Coronavirus Is Proving We Need More Resilient Supply Chains

As governments and health care agencies work to stop the spread of Covid-19 and to treat those who are infected, manufacturers in more than a dozen industries are struggling to manage the epidemic's growing impact on their supply chains. Unfortunately, many are facing a supply crisis that stems from weaknesses in their sourcing strategies that could have been corrected years ago. Just how extensive the crisis is can be seen in data released by Resilinc, a supply-chain-mapping and risk-monitoring company, which shows the number of sites of industries located in the quarantined areas of China, South Korea, and Italy, and the number of items sourced from the quarantined regions of China. After the March 2011 earthquake and tsunami in Fukushima, Japan, many multinationals learned painful lessons about the hidden weaknesses in their supply chains -- weaknesses that resulted in loss of revenue, and in some cases, market cap. While most companies could quickly assess the impacts that Fukushima had on their direct suppliers, they were blindsided by the impacts on second- and third-tier suppliers in the affected region.