Global to Trusted Supply Chain - A change in the making

Pacific Funds | Supply Chain Reactions

A fractured Supply Chain has left many of us revisit the assumptions on which the Supply Chains were built over the past 2-3 decades.

As I also mentioned in my previous article, post WWII and more recently with formation of WTO led to an opportunity which was leveraged by Supply Chains to spread globally. Efficient Supply Chains which were able to deliver the cost arbitrage were preferred over non cost arbitrage Supply Chains. Come 2020, Covid 19 and the natural tendency central to human evolution emerged as a central theme - "One cares first for oneself before one cares for the other". At a nation level this held true. Probably was the first trigger for the Supply Chains to reassess its assumption. But as it happens in humans so it happened with Supply Chains. One tried to do the same of what worked in the past thinking that the current situation is just an outlier and will normalize soon.It took almost couple of years to realize that Supply Chain which are global & cost efficient are no more the same as they used to be!

A strategic reorientation of Supply Chains is under way & if not till now, will be under way soon. The writing is on the wall. Be it nations deciding to stop exports to curb inflation or introducing barriers to safeguard their own country ahead of the other are all indicators that the reorientation in thinking of Global v/s Glocal is needed. Cost efficient Supply Chains no more suffice as those cost-efficient Supply Chains are spread in geographies whose inherent nature, going forward, is not clear. It's better to not be cost efficient than not get the needed product at all! 

With the uncertainty along too many lines of considerations, one never knows when a wall would be erected while there was a bridge till yesterday. Hence the move to "Trusted" Supply Chains is needed.

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