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Japan postponed the Summer Olympics that day. India put 1.3 billion people under lockdown. The inhabitants of the United Kingdom woke up to their first day in house confinement of the coronavirus. The World Health Organization warned that the United States could become the new center of the outbreak. President Donald Trump said he would love to reopen the country at Easter, just three weeks later.
In the middle of that remarkable Tuesday, the CEO of Coca-Cola Co. described what he saw from the helm of the iconic American beverage company. “The supply chain is crunching around the world,” James Quincey said in an interview on CNBC.
Fast forward a month and some stresses persist and some are getting worse, particularly in the pipes for fresh food and medical products. But just a few days ago, Quincey seemed relieved that the plant shutdowns were limited to “just a couple of places” and even congratulated employees for “basically keeping everything running.”
A “major force” during the disruptions, he said April 21, has been Coca-Cola’s local production of soft drinks and juices.
“Drinks in the United States are made in the United States. Drinks in Germany are made in Germany. Drinks in Kenya are made in Kenya, ”said Quincey. “The local supply chain can then work designated as part of the food system, making it an essential service, to enable production and distribution systems to function. So we have had some problems over time with the ingredients. Those are much better than they were a few weeks ago. ”
The same cannot be said of US meat packaging companies that have closed processing plants to contain outbreaks among their workers. Or auto companies with supplier networks that stretch from Southeast Asia to Eastern Europe and are at least another week away from restarting assembly lines. Or industrial giants like Alcoa Corp. that have to rely on weak global demand for several months or more.
As publicly traded companies describe how they weathered a quarter that most people would like to forget, here are other examples of how large supply chains remain:
“Heroic work”
Unilever, with more than 200 factories worldwide, has been operating at approximately 85% of capacity, reflecting “absolutely heroic work by some people on the front lines of our supply chain, adjusting to new patterns demand and securing new supply routes for ingredients, “Chief Executive Alan Jope said in an interview Thursday with Bloomberg Television.
Like many companies, the Anglo-Dutch maker of Lipton tea, Breyers ice cream, and Dove soap has been trying to make sure it has enough workers who face both government travel restrictions and the free time needed when the virus attacks them. When northern Italy closed, the company obtained approval within hours to continue producing a line of food products in the region. In India, a similar request took four to five days. When an outbreak hit a facility in the Middle East, where many workers live in dormitories, Unilever reserved hotel rooms so that those who tested positive could remain isolated and others could go to work, according to Jope.
“Most of our supply chain is local, it is very flexible and, in general, the vast majority of the products we sell in a country that we supply in that country,” Unilever chief financial officer Graeme Pitkethly said Thursday, in a conference call with journalists.
Pernod Ricard, the Paris-based liquor maker, including Malibu Coconut Rum and Jameson Irish Whiskey, is working through the disruptions, with the exception of India, where there remains a strict lockdown. There have been small limitations on key supplies like glass, corks and labels “but overall, for the time being, it’s working,” CEO Alexandre Ricard said in an interview.
“But it’s working because there are a lot of people on the ground working like crazy to make that happen,” Ricard said. “The key is to have very strict sanitary guidelines so that our colleagues feel safe.”
Stay flexible
Walmart Inc., faced with a sudden surge in demand in China as people began to eat more at home, teamed up with other food, entertainment and hospitality companies to share employees in a bid to avoid worker shortages. The company has also hired more than 15,000 part-time workers in the country.
The employee exchange agreement involves some 160 companies and means that more than 400 Walmart stores in China use employees from other companies. The retailer not only alleviated labor shortages amid a surge in livelihood needs, but also alleviated income pressure for workers in industries affected by the epidemic, a Walmart representative said at China.
New Chinese businesses, such as Yonghui Superstores Co. and Alibaba’s Hema supermarket chain, have also started similar pacts to share workers. Hema told local media that such workforce arrangements could become normal practice and continue after the pandemic.
For Danone, the French food processing company, flexibility became one of its biggest challenges in adapting to “significant changes in consumer purchasing behaviors, with unprecedented changes in weekly demand accentuated by storage patterns in the first few weeks, the shift from out-of-home food consumption, as well as the shift from preferences to larger packages … ”
Volkswagon AG published a Q&A with its purchasing and logistics executives on its website on April 20, crediting a supply chain that remained intact to “an incredible amount of solidarity and flexibility everywhere.”
“The next step now is to ensure start-up in Europe and at the same time guarantee production in China,” said Karsten Schnake, head of purchasing at VW Group China. “We supply just over 2,000 parts from Europe and the rest of the world. For most parties, we are covered for a few more weeks. ”
We have the technology
The technology industry continues to struggle with the uncertainty surrounding the pandemic. This month Broadcom Inc. warned customers to order parts at least six months in advance, a surprisingly long lead time that points to longer-than-expected disruptions in the global supply chain.
Taiwan Semiconductor Manufacturing Co. and SK Hynix Inc., two corporations with a bird’s-eye view of the global production chain thanks to their early roles, allayed fears that Covid-19 was suffocating supply lines, but warned that this could change. quickly if the pandemic persists
TSMC, an advanced silicon supplier to most of the top names, from Apple Inc. to Huawei Technologies Co. and Qualcomm Inc., recognized the potential for supply chain disruption in its annual report released April 21. Chief Financial Officer Wendell Huang emphasized that skillful adjustments could mitigate the consequences. Signing confidence in a gradual recovery, TSMC is setting aside $ 16 billion for technology and capacity improvements this year.
“We did not see any interruption in the supply of material or any activity in the supply chain that has been in interruption mode. Although I said that due to the home shelter, part of the tool delivery has been delayed from two weeks to about a month, “chief investor relations officer Jeff Su told reporters in a post-earnings conference call.” We continue to work with tool providers and minimize the impact on capacity development. So throughout the year, we don’t expect it to have a big impact. ”
For companies in the US USA And Europe, ultimately, what can happen is a general re-evaluation of whether key supplies should be made closer to home.
“For the first time we see that not only one or two countries close, we have three countries closing,” said David Farr, CEO of Emerson Electric Co., which supplies automation equipment to the oil and gas industries and produces consumers. goods, like garbage disposals and shop vacuums. “So what we will have to do here is evaluate this from an economic and business risk point of view.
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