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After Globalization, a Supply Chain Perspective

Globalization’ is a term that’s fallen upon hard times. Once it was a rather Utopian term suggesting an advanced, rational, integrated one-world government. The primitive emotional errors of our collective childhood, things like war and regional favoritism, would fall away. We would self-identify not as Englishman or Frenchman, this tribe or that, but as a member of collective humanity

The nearest we’ve come so far to this universal Camelot, however, appears a ramshackle expansive conglomeration reminiscent of alphabet soup: NATO, the EU, the UN, the WEF and the IMF, with Joe Biden at the wheel, Klaus Schwab at his elbow, and a horde of unelected bureaucrats cackling in the shadows. 

The initial vision remains inspiring;

but its present approximation depresses. Nationalism, unsurprisingly, is fighting back, and doing so with a certain nuance The value of mutual cooperation between nations remains attractive, for instance; there is no way that international trade will stop. But non-democratic rule from elsewhere and above dictating the operations of such trade does not. The pandemic has given this trend toward an anti-globalist interdependence a new vigor as companies scour the globe for alternative suppliers. But there is also a tendency not to seek alternatives, but to pull inwards. Nations dependent on other nations for their supplies have suffered greatly as those supplies and their suppliers have been locked down, frozen at ports, suspended for unknown periods—so much so that a new autarky is in fashion. There are calls to make nations, or small regional collections of nations, self-sufficient and energy-independent—fortresses in the storm.

From a supply chain standpoint, developing that sort of self-sufficiency may not be a bad idea. Self-sufficiency can ensure emergency resources in times of unexpected crisis. But reducing external global trade in favor of developing internal national/regional production is a game best played by nations rich in material resources. Not all nations are so rich. (And some are significant national players, resources or not. Germany and Israel come to mind.)

But just as there are fashions in economic policy there are fashions in supply chain. Obviously it is a game-changer if global supply chains threaten to be permanently cut or crippled, reducing us to the segregated triptych of George Orwell’s Oceania, Eastasia and Eurasia. Is that in fact likely to happen? Are we still going global and post- and trans-national, or are we going local and national and regional? 

Neither and both, I think. But let’s clarify our terms. Globalization as a system of implied meta-government—an unelected government governing lesser elected ones—has always been a debatable and intrinsically fragile notion. But it is simply a fact that we increasingly live in an ever more globalized world. This is a direct result of technology and trade—which is to say, of the evolution of the supply chain. With every passing day we have easier and more fluid access to one another, both physically and informationally. Lockdowns and sanctions may impede and complicate access that becomes ever more possible; but they can’t stop it. What is grown or made on one side of the world today can be delivered on the other side tomorrow, and the reviews will appear on Google that afternoon. When positions open, resumes flow in internationally. Buyers and sellers are everywhere, interconnected as never before.

Politics may interfere, but connectivity and evolution is the new reality. The question is, does that corrode national institutions or leave them intact? Are we traders inside a national framework making full use of international connections, or the subjects of post-national planners attempting to regulate multiple regions from above? A little of both, but what is emerging seems to me to be more a system of interconnected regionalism rather than any nationalist/globalist opposition. 

What businesses are experiencing now are the tectonic shifts of new worldwide political realignments. Western responses regarding the Ukraine, for instance, are clearly forging new links between Russia, China and India. Are we witnessing the birth of a new Greater East Asia Co-prosperity Sphere? Very possibly. As migration makes America more Hispanic, the dividing line between North America and South America begins to fade. Chinese industrial development of Africa will eventually lead to a developed Africa that does not need China. 

This is the long view, of course. But it seems very likely that in the not too distant future, supply chains will more and more operate within continental regions rather than across them. The relative global stability once guaranteed by a single American superpower, or even the bipolar stability of a Cold War between two superpower opponents, is now fading, and as it departs nations will huddle together for warmth. Supply chains will be more than national but not quite global.

Except in one important respect: the supply not of material resources but of intellectual resources. It isn’t simply that ideas have no borders, or that today’s breakthrough process in one area is inevitably copied and improved upon elsewhere. It’s that brilliant talent knows no borders either. A logistics expert of genius can come out of Nepal as easily as he or she may emerge from Norway, and replicable management innovation can turn up in Nigeria as easily as in North America. 

The ever-expanding supply and demand for intellectual rather than purely material resources is slowly flattening the traditional disparity between rich and poor nations as places of business interest. For meritocracy selects on the basis of merit, and merit is neither local nor regional. Material asymmetry between nations and regions will always remain a physical fact, but a digitized world produces one sort of globalization that is irreducible: a globalization of intellect. 

“Who dares, wins,” is the motto of the UK SAS Special Forces. “Who thinks, wins,” will be the motto of the business world to come.

Thought Leadership & Strategy

Supply Chain Risks & Resilience
Artificial Intelligence & Machine Learning
Sustainability and Circular Supply Chains
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