Wave effect of Covid-19 on Supply Chain - Wave 2

Covid - 19 first wave effect which sparked with China, being the factory of the world, created a disruption for many Supply Chains.(http://blog.think-spark.com/2020/04/wave-effect-of-covid-19-on-supply-chain.html). Wave 1 effect has now evolved into Wave 2 effect.

China is back full steam & many Chinese enterprises have commenced manufacturing operations. It has offered the rest of world a ray of hope to define timelines to bounce-back from the Covid-19 disruption. That is a great news. Once the manufacturing operations commence, Chinese suppliers & in turn their customer organizations may breathe a sigh of relief. How long will it last is the question? In the Wave 2 of the effect of Covd-19 on Supply Chains, at some stage the Chinese suppliers will face a couple challenges. 

a) Their customers rolling plans for purchase will get differed. This shall happen due to the cascading effect which started with Wave 1. The short term demand side activity of the buying organizations may have come to a standstill. So the effect of Wave 1, where incoming Inventory has been piled up coupled with the fact that Production also has come to a standstill, will lead to postponing incoming material schedules.

b) In the Bill of Material(BOM)  of the buying organization it is entirely possible that other input material which may be from supply sources apart from China may create a bottleneck. For a country like India where inter-state goods movement also has seen some restrictions, organizations may face a challenge of producing Finished Goods in absence of full BOM quantity not being available.

c) Chinese suppliers must be producing goods from their existing on-hand inventory. This is one more concern. How secure is the Chinese manufacturers input material Supply Chain? If the supply side of the suppliers Supply Chain is not secured then in some days or weeks later, the manufacturer is likely to face a supply shortage leading to disrupting his own supplies to his customers.

In the current Wave of Covd-19 impact on Supply Chain, one cannot rule out the non-availability of the Transportation modes. e.g. In case of Ocean Shipping, there surely is a possibility of mismatch of location wise vessel availability. In normal practice, the rotation of ships between location happens due to normal trade. But for a  few months, ships have been stuck in particular locations & in absence of transportation load they have not moved much. So in the coming few weeks this bottleneck may play out too.

Wave 2 impact will be multi pronged as not as localized & operational as Wave 1 impact. Wave 3, the way I envisage, will be more structural in nature.