Risk, resilience, and rebalancing in global value chains by Susan Lund, James Manyika, Jonathan Woetzel, Ed Barriball, Mekala Krishnan, Knut Alicke, Michael Birshan, Katy George, Sven Smit, Daniel Swan, Kyle Hutzler published by McKinsey Global Institute (8/2020).
“Intricate supplier networks that span the globe can deliver with great efficiency, but they may contain hidden vulnerabilities. Even before the COVID‑19 pandemic, a multitude of events in recent years temporarily disrupted production at many companies. Focusing on value chains that produce manufactured goods, this research explores their exposure to shocks, their vulnerabilities, and their expected financial losses. We also assess prospects for value chains to change their physical footprint in response to risk and evaluate strategies to minimize the growing cost of disruptions.
Shocks that affect global production are growing more frequent and more severe. Companies face a range of hazards, from natural disasters to geopolitical uncertainties and cyberattacks on their digital systems. Global flows and networks offer more “surface area” for shocks to penetrate and damage to spread. Disruptions lasting a month or longer now occur every 3.7 years on average, and the financial toll associated with the most extreme events has been climbing. Shocks can be distinguished by whether they can be anticipated, how frequently they occur, the breadth of impact across industries and geographies, and the magnitude of impact on supply and demand…”
