TECH BUYER Feb 2020 - Tech Buyer Presentation - Doc # AP44989920

Handling Disruptions in the World of Digital Manufacturing: COVID-19 Impact and Future Resiliency in Asia/Pacific

By: Stephanie KrishnanResearch Director, Sampath Kumar VenkataswamyResearch Manager, Christopher HolmesManaging Director - IDC Insights Asia Pacific

On-line Presentation

Abstract

This IDC Market Presentation discusses the impact of the coronavirus COVID-19 on manufacturers and their supply chains in the Asia/Pacific (excluding Japan) (APEJ) market. Key takeaways from the presentation include:

  • The COVID-19 outbreak that began in Wuhan, China late December 2019 has continued to spread, shutting down an extensive number of sectors, including manufacturing, services, retail, and tourism, during the traditional Chinese New Year festival season, with many companies delaying the resumption of operations until mid-March 2020.
  • Supply chain material disruptions have occurred, with quarantines in effect in Wuhan, Huanggang, Shiyan, and Xiaogan within Hubei and adjacent provinces. Nearly half the population of China was under travel restrictions. The effect on manufacturing centers in Asia, such as South Korea, Taiwan, and Southeast Asia, has been felt. Companies, such as Apple and Nvidia, have indicated that revenue numbers will be affected as a result.
  • The spread of the disease beyond China has had significant global impact, and now that there are more cases outside of China than within, economies are realizing that there will be large-scale actions to be taken. In some cases, we have seen this, with interest rate compensation in Australia and New Zealand, support and stimulus packages in Singapore and lockdowns in The Philippines.
  • Logistics capabilities, particularly in air, road, and rail, have been significantly impacted by quarantines and travel restrictions, influencing supply capabilities even if factories are able to resume operations before the end of March. Demand is slowing in newly impacted countries, with social distancing taking its toll, and travel constraints further removing cargo space from air routes.
  • Short-term, midterm, and long-term opportunities are presented for reducing the impact of serious events, such as the recent COVID-19 outbreak.

"We are now seeing a greater economic impact from COVID-19 when compared with the severe acute respiratory syndrome (SARS) outbreak in 2003. This is largely due to the integration of China with supply chains in a multitude of industries. The impact on materials in multiple tiers of suppliers is now apparent and has been compounded by logistics and indirect materials effects. This event highlights the necessity of building resilient supply chains," says Stephanie Krishnan, research director, IDC Manufacturing Insights. Krishnan continues, "Looking to the future, we expect organizations, once they have sorted out their current supply chain issues, to take a fundamental look at their supply chains and invest in a diversification strategy coupled with greater supply chain visibility and simulation scenarios to be able to respond in a resilient fashion in the future."


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