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How the coronavirus is disrupting global supply chains
The coronavirus outbreak has hit numerous industries hard and showed the globalised nature of commerce and connectivity. From global car brands such as Nissan and Hyundai to the number of airlines which have cancelled flights to the mainland China, global supply chain is at risk. Depending on how long it and South Africa. Dave Hudson, Professional member and representative, SA Production Inventory Control Society.
Tue, 11 Feb 2020 15:17:33 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Extended Lunar New Year holiday and production delays in China are causing disruptions in the global supply chain, affecting businesses in South Africa.
- Dependence of the pharmaceutical industry on China for active pharmaceutical ingredients (APIs) poses risks of shortages in essential medications in South Africa.
- Disruption in the automotive and retail sectors due to missing components from China highlights the vulnerabilities of global supply chains and the potential economic impact.
The global supply chain is facing a significant threat as the coronavirus outbreak continues to disrupt operations in China, the world's manufacturing hub. The outbreak has already caused delays in production and shipment of goods, affecting businesses worldwide. South Africa is no exception, as companies are experiencing challenges due to the extended Lunar New Year holiday and shortages of essential raw materials and components.
Dave Hudson, a professional member and representative of South Africa's production inventory control society, highlighted the risks posed by the coronavirus outbreak on the global supply chain and its potential impact on South Africa. According to Hudson, South African companies typically place orders for goods from China well in advance of the Chinese New Year, expecting delivery shortly after the holiday. However, the extended holiday and production delays in China have led to disruptions in supply, causing problems for companies in South Africa.
One of the critical concerns raised by Hudson is the dependence of the pharmaceutical industry on China for active pharmaceutical ingredients (APIs). The delays in production and shipment of APIs could result in shortages of essential medications in South Africa, affecting both state and private healthcare sectors. Hudson emphasized that the pharmaceutical industry's stringent regulations and reliance on specific suppliers pose challenges in sourcing alternative ingredients, potentially leading to significant supply chain disruptions.
In addition to the pharmaceutical sector, the automotive industry and retail sector are also facing challenges due to the coronavirus outbreak. Hudson noted that even a single missing component from China could halt production and impact sales, leading to significant financial losses for manufacturers. The global economic impact of the outbreak is projected to be substantial, with estimates suggesting a potential 1% decline in China's GDP and a 0.2% impact on global economic growth.
Furthermore, the disruption in the transport and logistics sector, particularly in Chinese ports, is exacerbating the supply chain problems. With seven of the world's ten busiest ports located in China, the slowdown in port operations is causing delays in shipping and handling of goods. Shipping lines are bypassing Chinese ports to avoid infection risks, leading to congestion in other ports and further delays in cargo delivery.
As the global supply chain continues to grapple with the challenges posed by the coronavirus outbreak, stakeholders are urged to monitor the situation closely and implement contingency plans to mitigate potential risks. The interconnected nature of the global economy underscores the importance of resilience and flexibility in supply chain operations to adapt to unforeseen disruptions.
In conclusion, the coronavirus outbreak presents a significant threat to global supply chains, with far-reaching implications for businesses and economies worldwide. South Africa, like many other countries, is vulnerable to the supply chain disruptions caused by the outbreak, highlighting the need for proactive measures to address challenges and ensure continuity in operations.
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