Returning to balance in supply chains…

Every commercial enterprise and every public sector organisation has a supply chain. When the supply chain works well no one really notices, but when it’s disrupted, for whatever reason, all hell can break loose unleashing all kinds of reactions, realisations, and changed behaviours to deal with the situation. The Covid-19 pandemic and conflict in Ukraine illustrate this rather neatly. They have shown to governments, businesses, and the general public alike, that global supply chains cannot be taken for granted, are  fraught with risk, and can have dramatic economic and inflationary impact when seriously disrupted.

Global supply chains are at the heart of the functioning of the developed world, and the Chartered Institute of Purchasing and Supply highlights some of their advantages and disadvantages.  Globalisation has meant greater exposure to the risk of economic, political, and financial instabilities, health and natural disasters, and to the logistics,  communication, security, and lack of direct control risks that come with far off places. This truth is plain to see as governments and businesses, and we as individuals, deal with the ramifications of the pandemic and geo-political events. It’s unsurprising,  therefore, that much is going on in governmental and business circles to return supply chains to some better balance in order to reduce risk and improve economic resilience. As pointed out here, supply chain reshoring, where this is possible, and the establishment of multiple supply paths with overtly ‘friendly’ countries are being actively progressed to improve future business and economic continuity.  

The Badger’s harboured a feeling for some time that our reliance on complex global supply chains was a problem waiting to happen, and that some kind of ‘event’ would force some retrenchment. It seems that the pandemic and Ukraine have been the trigger  ‘event’, but if this hadn’t been so then it was probably just a matter of time before climate-change weather disasters or military belligerence between superpowers had the same effect.  There have, of course, been global supply chains for centuries – think back, for example, to the Silk Road and the Spice Route. What’s happening in the world today is not their death, but a ‘returning to balance’ that should provide a more balanced, baseline template for the future.

Decades ago, the Badger ran a project that included building hundreds of bespoke computing devices whose LCD screens were produced by just one company in Japan. All went smoothly until the Japanese company unexpectedly stopped manufacturing the screens. The ramifications took months to sort out. The subsequent review and lessons-learned report not only highlighted flaws in the Badger’s company’s approach to managing suppliers the other side of the world, but also recommended that the company’s approach to international supply chains was overhauled to ‘return to balance’ . The phrase is worth remembering and seems very pertinent to what’s happening on the world stage with global supply chains today.

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