Update: 14/09/2022


- The market is less competitive, logistics activities focus more on large companies… invisible, creating bottlenecks in the supply chain.
- Because bottlenecks in the global supply chain are difficult to solve soon, companies have rented or combined with each other to shorten the geographical distance. However, re-establishing shorter and national supply chains will be costly for growth.
- Each business will adjust the supply chain in a different way. Some will "freeze" operations, some will find subcontractors in different locations, some may increase automation... Meanwhile, many multinationals are maintaining high-value activities such as research, setting up factories in low-cost locations such as Malaysia, China. After learning the model from headquarters for a while, these facilities can produce goods at a much lower cost and with more consistent quality.
- However, over time, this model causes that business to gradually lose tacit knowledge or know-how in production. Some companies in the developed world have let these capabilities erode for decades, making it difficult to recover quickly. East Asian manufacturing hubs such as China, Malaysia and Singapore have developed many sustainable advantages in areas such as logistics.
- This also causes many problems for policy makers. Some advanced economies have launched initiatives to rebuild their manufacturing capacity such as the EU's 43 billion euro ($45.5 billion) semiconductor plan or California's $100 million proposal for manufacturing. insulin and other generic drugs.
- Those plans may be a good idea but take considerable time and money to succeed.
- Current supply chain bottlenecks also show that the market is reducing competition. Although economists also point to a growing concentration in the market, it is often concentrated on the big "superstar" companies in the production chain. This is a reminder that each link in the supply chain needs to become more specialized, with less competition at each stage.
- These supply chain challenges are the result of businesses neglecting many other issues besides economic efficiency. In particular, these problems, which have been passed for 4 decades, cannot be solved "soon and overnight". It is also another reason for policymakers to start rethinking the current supply chain operating model.


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