One of the most transforming effects on the world economy for the past 30 years has been the creation of finely tuned supply chains. In a highly efficient manner, components often cross borders several times before they are assembled and sold to the end customer. «Designed in California, Assembled in China» has become the norm in today’s world. 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. Manufacturing processes around the world ground to a standstill, because they were reliant on parts from Hubei Province in China, or from Lombardy in Northern Italy, or from the Alsace region in France. Western governments realized in shock that they lacked production capabilities for protective hospital equipment and that most of the base materials for the production of pharmaceuticals were sourced from China. Optimized supply chains turned out to be highly vulnerable to an exogenous shock like the Covid-19 pandemic.
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, join the webcast with Agatha Kratz, Associate Director at Rhodium Group, in conversation with Mark Dittli, Editor of The Market NZZ.
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