The Ubiquitous Supply Chain, Part II

The following article comes to the Strategic Sourceror courtesy of Naseem Malik and MRA Global 
Sourcing. 

Part I of this article, I discussed some of the overarching supply chain topics that have been commanding most of the oxygen. Everything supply chain related from risk to resiliency and transparencies and how broad sectors of our economy were being impacted and the stern counsel being provided from experts help us never be caught short ever again. If you bought all that, I have some beachfront property to sell you in Kansas.

‘The Great Supply Chain Disentanglement’
As the current administration continues to harden their hawkish stance towards China, there is another issue fraught with peril that continues to alternatively simmer and somewhat boil over. This is what I like to call the coming ‘supply chain disentanglement’. As our relations fray with the Middle Kingdom, we must be ready to accept the significant cost to competitiveness at play here too. For clarity purposes, goal isn’t to diminish the potential security considerations at play with this key rival and trading partner of ours. When it comes to network equipment for national defense or critical medical supplies - we do share a certain level of interdependence that must be balanced.

From the US perspective, we are dependent on China for pharmaceutical ingredients and that requires us to solidify and diversify (hopefully soon) our pharmaceutical supply chain prior to worsening relations. According to the FDA, in 2019 an estimated 40% of finished medications and 80% of active pharmaceutical ingredients were manufactured overseas, with the bulk of those coming China and India. Lest we think they have all the power, China too is dependent on US drugs, particularly our cancer drugs. And yes, we are still the world’s leading source of pharma innovation, so we have that going for us too. From a strictly risk mitigation perspective, it’s all the more important for both partners to ensure there aren’t any supply disruptions for these critical drugs and treatments as we learn to co-exist with growing uneasiness while still being co-dependent. Sounds like a lot of fun for those eager negotiators out there.

This decoupling also affects educational linkages between the two nations. With the ensuing Chinese brain drain here, the US will have to invest more in STEM at home and let up on its immigration policies with other countries like India to bridge the gap. This will also require us to deepen our economic and political ties with friends and allies across the pond and the world. Of course, this too sounds like academician-speak as they’re good at touting these lofty ambitions worth pursuing, but in actuality much harder to implement in real life.

The Vaccinated Supply Chain
What really caught my fancy in the recent past relates to none other than the one and only Amazon. They have certainly earned some goodwill during the pandemic as the country was dependent on their supply chain infrastructure and by the massive hiring they undertook. Where they really stunned their shareholders was in their last quarterly earnings call when Bezos told them all that they may want to take a seat…because Amazon is now trying to create the first ever vaccinated supply chain. They will take the entirety of their $4B quarterly profit and dedicate it to this cause. Imagine any other CEO doing this and their stock and company would get skewered. But if there’s anyone that can back their big talk, it’s the biggest of them all.

This vaccinated supply chain will cover PPE/safety protocols, enhanced cleaning, hiring new workers and increasing compensation. Their goal is to have COVID-free supply chain that can handle all of their goods safely from supplier to customer. It’s a brilliantly audacious move because others can’t even come close to this. FedEx can’t do it as they don’t control the front end. Walmart can’t do it because they don’t control the last mile and still have to use 3rd party delivery firms. How powerful a narrative is it to tell your suppliers, customers, partners, and workers that we will have an interruption and COVID free supply chain and oh by the way, no one else can even come close. It helps them that they’re fully vertical and have access to cheap capital to pull off this very expensive feat.

The Hottest Product Around
And of course, the icing on the cake is that they are also feverishly working to develop what will probably make the world’s biggest consumer product – testing for the coronavirus. Coming soon to a delivery near you – fresh food and your own home testing kit. With apologies to all other successful supply chain companies and models out there, how soon before it’s just the Amazon supply chain and everybody else when we refer to continuous evolution/results when it comes to the ubiquities of the supply chain?

MRA Global Sourcing is a specialized recruiting solutions firm, placing top talent in the supply management arena including procurement, strategic sourcing, supply chain and logistics.