MIT Sloan Management Review Article on Three Scenarios to Guide Your Global Supply Chain Recovery

Even as the business climate remains deeply unpredictable, supply chain leaders should act now to plot their comebacks.

On Friday, Feb. 28, 2020, technology executive Pierre Haren and I published a short article in which we predicted “that the peak of the impact of COVID-19 on global supply chains will occur in mid-March, forcing thousands of companies to throttle down or temporarily shut assembly and manufacturing plants in the U.S. and Europe.” This prediction was accurate; see, for example, the closing of automotive factories in Europe and the U.S. or luxury brands shutting down their manufacturing activities in Europe.

We are now six weeks after the publication of our article, and a few things are abundantly clear. As manufacturing activities in the European Union (EU) and North America are going offline, China is slowly recovering, yet at diminished capacity. At the same time, the pandemic strongly affects demand, not only worldwide supply. In the automotive industry, for instance, experts predict that the epidemic could mean “millions of fewer vehicles sold this year than earlier projections.” In the short term, the same report estimated a 17% to 18% decline in vehicle sales in March in various U.S. cities.

About the Author

David Simchi-Levi is a professor of engineering systems at MIT. He cofounded LogicTools, a provider of software for optimizing supply chains. LogicTools became part of IBM in 2009. He also cofounded two companies that are now part of Accenture: OPS Rules, an operations consulting company, and Opalytics, a cloud analytics platform company. His latest book is Operations Rules: Delivering Customer Value Through Flexible Operations (Cambridge, Massachusetts: MIT Press, 2013).

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