Tuesday 9 August 2022

Supply Chain disruption

 Brilliant article in the FT about the supply chain disruptions in the ICT chip manufacturing process.

Sadly, with no easy answers - apart from national (or even regional) self-reliance is not going to work.

Which many politicians will not want to hear (in many countries).

Quite a few business leaders seem very reluctant to hear that things are (necessarily) complicated and will remain so.  In particular in my old stomping ground (the chemicals industry) people find it difficult to process that the usual economic rules do not always apply.  Just because something is profitable and in demand does not mean that competitors will come into the market.  If a profitable product ceases production (e.g. as a result of an industrial incident) it does not follow that other businesses will make it (or that the original manufacturer will build a replacement plant).  There are complexities about risk, availability, production processes, regulations etc. that all need to be understood.  But if you are a customer you are likely to think "well why aren't they doing it?".

Good procurement personnel need to know and understand these complexities (obviously not at granular detail) in order to fully understand the supply chain risks.

In the pre-covid and pre-Brexit times when things were working smoothly, Lean supply chains seemed to be the answer.  At the moment we are all considering Resilient supply chains.  But nothing is ever quite simple, and neither approach is simply good or bad.

Interesting times ahead


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