Affected by the epidemic, the enterprise of abrasives and abrasives can go against the trend in 2020

Under the epidemic, the global supply chain is out of gear. Can the abrasive and abrasive products companies stand alone?
Key words Abrasives, Enterprise | 2020-02-27 11: 38: 03 | Source China Superhard Materials Network
Abstract In the Spring Festival of 2020, pneumonia infected by a new type of coronavirus will spread throughout the world. Pressing the "pause button" nationwide, logistics was stopped and production was suspended. With the gradual reduction of the epidemic situation in various provinces and cities, the resumption of business on the agenda, many companies shouted "the difficulty of resuming work, it is difficult to go to the sky." But more than this ...
In the Spring Festival of 2020, pneumonia infected by a new type of coronavirus will ravage the world. Pressing the "pause button" nationwide, logistics was stopped and production was suspended.

As the epidemic situation in various provinces and cities has gradually eased, and the resumption of work is on the agenda, many companies are shouting "the difficulty of resuming work is difficult, and it is difficult to get up to the sky." But even more difficult is the supply chain problem after resumption, and the harder call after resumption Overwhelming.

What problems did the outbreak cause to the supply chain and inventory?



China is already at the grid center of the global supply chain

The Chinese economy's share of global GDP has reached 16%, which is four times that of SARS in 2003. China's impact on the global economy is far greater than its own weight. The global supply chain is embedded in each other. For more than a decade, China has become the center of the global supply chain network, and the import and export of manufacturing intermediates account for a relatively high proportion. Today's China outbreak disrupts global manufacturing operations.

Under the epidemic, oil demand fell by 20%, refinery operations slowed down, liquefied natural gas, coal mine production slowed, electronics out of stock, etc ... Behind the shortage of Chinese-made goods, the global supply disruption caused by the epidemic brought about The chain reaction can't be underestimated. The four stages of the epidemic's impact on the global supply chain, China is currently in the second stage.

The first stage

The outbreak has affected China's domestic supply chain network. The impact of the epidemic has disrupted domestic production order to some extent. Delays in the resumption of work, delays in re-workers faced isolation periods, lack of protective masks for workers in resumption, and other factors have significantly affected logistics capacity. These have impacted manufacturing employment, inventory, production, transportation, orders, etc., especially in Hubei epidemic areas, the impact is even more severe.

second stage

The epidemic affected China's export of intermediate products to other countries, leading to production disruptions in other countries. However, at this stage, due to the buffering of finished goods inventory and transportation time of Chinese and foreign enterprises, it will temporarily have no impact on China's imports from other countries.

The third stage

The feedback of the effect of the global supply chain disruption has affected China through the reflection of import channels. Due to the interruption of the production process of foreign enterprises and the digestion of their finished product inventory, the import of intermediate products and final products in China will also face the risk of suspension.

Fourth stage

In the worst cases, supply chain disruptions will extend to other global supply chains without the direct involvement of Chinese companies. China's position in the global supply chain is very important. In the short to medium term, companies in other countries cannot completely replace China's position. At the same time, as the supply chain of other foreign companies is disrupted, the disruption of the global supply chain may spread to China. Directly related production networks. At this time, the uncertainty of the global economy will rise sharply.

From this perspective, the global concerted response to the epidemic is of great significance for maintaining the stability of the global supply chain. And China's full prevention and control of the epidemic, and the resumption of work under the premise of preventing and controlling the epidemic, are also of great positive significance to the stability of the global supply chain.

Cargo shock, delayed show, this is a tough battle

Maritime transport has been hit hard. By volume, about 80% of the world's goods trade is by sea, and seven of the ten busiest container ports in the world are in China. As of February 9, shipments from Chinese ports have fallen by 20%.



Air transport is one of the key modes of transport for fragile, perishable or high-value goods. The interruption of air navigation will greatly affect the production of chemical products, pharmaceuticals, high-tech products and key products in the machinery industry. If the ban on air travel is extended and accumulated inventory is exhausted, domestic and foreign companies may feel a shortage of goods such as medicines.

Land transportation presents local characteristics rather than international characteristics. It directly restricts the movement of workers and creates a backlog of goods. Resuming work to restore capacity requires a process. How much work is resumed and how much capacity is released is not that a factory can resume full operation after announcing the return to work.

And the domestic abrasives and abrasives industry companies will be affected by logistics. For the time being, it can be said that whether the goods can be produced in accordance with the contract time and whether the goods can be effectively delivered to customers will become an important question.



Not only that, the industry conferences including Xiamen Stone Fair, Cologne, etc. were all postponed or cancelled, which also had a huge negative impact on the company's marketing activities, and it is difficult to achieve the annual sales target.

As soon as the whole body is moved, the abrasive and abrasive enterprises cannot stand alone

The epidemic protection caused the logistics and transportation to be blocked, the raw materials could not be purchased, and the personnel were controlled and isolated at home. Existing employees could only meet the labor needs of individual production lines, and the resumption rate was unsatisfactory.

Abrasive products are involved in the upstream and downstream industries. Due to the different resumption time, even if their own factories resume work, if the upstream raw material supply company suspends production due to logistics and transportation, employee return trips and other reasons, it will directly cause the downstream product industry to fall into Situation.

Affected by the particularity of the outbreak of the epidemic, the downstream real estate, stone materials, and automobiles of the abrasive and abrasive tools industry are in a state of suspension. The rigid demand in the downstream market is weakening, and tool companies are the first to bear the brunt. This kind of chain reaction is inexhaustible and will bring potential extended impacts on the industry.



A single enterprise with downstream customers will be more severely affected. Once the downstream enterprise suspends procurement, the enterprise will face a difficult situation of overwhelming water. As for small and medium-sized enterprises, we must not only face the dilemma of inability to purchase inventory, but also face the decrease in market demand. Hubei writer Fang Fang said that the dust of the era fell on people as a mountain. The same is true for small and medium-sized enterprises in the industry. The dust of the times is also a mountain that falls on enterprises.

Mountains and rivers are the same, and they all need to be climbed. Some can climb mountains and ridges, and some can only become dry hillsides. The epidemic has accelerated the reshuffle of the industry.

The outbreak provided an important warning: for now, most companies are too dependent on one or two major suppliers. I believe many companies will learn from them and establish a flexible supply system after the epidemic. A distributed supply chain will replace a centralized supply chain, and multiple suppliers will replace a single supplier. If a company has multiple suppliers of the same product, they can minimize losses in the event of an emergency.

However, it is not easy to open the knot of the supply chain. The supply chain has a strong network connection effect, and some mesh nodes are deadlocked and difficult to unlock.

Another point is that the downstream diversification of products can also minimize the impact of the epidemic on enterprises. After all, eggs are safer in different baskets.

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