Exiting a COVID-19 Lockdown: The Bumpy Road Ahead for Many Supply Chains

16 Pages Posted: 3 May 2020

See all articles by Jan C. Fransoo

Jan C. Fransoo

Kuehne Logistics University

Maximiliano Udenio

KU Leuven - Faculty of Business and Economics (FEB)

Date Written: May 1, 2020

Abstract

We extend our validated system dynamics models that we deployed 11 years ago during the credit crisis to model the production lockdown caused by the Covid-19 crisis. We estimate the supply chain dynamics that we may see unfold over the next few months. Our results suggest that inventory dynamics may be very large, caused by dramatic drops in demand. Regardless of how the market recovery will evolve, we demonstrate the criticality of monitoring cumulative supply chain inventory and market demand. For companies upstream in the supply chain, the impact of the inventory evolution is much stronger than the exact details of the market recovery.

Our work and results are indicative, and definitive insights can only be obtained in hindsight. In view of the importance of sharing our insights, and given that our structural results are very robust to errors in market demand estimation, we have decided to write this paper now. We solicit your feedback; please do get in touch.

Keywords: Supply Chain; COVID-19; Lockdown; System Dynamics

JEL Classification: M11

Suggested Citation

Fransoo, Jan C. and Udenio, Maximiliano, Exiting a COVID-19 Lockdown: The Bumpy Road Ahead for Many Supply Chains (May 1, 2020). Available at SSRN: https://ssrn.com/abstract=3590153 or http://dx.doi.org/10.2139/ssrn.3590153

Jan C. Fransoo (Contact Author)

Kuehne Logistics University ( email )

Grosser Grasbrook 17
Hamburg, 20457
Germany

HOME PAGE: http://www.janfransoo.com

Maximiliano Udenio

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

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