One of the pleasures of working in the Middle East or South East Asia is the journey to Dubai. A window seat provides a view of some of the most significant places in the development of civilisation. Crossing the coast of the Black Sea one is near the site of the earliest known metal working industries, gold, 8000 years ago. Crossing Turkey one flies above the earliest known stone villages built almost 12000 years ago. Then there is Mesopotamia – modern day Syria and Iraq, home to the first known civilisation nearly 6000 years ago. Also, 1000 years ago it was the centre of the most advanced science and medicine of the time (with the possible exception of China), sponsored by enlightened Moslem rulers. That knowledge eventually spread to the West and triggered the Renaissance, which in turn led to Western civilisation as we know it. A short distance from the flight path saw the birth of the great religions of Islam, Judaism and Christianity.
1000 years ago, the wealth of the area was immense compared to the backward kingdoms of much of Europe. Goods came from as far away as China, which could mean journeys overland of several years. Long supply chains such as this were vulnerable, so such products were only for the wealthy and supplies could be intermittent. Shakespeare, some 600 years later, gives an idea of such vulnerability when he describes in his play, ‘The Merchant of Venice’, how the merchant lost all his ships one by one.
Today the business world depends on long supply chains, which all assume a stable world and business environment. Such an environment has never happened before. Whilst one cannot state that it will not continue, the odds against it remaining so must be pretty high. The rapidly expanding economies in South East Asia will change supply chain dynamics. A simple example is a recent report that there will be a shortage of cocoa for chocolate due to increasing demands from that region. How the appalling Syrian conflict plays out could be significant. Ruled by members of a Shia related sect, the regime appears to be supported by the Shia dominated states of Iran and Iraq – and Russia and China. It would be naive not to suppose that Russia and China’s motivation might to some degree be based on a hope to increase influence in a potentially high oil producing crescent of countries.
In the UK, supplies of a certain medical aid to the National Health Service dried up due to an earthquake which put its sole manufacturer out of action. The Japanese tsunami affected production of electrical components for many products. Climate change seems to be resulting in an increased number of high cost and disruptive disasters.
How many companies have contingency plans for supply chain disruption or are business dynamics such that keeping costs down for the short term rules OK and that supply chain resilience means hoping it will never happen.