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Assessing COVID-19’s Continued Impact on Supply Chains

June 21, 2021
A new ISM report finds that professionals are optimistic in the face of continued, global supply chain disruptions.

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Supply chain managers and procurement professionals have their hands full right now as they deal with a wide range of material, component and product shortages, but some hopeful optimism is beginning to emerge as vaccination rates rise and some normalcy begins to set in.

After gauging the pulse of U.S. chief procurement officers (CPOs) and supply chain managers on a quarterly basis about COVID-19 over the last year, the Institute of Supply Management (ISM) says its most recent report—released this month and based on a survey from December/January—reveals a hint of optimism in the air.

According to ISM, the majority of survey respondents (64%) feel business will be better during the second half of 2021 compared to the first half of the year, and 66% report their organization feels better about business overall over the next 12 months. It says revenue budgets may increase by 7.8% and that capital expenditure (CAPEX) budgets will reportedly increase by 4% in 2021. ISM also says that demand for products and/or services is forecasted to increase 10% in 2021 (compared to 2020 actuals).

Key Report Findings

In its report, ISM breaks down the current, key issues of interest to supply chain professionals and CPOs as order lead times, manufacturing capacity, inventory levels and headcount. Here are the group’s key findings in each area:

 Lead Times

  • ISM says average lead times for delayed inputs have improved in most regions compared to the end of July 2020 and are less than twice as long as compared to "normal" operations, for Europe (193%), Japan (190%), Korea (189%) and domestically sourced inputs (177%). China is still at or above twice as long as "normal" lead times (202%).
  • Compared to the end of 2020, 64% of respondents report that lead times for inputs from China have pushed out, according to ISM. Sixty-eight percent report longer lead times for European inputs and between 40-54% report lengthening lead times for inputs sourced from North American countries.
  • During the fourth quarter of 2021, ISM says only 11% of respondents expect longer lead times for U.S. inputs, 8% of respondents expect longer lead times from Canadian suppliers and 10% expect longer lead times from Mexico. Europe is expected to be the most impacted, with 20% of respondents expecting longer lead times for European inputs.

Manufacturing Capacity

  • Domestic manufacturing is operating at 87% of normal capacity, according to ISM, which reports that Chinese manufacturing is at 86% and European manufacturing is at 76% of normal capacity.


  • With increasing confidence overall, 93% of firms report that they expect to have sufficient inventory on hand at North American facilities in fourth quarter 2021 to support operations, ISM reports. 
  • For Canadian operations that proportion is 91%, and for Mexico 87%.
  • For other regions, confidence that sufficient inventory will be on hand for operations in fourth quarter 2021 is also high: the Middle East (96%), Japan (91%), Europe (89%), Korea (88%), China (85%) and India (81%).
  • According to ISM, 82% of respondents say their firms’ input inventories have been adjusted and 56% are holding more than the usual inventory, either intentionally or unintentionally.


  • During the second quarter of 2021, 27% of respondents report that their organizations will likely delay hiring, 9% will reduce hours, and 14% will reduce headcount. Additionally, 25% anticipate increasing headcount and 40% anticipate no adjustment, ISM reports.
  • ISM reports that staffing levels increased for North American respondents (U.S. 88%; Mexico 85%; Canada 87%). Europe (84%) and Japan (86%) also saw increases, with China (88%) and Korea (83%) remaining the same at the end of July 2020. India reported staffing levels at 79% and the Middle East at 75% of normal levels.

What’s Keeping CPOs Up at Night?

For 2021, ISM says professionals are most concerned about risk to suppliers, shipment delays and remote work issues. Thirty percent report concern over increased risk to Tier-1 suppliers, more than half (56%) are concerned over delays in shipment and supply, 31% report a concern over managing remote work, and 21% report needing to invest more in remote work infrastructure.

“Around the globe, even with concerns around supplier risk, shipping delays, and work from home challenges, companies are continuing to adapt to the changing environment created by the COVID-19 pandemic and feel bullish, particularly about the second half of 2021,” said ISM CEO Thomas W. Derry, in a press release.

"There is a strong positive sentiment that business activity will be substantially better than in 2020, and revenue, CAPEX, and demand for products are all expected to increase this year,” Derry continued. “That said, supply constraints—notably in shipping and freight, scarcity of many raw materials and components, and a widely reported inability to hire qualified labor—are limiting the ability of some firms to take maximum advantage of the surge in aggregate demand."

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About the Author

Bridget McCrea | Contributing Writer | Supply Chain Connect

Bridget McCrea is a freelance writer who covers business and technology for various publications.