gold is traditionally considered as the safe haven for the investors throughout the world. When crises hit, investors often choose less risky investments, but even the price of Gold tumble-down briefly In March as investors were fearful about global recession.
Now, there are certain suggestions for the businesses in order to cope with the prevailing uncertainty. There are certain lessons that the companies can learn from the current situation. There have to be some mitigation strategies as well. Companies can work more proactively and agile and can overcome the risk by making improvements in the recognition of risk profiles and by implementing the risk management strategies and many more.
After the COVID-19 global emergency, we will see organizations can be categorized as one of two classifications. There will be those that do not do anything, trusting such a disturbance won’t ever happen again. These organizations will be facing exceptionally hazardous challenges in future. Furthermore, there will be firms that notice the exercises of this emergency and make interests in mapping their supply chain network. The businesses organize themselves so they do not need to operate blindly when the following emergency strikes again in future and they would be capable enough to rapidly make sense of arrangements. These organizations will be the victors in the long run.