How are global supply chains managing the coronavirus?
An ever-growing number of companies are feeling the effects of the deadly...
The coronavirus is significantly disrupting individuals and businesses alike.
An ever-growing number of companies are feeling the effects of the deadly virus, with many global organisations fearful it could get worse. Supply Chain Digital looks at how three global companies are handling the coronavirus.
The global tech giants, Apple, has warned of global “iPhone supply shortages” resulting from its Chinese factories closed due to the outbreak. Apple manufactures the majority of its iPhones and other products in China, and the coronavirus’s increasing presence has caused the firm to halt production and close retail stores in China. In a press release, Apple confirmed it would not meet its Q1 revenue target of US$63-67bn. “Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” read the press release. “As a result, we do not expect to meet the revenue guidance we provided for the March quarter.”
In a recent earnings call, Chris Kempczinski, McDonald’s president and CEO, commented: “The situation in China is fluid and concerning. Right now, as you would expect, our priority is on our employees and customers and ensuring we do everything we can to ensure they’re safe and taken care of.” At the end of January, McDonald’s closed approximately 300 restaurants in China, however, Kemczinski stressed that “3,000 restaurants in China remain open.”
The coronavirus could cost the luxury industry over US$40bn in revenue. Companies such as Burberry, Ralph Lauren, Coach and Capri Holdings have already told of the significant impact the deadly virus has had on business. Burberry has closed 24 of its 64 total stores in mainland China, while the other 40 remain open on reduced hours and with substantial footfall declines. Speaking to Business Insider, Burberry CEO Marco Gobbetti said: “The outbreak of the coronavirus in mainland China is having a material negative effect on luxury demand. While we cannot currently predict how long this situation will last, we remain confident in our strategy.”
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5 minutes with: Ivalua’s Sundar Kamak
Who are you?
My name is Sundar Kamak, I’m Head of Manufacturing Solutions at Ivalua. I’ve been with the company for around two years now, and I’m responsible for our industry solutions and our pre-sales team. Before joining Ivalua I spent almost 20 years in the source-to-pay procurement space, working for a number of providers. But I got my career started in manufacturing and supply chain, specifically in automotive and aerospace.
And what is currently taking up the majority of your professional time?
The last year I've been focused in helping organisations put together a digital transformation strategy, especially manufacturing companies, so they can continue to address some of the challenges they face due to the COVID pandemic.
The traditional approach of engineers designing their latest product then procurement going off to source no longer works
What are the biggest challenges facing your corner of supply chain?
We have a lot of clients coming from different backgrounds - aerospace, high-tech, automotive - and they’re feeling the pressure and the crunch. There’s a lack of product, lack of material availability, lack of resources, labour shortages. So, I work with the leadership in these organisations, try to understand what problems they're looking to solve and come back with Ivalua solutions that can help them address some of these challenges.
Where do the biggest opportunities lie?
If we look at manufacturing, it all comes back to procurement and supply chain being involved sooner in the process. The traditional approach of engineers designing their latest product then procurement going off to source no longer works. It’s important to treat suppliers like partners, which means you build trust, so they can participate very early on in the product design and product development process. It’s not done consistently in the manufacturing sector, but it will be key.