Some firms have diverted their supply chains to produce masks in response to coronavirus © AFP/Getty Images
Some firms have diverted their supply chains to produce masks in response to coronavirus © AFP/Getty Images

Coronavirus: half of firms have experienced force majeure

7 April 2020

Over half of global firms have experienced force majeure either through a supplier or declaring it themselves as a result of the coronavirus outbreak, according to a survey. 

In our second snap poll, conducted by SM and CIPS, over half of respondents (52%) said their firm had been forced to decrease production due to the ongoing Covid-19 pandemic, and almost a quarter (24%) had ceased production entirely.

Over two-thirds (69%) of procurement and supply chain professionals believed the impact of coronavirus on businesses is getting worse. As a result, 31% of respondents said they had either lengthened on suspended payments to their suppliers. 

However, a fifth had shortened payment times, mirroring retailers such as Morrisons and Sainsbury’s, who have committed to pay suppliers immediately in order to support cash flow. 

Over a third (34%) of firms have switched to alternative suppliers to help manage the impact of supply chain disruption, and 31% are collaborating on buying and logistics.

Actions taken by procurement teams are set to remain in place for the long haul. Almost half (45%) said they would look to retain alternative suppliers, while 41% said collaboration efforts would be ongoing post-coronavirus. 

Up to 70% of buyers are currently paying more or expect to pay more for good and services, with almost half (48%) paying up to 20% more and 15% paying up to 50% more. 

Firms have also been forced to adapt to the rapidly changing situation. Up to 17% of firms have diversified into other good and services in order to help respond to the coronavirus crisis, and 15% have diversified to ensure business continuity.

This is reflected by engineering firms, as Mercedes Formula One, Dyson and Rolls-Royce are working to develop ventilators for hospitals. H&M and Inditex are among fashion retailers that have committed to diverting their supply chains to produce personal protective equipment such as masks and gowns for healthcare workers.

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