Global Supply Chains Depend on People
Any threat to use tariffs as an economic weapon will have limited effect because we don’t hold the same power we used to.
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Many alarmists are ringing the bell on President Trump’s recent announcement on Trade Wars. Some speculate that it will severely hurt our economy and therefore our supply chain and some think it won’t. It’s time to face the truth – the U.S. economy doesn’t make up such a large percentage globally and in fact, has been on the decline since World War II ended.
The U.S. and EU economies are about tied at 20-percent of world GDP each, and Asia has over 35-percent of world GDP, and it is increasing. Any threat to use tariffs as an economic weapon will have limited effect because we don’t hold the same power we used to.
It’s easy to see why. Population means buyers and producers. To see the dominant supply chains of the future, look at the projected biggest populations by 2050:
1. India
2. China
3. EU (assuming it stays together)
4. United States of America
5. Pakistan
6. Indonesia
7. Nigeria
8. Bangladesh
9. Brazil
10. Democratic Republic of the Congo
India, China, Pakistan, and Bangladesh form an almost contiguous area, with populous Southeast Asia connecting them to Indonesia. The East has long determined the shape of global supply chains, going back 2,000 years to the Silk Road’s influence on ancient Rome, and for the same reasons then as now – it has long been the most populous region.
With “trade wars” alarmism appearing in the news lately, it’s notable that China’s rise coincides with its opening up to global trade and participating in the international economy. We live in times of uncertainty, characterized by great shifts in power and economic forces. Yet one fact remains certain – successful supply chain leaders bet on people.
About the Author
Michael Gravier
Michael Gravier is a Professor of Marketing and Supply Chain Management at Bryant University with a focus on logistics, supply chain management and strategy and international trade. Follow Bryant University on Facebook and Twitter.
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Simplifying Your End-to-End Supply Chain
Download this report highlighting each point on the supply chain journey by explaining the role it plays, which includes the pain points you may face, what you should be thinking about at a particular stage in the journey, and what technology you can benefit from.
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When COVID-19 was bringing other supply chains to a screeching halt, AGCO acted early and decisively to keep its operations around the world up and running. The key: A very agile supply chain.
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