Opinion | The fatal flaw in global supply chains? Their extreme efficiency
- The source of the chaos is the fact the system was built with efficiency in mind rather than resilience
- A supply chain requires all its parts to function smoothly all the time. Failures cannot be isolated or fixed with higher prices or new techniques. Instead, they cascade through the system
A supply chain is like a Rorschach test, with each analyst seeing in it a pattern reflecting their own preconceptions. This might be inevitable since everyone is a product of differing backgrounds, but some observed patterns are more plausible than others.
Consider the following sampling of perspectives. For Jason Furman, formerly US president Barack Obama’s chief economic adviser, and Lawrence H. Summers, a former US Treasury secretary, today’s supply chain problem is one of excessive demand.
And for Awi Federgruen, a professor of management at Columbia Business School, the issue is inefficiency. The remedy for this is to work harder and do more with less.
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Global supply chain crisis bites in US cities as store shelves empty with rising demand
None of these interpretations withstand scrutiny. The excess demand story fails on a glance. After all, there is no shortage of goods. Ships bearing the supply – 30 million tonnes of it – are sitting outside US ports, with more on the way.
