China Risk Management

Over the last several weeks, news from China has continued to deteriorate. Leaders of major companies have begun to state that there will be a material impact to their operations. While our hearts are with those affected by this illness, we as supply chain professionals must continue remain vigilant and mitigate potential impacts. Please click here for a complimentary copy of our Risk Management Report.

• Coronavirus Fallout - Some companies have already seen an impact on their business, while others are unsure about the potential impact to their supply chains. The virus may lower China’s Q1 GDP by over 1.5%.

• China Exposure - China accounts for over 50% of some US-based companies’ revenue and significantly more for Asia-based shipping companies. Prolonged shutdowns, will likely have a material impact.

• Air Freight Capacity - Peak season rates are expected as commercial air travel, which typically moves 45% of air freight grinds to a halt.

• Supply Risk - Procurement and Supply Chain professionals should review their value chain and identify safety stock levels for single and sole-sourced components originating in China.

• Supplier Financial Risk - Public and Private suppliers’ financials should be reviewed to determine exposure to China, cash reserves, and available means of mitigation.