I recently established a new video series to address some of the many questions that come to me over the course of the week. I take a look at the questions that arrive and choose one or two a week that might provide some useful insight.
One visitor asked “what’s the future of globalization? How will trade patterns and supply chains change as a result of what’s happened in the last year?” Here’s what I filmed in the virtual broadcast studio yesterday.
Here’s what we know:
- it’s pretty clear that supply chains are broken: any discussion today is all about resilience, backup, multiple sourcing. Some companies have strategies in place that provide for triple or quadruple sourcing for product
- Covid-19 didn’t just break them – it highlighted what was wrong with them – in that companies and nations did not build any sort of resilience into their global supply chains
- fast trends highlighted this weakness: as the world rushed to online shopping, companies that were exposed were quickly exposed!
- it has weaponized global trade: we saw this early on as nations locked down supplies with PPE, and we are seeing it now in real-time as countries block vaccine exports. This is a new fast trend with major implications
- governments are finding new barriers: the pandemic provided a convenient opportunity to revive talk and action around protectionism
- trust has been eroded: the impact of all of this is that global trust has broken down on a massive scale
- damage must be fixed: expect this issue to be the focus of much corporate and global organizational discussion over years to come. G7 meetings will spend a lot of time on this issue, and companies will revise global trade contracts to better protect themselves
- localization accelerates: countries and companies are obviously moving to produce locally when and where they can, but as I identify in the video, many have not addressed the skills and other issues that come with this
- and so global trade patterns are forever transformed: we aren’t going back to where we were – we are only going to where we will be!
It’s not as though supply chains and global trade were already being transformed. Protectionist moves and the impact of the 2008-09 downturn were already dominating the trend:
- global trade was already falling in 2019 due to global politics
- and it was already falling as a result of the economic downturn of 2009
- global supply chains ceased expanding after 2008!
- it then shrunk by 9.2% through 2020
This is all pretty obvious – so what does it mean? I had this to say in the video:
The ultimate impact of our post-Covid world is that it will amplify the weaknesses of those who were not already aligning to a fast future.
Think about that in the context of retailers who did not have an e-commerce strategy; they thought they had 10 years to prepare, but only had a matter of weeks. Companies that were talking about localization because of trends that were already underway pre-pandemic suddenly found their lack of action exposed.
The long-term impact?
Upheaval, resilience, skills issues, and more!
Take this quote and pin it to your wall!
GET IN TOUCH
Jim's Facebook page
You'll find Jim's latest videos on Youtube
Mastodon. What's on Jim's mind? Check his feed!
LinkedIn - reach out to Jim for a professional connection!
Flickr! Get inspired! A massive archive of all of Jim's daily inspirational quotes!
Instagram - the home for Jim's motivational mind!