Emerging Global Supply Chain Order

Turbulence Worldwide: In recent history’s toughest times the countries, the regions, industries and lives have been impacted due to supply chain disruptions the world over. The COVID situation has proven that while cost economics and dynamics of buying and selling cost and resultant optimization of profit is though very important to running of businesses, the survival of businesses is far more important. And lack of availability of goods and services is the biggest nightmare for businesses and people affected by that. For most of the world, Asia and more so China is a faraway place. The logistics and planning inefficiencies anyway put some constraints even in normal circumstances, a complete disruption due to COVID 19 situation and emotional impact of that has created a global realization and sentiments of having local, regional supply chains. The reasons are actual issues due to distance, patriotic outburst as well as protectionism and economic factors. 

• Best Supply Chain Practices Suggest: That in a global environment more than one supply source as a country /supplier are best practices. Regular evaluation and benchmarking on the total cost and make or buy is a continuous process which need be periodically done. Dependence on China largely has comforted countries and those responsible to be complacent and overlook the same.
• Options – Looking forward There Are Seemingly The Following Options:

1. Things Stay As They Are: Which will happen for some regions/countries due to their lack of ability to create an infrastructure. Emotional outbursts would be over and business goes as usual 
2. Independent Supply Chain Hubs: There are a few capable and dynamic economies and regions like Eastern Europe, Latin America, Korea, Japan, South East Asia, India which could develop themselves into self-reliance /enablement by mutual engagement with rest of the world over 2 to 5 years
3. Interdependent Supply Chain Optimized Model: This is the model where China should come forward and collaborate to participate and create regional spokes to its core. The transformation will be fast and it’s going to be a win: win for all. China tends to regain confidence as a collaborative entity and gain for such growth by the back end. The world will solve the inefficiencies of its supply chain for the long term.

• What Could India Do?: I have written before on what India needs to do internally to optimize its workforce potential and resources and be very pro-active in doing it. At a regional/global level, India has to be flexible and agile both. It has to quickly identify areas where it can really be independent and go about doing it in close collaboration and support to local industry with respect to the policy as well as flexibility in approach to attract that more people want to remain and grow in those sectors locally.

The difficult part is areas wherein, India is dependent on China or other countries of the world not only on finished goods, sub-assemblies but also raw materials.

For those sectors, India as a country in general (about government and its policies) and Industry, in particular, has to look at creating new routes to the optimization of time, effort and cost to leverage from the existing and new policies and push for creating new ones, as well as pro-actively end up doing what it takes in their respective categories in next 6 to 12 months. It’s true that a robust supply chain shall take 2 to 5 years. If we, however, remain in that complacency, we will miss the opportunity. So what can be done in two years has to be done in 6 months. Entrepreneurs and Executives have to take the challenge and do it once to test themselves beyond the Gyan of knowing it and actually doing it.