Supply chain risk is exposing an ever-changing world. Trade routes, geopolitics, and energy are all affected. Business operations, inflation, movement of goods, stock prices—it’s all elegantly (or messily) related, depending what side of the trade you’re on.
After profiling academic research on the topic —posting an investment thesis idea, a video interview, and University profile—the descriptiveness of the findings really struck a chord and sparked connections. I sought to test how receptive different groups were to the ideas.
On the crowd-sourced financial research site, readers and/or investors seemed to be eyeing the inflation news, alongside FedEx’s negative news—few were feeling strategic. I think that those savvy in the business and investment world are busy identifying M&A candidates or positioning themselves tactically and strategically. The challenge of academic research is always how to apply it, even though this has a highly-applied message. Where’s the monetization or the alpha in it?
Complexity science might have a different view. The far-flung supply chains of some firms, such as Apple, may be reaching its natural limits. They can only grow so much; innovation specifically may have reached it limits in geography terms, but other types of innovation can take root, ie., the forces of creative destruction. Large multinationals face the geographic risk challenge that events bring: Japan’s earthquake of 2011, the COVID pandemic, Russia’s Ukraine invasion. Smaller firms may re-trench to home shores or be acquisition candidates. Still the “flight to safety” has varied implications.
A relevant passage from the research profile, according to my narrative:
“Supply chain risk is not one-sided,” the authors note. There are firms and periods with positive supply chain sentiment, with opportunities for outsourcing to reduce costs, and also of negative sentiment when concerns about bottlenecks and the reliability of the supply chain emerge. The pandemic laid bare the reliability of supply chains globally
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When faced with supply chain risk, the research finds that firms seek out leaders in their industry. The trend toward reshoring is a byproduct of supply chain risk. The larger story however is the drive toward supply chain resiliency.
The video interview offers a more wide-angle, spontaneous flow and exchange of the research’s messages, construction, and meaning. Professor Huang and I are connecting the dots and providing forward action. I suspect this work will develop a new branch in supply chain thinking.
Supply chain risk of firms is analyzed: nobody can quantify what it really is. It has many meanings and drives activity and change.