This article is written by Tom Lagerman, Supply Chain Analyst – Technology at Bloomberg.
The drastic, unprecedented impact of the SARS-CoV-2 coronavirus pandemic on companies and industries is just beginning to take shape. Its implications on how companies operate and do business around the world will be immense and far reaching.
Many ways companies currently do business – especially across global supply chains – are breaking down in the coronavirus crisis. For investors, understanding companies’ supply chain dependencies and related risk exposures is essential in these fast-changing times. A number of analytical tools and search functions inside The Bloomberg Terminal can help.
Risks meet capabilities
Supply chains have been a rising area of interest for investors (and of risk, for companies) in recent years. As tariffs and trade tensions have come to play a greater role in organizations’ operations and logistics strategies.
The Bloomberg Terminal has the most robust research and data sets available for analyzing the supply chain relationships connecting 23,000 public companies and 96,000 private companies around the world. These complement several new, coronavirus-specific search and tracking tools recently released. Taken together, tools and information on The Bloomberg Terminal can help traders find signals by:
- Staying on top of relevant news, updates, and emerging themes
- Visualizing supply chains relationships across geographies
- Analyzing concentration risks and quantifying exposures
SPLC for supply-chain relationship information
{SPLC <GO>} on The Bloomberg Terminal allows users to explore a massive data set of 900,000 identified global supply chain relationships. The data comes from reputable public sources (such as conference call transcripts, company reports, and regulatory filings), with customer-provided data and supplier-provided data filling out the relationship information from two directions.
Since companies are required to disclose customers representing over 10% of their revenue, Bloomberg uses this bi-directional data – along with a team of industry analysts’ who utilize a proprietary algorithm to create estimates – to quantify companies’ supply chain exposures on both the demand and production sides.
The overall Bloomberg Supply Chain dataset has 200,000 of these quantified supplier-customer relationships. For each, the data includes both 1.) the revenue percentage, quantifying the supplier’s reliance on the customer and 2.) the cost percentage, quantifying the customer’s spending on the supplier (as well as classification for cost type, such as cost-of-goods-sold or capital expenditures). Bloomberg uses a transparency icon and pop-up to show the exact location where any such quantified information was captured in a company filing.
Understanding the levels and scope of interdependence in these quantified relationships shines a light on concentration risks for both suppliers and customers. Visualizing concentration risk geographically, however, requires overlaying SPLC-gathered insights with more robust location data.
MAPS & CMAP for geographic visualization
{SPLC <GO>} allows for grouping companies by their ‘country of domicile’, but that’s an inadequate classifier for geographic understanding (since many companies incorporate in one place but operate locations around the world).
Bloomberg’s physical asset dataset – accessible with the {CMAP <GO>} or {MAPS <GO>} – allows for exploring geographic risks in a visual way. The dataset includes physical-site information on 11,000 companies in 200,000 locations (with all data pulled from the same reputable, public data sources that feed the larger Terminal dataset).
Using {CMAP<GO>}, a given company’s identified facilities are color-coded to signify their facility type, be they manufacturing centers, distribution or warehousing locations, R&D sites, or administrative offices. Terminal users can click into each node to access any further information available on each site (such as any products disclosed as being made at a given location).
For a fuller portrait of not just the company’s locations, but also those of its suppliers, Bloomberg Terminal users can layer SPLC-researched information with {MAPS <GO>}; pulling in the locations where identified suppliers have sites can help users understand areas of concentration risk in manufacturing (or in other areas like labor, materials availability, or product flow).
To fill out their understanding of a company’s geographic risks even further, Bloomberg Terminal users can analyze its financials using the {FA GEO <GO>}. This uses various disclosures on companies’ financial metrics by geography – such as revenue or assets – to quantify their geographic exposures.
DSCO & CN for staying ahead of developments
To stay informed on what companies are saying about the impact, Bloomberg Terminal users can conduct document searches – using {DSCO <GO>} or {CF <GO>} – for keywords of interest. For each hit, they can easily navigate to the mention in the company filing to review qualitative information related to the keyword’s supply-chain context.
Searches can be run across multiple filing types, and for single-company or portfolio- or index-wide wide analysis. And Bloomberg’s modeling ensures that a search for ‘coronavirus’ will also pull up any relevant mentions using related or pseudonymous terms – such as COVID-19 or 2019-nCoV.
To stay on top of the COVID-19 mentions to come in future news reports and filings, users can also search and set alerts for their desired keywords using the company news function, {CN <GO>}. Starting with a topic filter for the theme ‘Coronavirus’, for example, then adding in contextually-relevant text searches – such as ‘distressed debt’ or ‘earnings guidance’ – can help users receive actionable information on the emerging areas of the virus’ impact that are most significant to their interests.
Understanding implications
The most significant areas of impact for COVID-19 have so far been supply chains, but companies’ business models and ways of working will continue to be affected in ways we can’t yet predict. As more implications emerge, Bloomberg will continue to bolster its data sets and capabilities to help customers make sense of this fast-changing pandemic’s effects on companies and industries around the world.
Note: To help our clients address the emerging effects of coronavirus on their own operations, Bloomberg also offers disaster recovery and remote-access services for customers who can no longer make it to the office. Contact us here for more information.