Supply Chain Conversation Amid COVID

This article discusses the global supply chain network and company strategy changes that are occurring because of COVID, and gives recommendations on where weaknesses exist and how to address those weaknesses. I am posting this article to highlight that one of the challenges in the current global economy is the debilitating effect on globalization.

One of the article’s main concepts is that having multiple sources for a single point within the supply chain minimizes risk. When one source is disrupted, thus causing a supply-shock, a company can lean on its other sources. This idea might be a life-preserver ordinarily, but in COVID, where every location is experiencing disruption, all sources are experiencing disruption. If it isn’t that source specifically who is having problems with resources, political shock, etc., then it is one of their suppliers or partners that decreases their efficiency, and therefore the company farther down a kind of bullwhip chain. Voila: the COVID global supply chain shock.

I appreciate the article’s recommendation to transfer a source or two to rising countries, such as Myanmar or Turkey in the name of flexibility, diversification, and an increasingly robust global marketplace, but these locations are also subject to the limits of a COVID universe. Additionally, at this point in history, there are presumably other reasons why certain countries are not relied on. It is true that a competitive advantage may lie in being the first company to ‘conquer new land’ in the global marketplace but it also has the potential to be devastating in an already risky market environment. I, respectfully, do not agree that the answer to disruption in your global supply chain is to seek more global supply chain, especially not for the short-term. Instead, an answer may be that they refine their view of the longer term risks and put more resources into diversifying their products to be less dependent on point sources of risk.

Overall, there are solid ideas here, but I find this article, as well as other supply chain articles, to be too generalized. There are variances in industries, and even companies. COVID will soon be over and will serve as a redundant reminder that companies should always be practicing foresight, contingency plans, and refining their communication as well as technological efficiencies. This is the foundational “secret” to keeping businesses, and by extension, economies alive. Like all wars, this COVID war has depressed world trade, but economies will return and eventually rise to new heights.

E-mail me when people leave their comments –

You need to be a member of UNH Economics Collective to add comments!

Join UNH Economics Collective