The new coronavirus could have a lasting impact on global supply chains


Worried shares are down in Asia this morning as the impact of the corona virus deepens with apple saying it will fail to meet its profit target in China moving to cancel major events including the Beijing Auto Show benchmarks falling early in Tokyo Seoul Hong Kong and Shanghai markets of course closed overnight for presidents day as the outbreak process bringing new travel advisories and disrupting trade travel and supply chains it's casting a shadow over China's regional economy Yossi Chevy is director of M. I. T. supply chain management program he told CNBC there is no telling how the virus will affect supply and demand it's not just manufacturing in China that is affected it's not just getting parts into manufacturing in China for example we talk about April ebony and gets it's far from forty three countries did go into folks going to assemble the phones now we have trouble with speed restrictions we have a we lost all the Benny cargo most of the freight fifty two percent of the town kilometers of freight lie in the belly of passenger planes we just losing most of these capacity in addition right of UPS and fed ex that the it's got capacity then this is the man the demand in China is down so we both supply and demand a fake what do you think the legacy of this is going to be on supply chains in general it depends if this is a relatively short term impact not much is going to change however existed this can be a very long term impact this me describe what might have been in supply chain management we call it the border with the fate let me explain in a few seconds to your audience what's the bully perfect let's say a retailer sees it's a says no down by express it he has too much inventory he thinks it will continue so every too much inventory his order he orders two X. list present from his he horn wholesaler notice that this is too explicit risen reduction using this same logic he's ordering now for excellence resident so in the end of the supply chain what we call the optimal the supply chain is to apply as many of them must morning leverage and they're just going in drove out of

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