The Coronavirus epidemic is both tragic and alarming and has highlighted how dependent the tech industry on concentrated manufacturing centres in the Far East. So how is this affecting IT supply chains and what should leaders do to minimise business impact?
Restrictions and quarantines have caused production facilities to close and therefore impacted on supply of IT hardware. Some production facilities have switched to producing medical supplies to help fight the epidemic.
As many brands run a Just In Time approach to manufacturing, issues in production can quickly knock on to availability of hardware and as the estimated peak of the virus could be as far away as April, the impact could be felt across much of 2020.
There have been a number of updates from firms which rely heavily on outsourced manufacturing in the Far East, such as Apple, who guided that the impact on iPhone sales could be 10% – equating to millions of devices. Lenovo, the Chinese laptop brand has also said that there will be an impact on supply.
How should IT leaders mitigate the impact of this on their plans? Planning ahead, looking at hardware requirements for 2020 and then categorising against their criticality / urgency level will help to understand what the scale of the issue could be. As always, communication is key – talking to supply partners to review contingency options can help you to prepare for any shortages which may come along.
- Urgent requirements: Place orders as soon as possible, understand likely disruptions with your supply partners and have alternative channels ready in case of issues.
- Medium urgency: Review requirements as to whether device alternatives could work, place orders and manage lead times with vendors, review contingencies in case of delays.
- Low urgency: Wait until supply networks are back to strength, accept delay or source other similar products instead.
It’s also worth getting regular updates from your key partners, perhaps on a regular conference call or update email. The situation is fast changing and impacting on other areas as the outbreak continues to spread.
Let me know if there is any support or further information you would like. Be prepared and stay safe!