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Coronavirus crisis exposes the risk in low-cost supply chains that criss-cross the world

PA Consulting’s Stephen May is quoted in an article in the Daily Telegraph and Sunday Telegraph on how the coronavirus outbreak has exposed weaknesses in global supply chains.

The article discusses how as a result of globalisation, the mass factory closures of the last week had been signalled in advance. It says this is particularly true of the car industry, which sources various low-cost parts from around the world and assembles them in factories. These long supply chains are problematic when a major event causes one part to go wrong – halting entire production.

The article goes on to cite single sourcing of parts as another concern. It says that just under 90 per cent of supply chain managers have been impacted by Covid-19 and half are already finding alternative suppliers or are planning to move away from single sourcing.

Stephen May warns the problem is even more difficult with the sub-assemblies found in modern manufacturing: “You might buy a sub-assembly and you know who you are paying but do you know where they are getting their supplies from?” he says. “You might think there’s safety in double-sourcing but what if each of your suppliers relies on the same company for one critical piece?”

The article goes on to say that the current crisis will mean a fresh focus on companies trying to build resilience. Stephen predicts this will mean a much closer examination of supply chains, not just looking at first-tier suppliers, but their suppliers’ suppliers.

Read the full article on The Daily Telegraph.

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