For the past 40 years supply chains have been governed by the ruthless logic of economic efficiency. Companies have scoured the world for the best combination of price, speed and quality. New sources of labor and commodities have appeared as if by magic, most notably in China. And consumers have enjoyed a bounty of high-quality goods at bargain prices: Look at the iPhone that in recent years has been surgically attached to your body, and you behold a miracle not just of technology but of supply chain management, with components sourced from more than 40 companies on six continents.
That world is no more. The pandemic showed what happens when supply chains snap because of an unexpected catastrophe: shortages of protective clothing, ventilators and drugs, an unseemly scramble to secure new supplies, empty shelves and consumer panic. More unexpected catastrophes will surely loom in the future as the world heats up and hurricanes become more common. Russia’s invasion of Ukraine has underlined the danger of being dependent on a geo-strategic rival. China’s Xi Jinping is every bit as ruthless as Russia’s Vladimir Putin and controls an economy that is roughly 10 times as large.