In the meantime, the coronavirus has also become tangible in Germany due to the increasing number of infected people. In addition to the health aspect, distributors are mainly concerned with one thing: How does the epidemic affect supply chains in Europe? We give a brief assessment of the effects of the global health crisis.
Effects in all areas
The virus is already having a visible impact on the global economy. Some companies, such as Apple, have already corrected their sales forecasts due to the decline in business in China. In addition, events such as the MWC in Barcelona have already been cancelled or postponed as a precaution.
Companies will also face challenges from the coronavirus in the field of electronics distribution and, in connection with this, in German manufacturing as well.
Dependence on China
Some electronic components essential for production, such as resistors, are manufactured almost exclusively in China. German companies will therefore also feel the effects of the closure of Chinese plants due to the virus. In addition, producers in China are lacking necessary raw materials due to the health crisis.
While distributors’ inventories are currently still secure, the situation may change rapidly in the coming weeks.
Increase stocks
Since information on the confirmed disease cases in China is not very reliable, it is difficult to make accurate predictions about the production situation.
To ensure that production in German companies does not slow down or even come to a standstill, reichelt elektronik recommends that the critical inventory be kept in stock as a precaution. It is true that for cost reasons, companies are dependent on minimizing the stock of components. But a sales-damaging interruption of production due to missing components, which are often cheap and take up little storage space, should be avoided. In addition, this way companies do not have to accept price increases that might result from a shortage of components. Hurried panic buying, on the other hand, is not advisable.
How the coronavirus will affect the German economy in the long term remains to be seen. It is certain that the manufacturing industry can protect itself from production interruptions or dramatic price increases for components by increasing critical stocks at short notice.
