How to remedy supply chain issues: renew commitment to cross-border movement

The modernization and improvement of global mobility is key to restoring stability to global supply chains following the pandemic.

The strains on global supply chains have been the focus of much scrutiny over the past many months. Governments throughout the world have unleashed more than US$11.5 trillion in stimulus spending over the recent term, providing fuel to the unquenchable demand to consume. However, the persistent impact of the coronavirus and its variants has compromised the reliability of international sources of supply, with undue strain on the planning, production and procurement of goods and services. This stress has contributed significantly to levels of inflation not experienced in decades. The world’s economy is more fragile as result.

A striking feature of the COVID period was a virtual shutdown of borders and a moratorium on travel. This reality was particularly impactful on the thousands of globally mobile professionals who are on temporary transfer in multiple countries. It was they, and their predecessors in assignment, who first built and then supported the global supply chains in locations throughout the world. 

Generations of investment in globalization had appeared to create a bedrock process of provision. And for the first several months of the pandemic, the supply chains held fast. Food continued to flow, parts moved and components continued to be brought together for end-user assembly. 

As time went by, weaknesses in the chains began to appear. The recent mania for so-called lean manufacturing and just-in-time deliveries was increasingly exposed. In the period just before the outbreak, the average S&P company was reported by The New York Times to carry only 66 days of inventory. Apple, which relies on components from no fewer than 49 countries to produce its products, had relentlessly driven that number down to nine days by the spring of 2020. Moreover, many companies now routinely depend on hundreds of suppliers, often scattered across the globe, for the components of their production and the reach of their services.

These approaches combined to expose the modern economy to harm from extended disruptions in global supply chains. As the crisis became prolonged, with ongoing restrictions on borders and mobility programs, this fragility was increasingly revealed. By the autumn of 2021, untended supply chains were fraying, with strains apparent in international procurement, component sourcing and freight movement. In October 2021, the International Monetary Fund reported that “border controls and mobility restrictions… have combined for a perfect storm where global production will be hampered because deliveries are not made in time, costs and prices will rise and GDP growth worldwide will not be as robust as a result.” One of the predictable results was the rise and resilience of inflation.

Resolving these and related challenges will not happen without an integrated, cross-border approach. The focus must return to facilitating the movement of skilled professionals to enhance, enrich and expand the supply chains forged over the past 40 years. Simply put, the presence and innovation of assignees are sorely missing, and business movement is necessary to restore the balance between stimulated demand and compromised supply.

Supply fatigue has been evident for the past many months. In response, many called to embrace what The Economist has called “a new [national] mantra of resilience and self-reliance”. A competing narrative insisted the security sought could best be achieved another way. True economic strength and confidence, these voices insist, comes from well-considered but diverse sources of supply. Over-reliance on any single source of supply — even one contained within one’s borders — is a risk. Rising political and economic tensions call out for diverse new sources of global supply, not a shuttering of international cooperation. Only through enhancing the global supply chains, balanced with appropriate local sourcing and stockpiling, can future prosperity best be served. The chains must be improved, adapted, and modified to address current and future circumstances.

To do so, we must address the present lack of support and investment in supply chain management. The absence of skilled mobile professionals has had a profound impact on the recent scarcity of all manner of goods and services. For better or worse, these chains are now akin to living things; they have been neglected for too long and the weakness is beginning to show.