Retreat from Globalisation: What does it mean for you?
The last few decades have seen increased dependency on “global” solutions and supply chains. Companies, individuals and countries embraced the break-down of trade and communication barriers with an eye on economic and financial advantages derived from efficiency, choice and resource specialisation.
With COVID wreaking its havoc, we have been forced into re-considering how the world works and how we survive and grow together. All the disadvantages of globalisation became apparent quite quickly and most countries (and even States within countries) developed their own, unique solutions, often based on the premise that self-sufficiency was the way ahead. Health and survival were the primary drivers of this change, but as the dust starts to settle on the likely way forward, countries and companies are being forced to look seriously at their supply chains and their independence, often regardless of the financial viability of the proposed solution. Water purification is an industry in Australia which relies completely on imported chemicals. Watch that space!
Whilst for most functions and services, the stress points of global connectiveness are not life threatening, they are annoying, particularly for your customers, unless they are recognised and work-around or long term solutions are put in place. Those companies that off-shored core services experienced discomfort as in some cases those off-shore capabilities found themselves bereft of staff and capability. India for instance, where home connectivity isn’t great at the best of times, experienced the most significant of problems: mobile assets (ie people) de-camped and simply trekked home to their villages.
As the world moves to retreat from globalisation for a period, towards self-sufficiency, it’s important that companies look at their resilience in tough times. Can services and products be serviced largely on-shore? What dependencies does your business have on links in the value chain that you have no control over? Where are the weak spots in your processes and are you able to manage all the components required to keep your customers happy?
The key to this is obviously investing in new technologies and capabilities that can originate from your home country, managed accordingly to ensure your customers get what they want faster, more reliably and in some cases cheaper. Australia has a competitive disadvantage because of our high labour costs, which means we need to drive smarter and harder investment in digital platforms and “new ways”.