Supply Chain Vulnerabilities in Mainstream Press — Pros/Cons of Simplified Coverage

Sometimes it takes a disaster -- or at least a sensational story -- to make procurement and supply chain issues front-page news in popular business publications. Unfortunately, in the wake of the recent earthquake and tsunami in Japan, aspects of both have combined to keep the tragedy in the business headlines. Consider this recent piece from the FT that questions "whether the whole concept of globalised supply chains is being outmoded by the rise of new centres of demand in Asia and Latin America that might be best served by a return to regional sourcing and production."

Outside of the context of the tragedy that is not yet three weeks old, suggestions by the business media that senior leaders ought to consider alternative supply chain designs (i.e., maintain greater inventory levels or reverse rationalize the supply base) would come as a bit of a surprise to those deep in the field. But perhaps in this context, it's important for executive, sales, finance, legal and even HR types to understand some of the predicaments we, as global sourcing professionals, face every day. To boil the issue and resolution down in such simple terms as the FT does fails to do justice to the issues both SMB and multinational manufacturers are grappling with at the moment.

Granted, we can all agree that the China price, as the article points out, is moving up for a combination of factors (which in turn makes evaluating local or nearshore supply options an essential component of responsibilities these days). Further, no doubt inventory levels are certainly a buffer, an insurance policy if you will, against some forms of supply disruption. But often for far too short a period of time -- and as the bullwhip effect shows, unless our suppliers and our suppliers' suppliers hold additional inventory as well, we can still fall victim to disruptions, even if we've already done everything right within our facilities, and paid the price in tying up greater working capital.

In short, my hat goes off to seeing this critical topic covered and reaching an audience who is never likely to read these pages with any regularity. Yet the distillation of so many complex issues together into 800-1000 words may end up doing severely less justice to the topic by providing fodder to those around us to influence decisions with only a lens into fraction of the issues that we must take into account.

Jason Busch

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