Supply chains suffering severe disruption from coronavirus pandemic

supply chains disrupted
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New analysis from Juniper Research has found that disruption to supply chains from the coronavirus pandemic could cause around a $42 billion revenue gap over the next 9 months for smart device vendors. The analysis examined a number of key device verticals including smartphones, tablets, consumer robotics, smart speakers and smart wearables. Three impact scenarios, low, medium and high, illustrate a range of possible outcomes.

Production Shortfall of 80 Million Devices

In our high impact scenario, the research forecast a reduction in output of over 80 million devices over the next 9 months. Delays to the delivery of components, such as batteries, processors, and displays, will each have the potential to disrupt production rates from device vendors. These, including Apple, Samsung, Amazon, Xiaomi and Huawei, must all ensure that any gaps in their supply chains are closed in order to meet the demand for their devices.

The advisory note forecasts that smartphones will comprise the majority of this device shortfall over the next 9 months, accounting for over 85% of missed shipments. It anticipated that the virus may also cause longer term issues, including the development of new devices. Additionally, it noted that the financial uncertainty from the impact of the virus means that demand will be lower, leaving device vendors unable to completely recover lost device sales.

Vendors Must Adapt ‘Resilient’ Strategies

The research urged device vendors to diversify their component supplier bases, arguing that doing so will enable them to ensure that future gaps in the supply chain are filled.

Just-in-time manufacturing has been a weak link in the resilience of device vendor supply chains. This kind of manufacturing involves organising supply chains to timed deliveries of components immediately prior to the device manufacturing stage. Whilst holding stock can be expensive, Juniper Research believes that vendors must now consider building inventories of ‘strategic’ components.

Download the free whitepaper: ‘Coronavirus: The Impact on Consumer Device Supply Chains’.

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