- Coronavirus is threatening global sourcing and has brought concerns over supply chains into the corporate boardroom, PriceWaterhouseCoopers survey says
- Corporate planning and investing is being affected as companies reconfigure sourcing
- Changes in supply chains will remain long after the pandemic ends, PwC says
As companies struggle with pandemic-inspired fears of recession, falling consumer confidence and plummeting sales, another concern has crept in: weakened links in their supply chains.
Thirty percent of companies in a new PwC survey said they are considering making changes to their existing supply chains. And the changes are coming fast after recent Trump administration tariff policy changes that rattled global sourcing.
“There is heavy pressure on supply chains,” Tim Ryan, U.S. chairman and senior partner at PwC, said last week in a call with reporters. “We are seeing some critical items that are significantly being disrupted because of the inability to move products, whether it be from China or other parts of the world, or even within the United States.”
The PwC survey, taken the week of March 9, found that 34% of CFOs see supply chain issues as one of their top five concerns now. Other key concerns are a potential global recession, waning consumer confidence and workforce reductions.
The high-level focus on supply chains may lead to “more comprehensive, proactive modeling,” according to the survey report. Companies are already diversifying their Asian suppliers, it said.
“Companies will begin to look at their supply chain in more depth,” it said. “Supply chain is going to be a C-Suite boardroom topic for the foreseeable future.”
PwC is conducting the survey of financial leaders every two weeks to measure changing attitudes towards the Covid-19 crisis. Among the issues that are being looked at in the polling is the issue of recovery. In this last survey, 90% of CFOs thought their businesses would be back within three months if the virus was contained today.
Amity Milhiser, vice chair and chief clients officer at PwC, noted that while company executives are confident in the prospects for their own business, they are more concerned about the overall economy. “It speaks to the confidence organizations have in their own scenario planning, contingency planning, the resiliency they have built into their organizations over the last few years as they’ve thought about how they would respond to any kind of global shock,” Milhiser said on the call.
Still, given the uncertainty of the crisis, Ryan said it is important for companies to remain flexible in its planning for the coming months. “We don’t think it’s a time for companies or others to hold onto what original plans were for 2020,” he said. “It is clear the virus will change plans for almost every company, and they need time to assess what the new normal will look like.”
Photo by Hagen Hopkins/Getty Images