COVID 19 outbreak: impact felt through ecosystem
Stephen LawElectronics Supply Chain Covid 19 Covid 19 ecosystem ecosystem electronics supply Chain supply chain
Most electronic tech players use manufacturing hubs in China
A black cloud of uncertainty hangs over the global electronics industry, as the COVID 19 crisis continues to negatively weave its way through all aspects of the ecosystem. According to the results of a recent survey conducted by global electronics manufacturing association IPC, electronics manufacturers can anticipate at least a five-week product shipment delay from suppliers due to the coronavirus epidemic.
It’s a well-known fact that companies around the world rely on China to supply electronic parts, partially assembled goods and finished products to OEMs. Needless to say, high-tech companies here in Canada have been keeping a close eye on the impact to their supply lines, as the superbug continues to spread. IPC says shipping delays from China and other countries where the virus has spread are already having negative impacts on electronic OEMs.
“The delays will likely have ripple effects for the rest of the year,” says John Mitchell, IPC’s president & CEO. “The longer China is affected by the epidemic, and the more it spreads to other parts of the world, the supply chain will experience more and varied strains and disruptions.”
Impacting product offerings & development initiatives
During the onset of the crisis several technology companies were quick to impose travel restrictions to and from China. Temporary office and factory closures in the Asian nation have definitely had an impact on the product offerings and development initiatives targeted within its own domestic audience. Theses closures certainly pack a much larger wallop on new product releases and the roadmap for technology giants relying so heavily on China.
The IPC survey shows an overwhelming majority (84%) of electronics manufacturers and suppliers are worried about the epidemic’s impact on their business operations. Delays in receiving supplier inputs can lead to factory downtime, higher average costs, transportation bottlenecks, pressure for alternative sourcing, delayed sales, and delayed prototyping that slows the introduction of new products.
“In most cases, it’s not easy for manufacturers to switch suppliers, if that’s what turns out to be necessary,” Mitchell adds. “Securing alternate sources requires an investment of significant time and money that must be weighed against the value gained.”