In an effort to continue to try and provide our members with resources that are easy to consume, and relevant to their own businesses, we are taking some information that has been developed and trying to “pare it down” as much as possible so you can easily find the identified portions that are most beneficial.
One resource that has been created in the wake of the COVID-19 virus is a video series developed by Dirk Beveridge from UnleashWD. In this particular video, “The Economic Impact of the Coronavirus Crisis”, Dirk interviews Dr. Christopher Kuehl, Managing Director of Armada Intelligence.
We have taken some time to pull some of the highlights and identify some important items that were covered, and then time stamp the video for easy access to everything that was covered in the video.
The crisis concerning international supply chains is still evolving, with the initial concerns around China’s drop-off in productivity slowly giving way to concerns about other countries that have been deeply affected by the COVID-19 outbreak – specifically South Korea, Japan, Italy, and other parts of southeast Asia and Europe. We can expect to be feeling the effects of this crisis for the next several months, with the overall timeline being driven by the duration of the outbreak, and how quickly businesses in China and elsewhere resume work. Businesses must communicate as best they can with their customers, and in the event of product shortages ensure customers know that a business is working hard to find a necessary product. Although it may seem obvious, stressing to customers that a shortage is due to the COVID-19 outbreak rather than poor planning will help alleviate any customer frustrations.
The economic challenges that are confronting world markets are not the result of some underlying instability, but rather the result of governments effectively shutting their economies off. If COVID-19 behaves more like seasonal cold or flu outbreaks, and the overall expansion of the virus slows in the summer months, we can expect to see a strong economic “bounce-back” due to pent-up demand. In such a scenario, consumer spending will likely hit a peak in the late summer, setting the U.S. and global economies up for a strong third quarter. However, if the rate of infections continues to grow through the summer months, there is every reason to believe that the economic slowdown lasts through the fall. Right now, we can anticipate an increase in job losses through the remainder of March, and into April and May. The only sectors that will be immune to this problem are the sectors that can support tele-commuting. Manufacturing, quite obviously, does not fit this bill as employees cannot produce things from their homes.
To stay ahead of the curve, distributors and suppliers should be tracking a few key leading indicators, like the Purchasing Managers’ Index and total industry capacity utilization [HARDI also recommends the tracking several additional indicators, explained in detail here]. Although not as timely, government published information on job growth and unemployment will help complete the overall economic picture. Over the long term, distributors and suppliers should be evaluating their supply chains and trying to determine where the risks are to help guard against future crises. Suppliers and distributors must consider the tradeoff between price and dependability – although few nations were prepared for the current crisis, wealthier countries generally fare better when disaster strikes because they have the resources and infrastructure to cope with major problems. Poorer countries, who many suppliers and distributors buy from because they can produce inexpensive products, lack the resources available to wealthier countries, and consequently may have a harder time recovering from a disaster. Suppliers and distributors should be mindful of this trade-off, and purchase from manufacturers that can be trusted to weather any disaster or economic downturn.
3:00 – Conversation begins
4:05 – Is there still a supply chain crisis in China? What type of improvements do you anticipate?
6:39 – What should distributors who rely on manufacturers in China be considering over the next several months?
7:52 – Should the conversations we have with our suppliers be modified in any way going forward?
9:08 – Do the Chinese have any measure of industrial production, and if so what does that look like since January?
10:33 – Should we be rethinking our reliance on China?
13:27 – What can we anticipate the timeline to be on the current business closures and social distancing practices?
15:02 – From a forecasting perspective, what should we be doing and planning for in the months to come?
16:10 – Are you forecasting significant job losses?
20:26 – What should leaders in wholesale distribution be looking at in terms of data or metrics to evaluate the health of the economy?
About UnleasedWD's video series
At UnleashWD our purpose is to unleash the human spirit. And during this unprecedented time we felt compelled to support the UnleashWD tribe and our association partners with the right mix of inspiration and timely, relevant information. We reached out to our network of wickedly smart subject matter experts to provide the sessions below. In the words of one attendee - “This was amazing. You’ve changed our day tomorrow. We’ll be on the attack!”
We are a design, innovation, and strategy firm who transforms legacy distributors into nimble and innovative market leaders. What you are about to experience is designed to unleash your spirit so like the individual above decided, you too will be on the attack!
We are here to support you through these next few months and beyond. If we can do anything for you please reach out directly to either of us.