One of the biggest risks is climate change, and this has particular ramifications for supply chains. Extreme weather conditions can lead to material shortages as food, wood and mineable materials are harder to harvest or access. Floods, fires and storms can upset logistics too, causing delays or losses. Bringing supply chains closer to home is one way to make them greener. Some believe there is always a local supply chain that’s readily available. That helps to reduce prices and with logistics. Considering the carbon footprint of having things delivered from hundreds or thousands of miles away and bringing it down to 10, 20 or 30 miles away, there is a huge difference.
Covid highlighted the fragility of these long, global supply chains. As countries, particularly China, shut down in 2020, companies like Jaguar resorted to flying parts over in suitcases as they became harder to source. now many brands are exploring the possibilities of more localized supply chains.
“Globalization failed because we stressed the supply chain too much. It became too long,” says Rickards. He thinks that in 2023, and beyond, companies will become far more selective about which countries they do business in and with. “What we will have is a new world where we will trade with our friends but many countries won’t be in the club,” he says. “Certain groups will trade with each other, outsource to each other, but China won’t be in this club. Anyone not in the club will have to go their own way.”
Supply chain managers will need to seek out new partnerships as sources of raw materials and, wherever possible, find what is needed nearby. It also means that organizations will have to get much smarter about information sharing.
- Prof. Howard Weiss has graciously agreed to provide Guest Posts in the coming days while I am travelling. Thanks, Howard.