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ASCM Insights

Geopolitical Disruptions Cast Doubt on Supply Chain Stability

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Even the strongest networks are falling prey to a growing list of supply chain disruptions. Now, China — long regarded as a nation of stable manufacturing capacity and affordable labor — is stumbling over its zero-COVID approach and aggressive human rights restrictions. The effects are rippling throughout our global networks.

Protests in China are rattling markets, with the Dow Jones Industrial Average dropping 500 points on Monday, following declines in Asian and European indexes. In addition, the value of cryptocurrencies fell after an economist reported that zero-COVID policies were a challenge to stabilizing Chinese demand for crypto assets. Markets did start recovering by Tuesday, with the most immediate economic impacts expected to continue within China.

The bigger concern is that ongoing protests could further disrupt the production and distribution of machine parts, household appliances, integrated circuits and more. Of course, even a minor disturbance in the world’s largest manufacturing nation and second-largest economy has swift impacts.

Many companies are rethinking their reliance on China, diversifying their supply chains, or focusing on reshoring and nearshoring to improve resilience. Experts believe this latest geopolitical event will accelerate this trend in some cases. For example, Apple and other tech companies are shifting some production to other Asian countries, such as India and Vietnam. Other companies are likely to hold back from future investments in China, as global confidence in its supply chains is shaken. Still, a massive movement away from business in China is unlikely to happen anytime soon. After all, the country produced 30% of the world’s goods last year.

“There is simply no alternative to what China offers in terms of scale and capacities,” Kerry Brown, associate fellow in the Asia-Pacific program at Chatham House, told The New York Times.

Planning ahead

Of course, working through the issues in China is especially challenging when there are so many other problems around the world: The invasion of Ukraine, catastrophic weather events, the European energy crisis and tech industry disruptions are just some examples.

After years of near-constant supply chain upheaval, industry professionals, other stakeholders and consumers in particular are growing weary. Supply chain decision-makers must prioritize smart planning and devise effective strategies for quick responsiveness and essential agility. To help more professionals gain the knowledge and skills necessary to reach these goals, ASCM has extended its 15% off sale on APICS Certified in Planning and Inventory Management; Certified Supply Chain Professional; and Certified in Logistics, Transportation and Distribution Learning Systems; as well as our industry-leading certificate programs in planning, procurement and warehousing.

Don’t delay: The sale ends today, December 2. Use promo code CYBER2022 to save now.

About the Author

Abe Eshkenazi, CSCP, CPA, CAE CEO, ASCM

Abe Eshkenazi is chief executive officer of the Association for Supply Chain Management (ASCM), the largest organization for supply chain and the global pacesetter of organizational transformation, talent development and supply chain innovation. During his tenure, ASCM has significantly expanded its services to corporations, individuals and communities. Its revenue has more than doubled, and the association successfully completed three mergers in response to both heightened industry awareness and the vast and ongoing global impact driven by supply chains. Previously, Eshkenazi was the managing director of the Operations Consulting Group of American Express Tax and Business Services. He may be contacted at abe@ascm.org.

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