Supply Chain Weekly Wrap-Up: 02/21/20 – 02/27/20

Coronavirus to disrupt electronics supply chain

The electronics industry could face severe delays and disruptions due to the coronavirus outbreak. An industry survey conducted by the trade group IPC found that many electronics manufacturers are expecting several weeks of disruptions due to the virus and that 84% of these companies are concerned about these delays.

Manufacturers, who participated in the survey, told the IPC that they have been warned by their suppliers to expect delays of about three weeks, but according to the trade group many manufacturers are privately expecting this to be longer. On average, manufacturers believe that the expected delays could be up to five weeks, but some predict even more than nine weeks.

With multiple suppliers and sub-suppliers involved in the electronics supply chain, even if firms are manufacturing in regions that haven’t yet been infected by the coronavirus, those products could also face delays as they may use parts which are made in China. The industry could also be facing further disruptions due to the increase in coronavirus cases in South Korea, a key electronic manufacturing country.

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Walmart launches fulfillment services for third party sellers

Walmart has launched a fulfillment service for third party sellers on its marketplace, similar to Amazon’s “Fulfillment by Amazon” service. The company will leverage its vast logistics network to provide storing, picking, packing, shipping returns processing and customers service for a fee.

The service was launched last fall in Shepherdsville, Kentucky, with Jare Buckley-Cox, vice president of Walmart Fulfillment Services (WFS) for Walmart eCommerce, saying that they had chosen to begin the service in this area because “Kentucky is a strong central location for us as we can guarantee two-day delivery anywhere in the country”. However, over the course of this year the service is set to be rolled out to multiple more locations, according to Buckley-Cox.

While Walmart is entering into an already crowded arena of third-party fulfillment services, the company has said that it has set a “high bar” for participation requiring sellers to meet specific qualifications before being accepted onto the program.

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Revenue concerns due to the coronavirus outbreak spread outside of China

With the number of cases of the coronavirus outside of China rising, company concerns about the effects that the virus will have on revenues are also increasing. According to a new survey conducted by the American Chamber of Commerce in Singapore, 72% of international businesses, including those within the logistics and manufacturing sector, expect the outbreak to impact their 2020 revenues.

The results showed that of the logistics companies surveyed, all said that they had been impacted by the outbreak, of which 43% said that this had been “to a great extent”. Similar results were also echoed by the manufacturing industry with 37% of these companies saying that they had been affected “to a great extent” and a further 37% saying that their operations had been “somewhat” affected.

The majority of respondents in both sectors said that they expected, as a result of the coronavirus outbreak, their 2020 revenues to fall between 1% and 10%. However, some suggested that they could see their revenues fall by up to 20%.

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Have a lovely weekend!