Analysis: The supply chain in the time of coronavirus

One of the growing number of unknowns about the ongoing coronavirus outbreak is the effect that it will have on the supply side of the industry. There are as ever, estimates and guesses, but as the whole world essentially enters the part of the map tentatively labelled ‘here be dragons’, there is little hard evidence to say what is coming next.

A big part of the problem is that the Just in Time manufacturing system that has been embraced by most industries since it transformed large-scale physical manufacturing in the latter part of the 20th century, relies on the swift flows of goods. Once that flow is interrupted then it creates a cascade all along the chain. As this is the first genuine global disruption to test the model, no one knows quite how it will react.

The optimistic scenario sees it as a pause of whatever length followed by a swift taking up of the slack and a rapid return to pre-virus levels of production. The more pessimistic one models events along the lines of a shockwave motorway traffic jam where one car touching its brakes can cascade into a lengthy tailback as the shockwave travels backwards through the traffic.

“Production slumped in…