Supply Chain Interruption
This is something I wondered about all week and even talked about in a few videos. However, while there was also speculation among others, nobody was able to formulate how things were being affected by the coronavirus.
Today, I came across the first article detailing that things are truly being affected.
Third party sellers on Amazon are finding that their inventory is getting low and there is the possibility that restocking could be difficult. This could affect the rankings with Amazon's algorithms, meaning one could face a significant drop in business long term.
Earlier this week, Amazon sent notice to resellers on how to protect their business.
Amazon has been advising sellers on how to manage the impact of the coronavirus on their businesses. Earlier this month, the company sent a notice to sellers advising them to cancel previously placed orders that they’re no longer able to fulfill. The company also suggested they put their businesses in “vacation status” to protect their listings from being demoted in search results by its ranking algorithms. Sellers said Amazon will push listings down further in search results if it detects they are running low on inventory or are out of stock.
China is obviously an epicenter for manufacturing. Products that end up consumed all over the world are made there. Overseas companies often place large orders just before the Chinese New Year. The items are manufactured after the holiday ends. In other words, it is a time of large production.
Not this year.
The virus has stalled the return to factories. Those that are open are producing very little with many closed altogether.
How long can the world operate under these conditions? We now live in a world where most major companies operate on a "just in time" inventory basis. This means they only keep enough inventory in stock for a short window, perhaps 4-6 weeks.
With the interruption, those who are in this situation will face shortages in the next couple weeks. The effects of this could ripple through the global economy quickly. What would have to follow are layoffs.
In other words, this is have a global recession could happen in a short period of time. We could already be seeing a change in sentiment which causes consumers to slow down their spending and hang onto their money longer.
At this point, it is evident that supply chains are about to be interrupted on a large scale. How far this travels is something to keep an eye on.
Image from article linked
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Posted via Steemleo
I suspect supply chains out of China will take over 8 weeks.......but this is just a guess and the contagion phase of this is not understood. Ro of 4.7-6.0...very high.......Rumors of Chinese officials demanding factories to turn on empty factories/machines to show electricity use as people are tracking demand to mean output.......but this indicator will be false.....Global recession is imminent.
Posted via Steemleo
One thing that isn't be discussed more is medicine. China makes a lot of the ingredients that go into making medicines. This will be a major issue in the near future.
Posted via Steemleo
Very true. That is one of the biggest threats that is flying under the radar. Few are talking about it but what happens when the ingredients for heat medications are not available?
Then we will be facing a major issue. Imagine people dying not from the virus but because we dont have medications.
Posted via Steemleo
Good. Not the corona virus of course, the consumerist cycle.
While this will slow down our economy and have serious repercussions, it will make us stand still, and buy less stuff. Those little amazon vans all over my neighborhood causing extra pollution, and delivering stuff that will be in the landfill within the next six months need to slow down.
I understand jobs will be lost, I understand the economies will slow, I understand things will be financially unstable, but our consumer ways need to slow down at least a little bit.
We cannot survive with the inundation of stuff that surrounds us. We are trashing our planet.
I truly believe that if we stop consumerist tendencies, we as a human race, will find a different way to keep things moving without wrecking our planet.
Posted via Steemleo
It's sad. I'm afraid of what the world is turning into. But I'm sensing politics.
Posted via Steemleo
@tipu curate
Upvoted 👌 (Mana: 5/15 - need recharge?)
yes indeed, it's quite alarming. Besides all of the things you'd expect to be short in supply like masks and medical equipment, I have a feeling that it is happening for other products as well. Just having a look at the shipping dates is revealing...
I made a post some time ago how I think cryptos will be hit by the stock market and financial turmoil: What will the Crypto Market do in a Global Recession?