Geopolitical risks and sustainability are expected to be newly taken into consideration when building supply chains as the world has been grappling with unprecedentedly lengthy supply chain disruptions across the board triggered by the Covid-19 pandemic and aggravated by Russia’s attack on Ukraine, said Bain & Company chair.
“In the past, supply chains were optimized around balancing service levels, costs, and cash (inventory). It was a relatively simple tradeoff between service levels and cost to serve. More recently, that balancing equation became inadequate,” Orit Gadiesh, Chairwoman of Bain & Company, said in a special written discussion with Dr. Daehwan Chang, Chairman of Maekyung Media Group, ahead of this year’s World Economic Forum (WEF).
She expected both governments and corporate leaders to take “resiliency, sustainability, and geopolitical” issues into considerations during supply chain design and management “on top of the original goals of balancing service levels and economics” after the global supply chain has been disrupted by the pandemic and Russia’s war in Ukraine.
Gadiesh also projected uncertainty would continue to weigh on the global economy for a while this year amid rising inflation and continued zero-Covid policy by world’s second biggest economy China.
“There is a lot of economic dependency on central bank decisions as regards interest rates and the impact this will have on financial markets,” said Gadiesh. “Closer to home for Korea are choices that China will make as it continues to deal with the pandemic, and how this impacts its openness to the global market.”
After the pandemic has accelerated digitalization, countries are recommended to find out “how to re-deploy and define work in a way which uses their workforce effectively and keeps population satisfaction high,” she said.
The WEF meeting will be held in Davos, Switzerland from May 22-26 under the theme of ‘History at a Turning Point: Government Policies and Business Strategies.’
By Park Yong-bum, Choi Seung-jin and Minu Kim
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