Webcast: From Optimization to Resilience – Global Supply Chains After Covid-19
How Governments and Companies Will Organize Their Future Supply Chains
Supply chains were ever more optimized, while companies were able to cut their warehousing costs and free up «dead» capital. Then SARS-CoV-2 hit. Supply chains of the future will have to change. But how? Will there be a re-shoring, a burst of deglobalization and re-nationalization of production? Or will companies choose a strategy of redundant supply chains on different continents? To answer these and other questions, watch the webcast with Agatha Kratz, Associate Director at Rhodium Group, in conversation with Mark Dittli, Editor of The Market NZZ.
Our Key Takeaways
Agatha Kratz put emphasis on the complexity of understanding how value chains will change. While Covid-19 will consolidate economically what has been changing recently, the effects of the decoupling of the U.S. and China will be far-reaching and affect everyone – though not all industries equally. The trade conflict between the U.S. and China started before President Trump and will stay way beyond the current administration.
Security of supply is different from self-sufficiency: not even all essential goods within clusters like pharma or tech will need to be brought back home. Alternatives to re-shoring can mean diversification into different countries, stockpiling, the usage of dormant factories, or re-purposing of active factories. Economic likeminded networks could serve as sage places for value chains and production.
The costs of decoupling and of re-shoring are high in terms of sunk costs (leaving behind established infrastructure and personnel). New costs for re-establishment of an active production, different prices at location, different environment and social costs, soft costs, and on top of it different constraints have to be considered.
This webcast was co-hosted by The Market NZZ.