The unquestioning faith of supply chain management (SCM) studies in unconditional economic growth and free trade policy has left us unprepared to confront the pandemic, leading us to a sudden and uncontrollable collapse
Global supply chains seem to be at the forefront of major societal challenges. The global economy has evolved into a network of interconnected supply chains where differences in operating conditions, such as those of disruption events or errors, can yield widely diverging outcomes across national economies. The Covid-19 pandemic is regarded as the greatest economic, financial and social shock of the 21st century, even greater than the 2008 global financial crisis. The sheer magnitude of the shock and the extraordinary uncertainty of the situation are reflected on constantly revised financial stability reports which exceed even the most pessimistic scenarios.
The disruption of production, which temporarily dismantled global supply chains, together with the steep drop in consumption, have set off an unprecedented unemployment crisis across the globe. Claims for unemployment benefits are soaring, despite many governments’ efforts to prevent mass layoffs through wage subsidies. At the same time, many corporations are insistently requesting for bailout, while, at the same time, promoting even a more widespread adoption of atypical and precarious work contracts as the new labour future. Using the pandemic as an excuse, pressure is applied on local governments to lower environmental standards and suspend monitoring requirements in order to reclaim lost profits.
This dismal reality poses a direct challenge to the founding assumptions upon which the theory and practice of supply chain management (SCM) has been based: that of perennial economic growth and maximalist and frictionless free trade. The deluded idea of endless economic growth constitutes the prevalent system’s fetish; the holy path towards the sacred diptych of wealth and prosperity. At the same time, the reality of finite resources and the prevalence of environmental pollution and degradation are regarded as a heresy; a heresy, however, upon which is reflected the problematic nature of the system’s preoccupation with overproduction which is in turn seen as the only way to ensure capital accumulation.
The removal of international trade barriers alongside the weakening of regulations (e.g. environmental, labour) are seen as central to enabling capital accumulation because it decreases the cost of doing business. After all, contemporary production systems are characterised by the frequent relocation of production facilities, as firms constantly seek for more economical places to establish manufacturing based on cost considerations. Central to these considerations is the concept of global labour arbitrage: the replacement of high-wage labour with like-quality lower-wage labour abroad. Also, this has been accompanied by the phenomenon of land grabbing and extraction of resources from the Global South for profit and consumption in the Global North.
Global supply chains can be then seen as integrated entities, seeking to establish the hierarchical control of resources in order to achieve economic and financial profitability. Despite the increasing discourse about “sustainability” and the “triple bottom line” in the supply chain management (SCM) literature, organisations have taken a disentangled approach, viewing these issues simply as management externalities which can be “fixed” using managerial and accounting techniques.
While SCM has evolved as a field of study whose purpose is to aid the structuring, operation and maintenance of global supply chains, SCM has overlooked the complexity of multi-faceted and structurally rooted problems and the role of supply chains within them. Consequently, the literature has rarely developed any consideration regarding production relationships, ownership models, geopolitical implications and practices to be adopted in scenarios characterised by different approaches to economic planning. As a mere technocratic domain linked, on the one hand, to mathematical optimisation techniques, and, on the other, to strategic management literature which considers global sourcing a panacea to competitive advantage, the fundamental environmental and labour implications related to the founding axioms of the dominant economic system – accompanied by an abundant body of literature in related fields of study (e.g. political economy; industrial relations) – have not been absorbed by SCM scholars. The distinct reliance of dominant economic thinking on reductionist assumptions regarding the broader structural issues, such as social, ecological, and distributional conflicts, has created an obvious gap between theory and reality. Consequently, SCM has developed as a supporting discipline for the facilitation of maximalist free-trade policies and global sourcing, putting spurs to the fetish of economic growth.
The need to politicise supply chain management
While global markets organised around global supply chains have superseded national economies, the role that politics continues to play is often overlooked, showing the need to be better integrated in SCM. The conditions that have developed in the post-COVID market landscape, as we move from crisis to crisis, magnify the problematic nature of some of the underlying assumptions of the dominant economic model. Economic growth, since the 2008 global financial crisis, has become an extremely difficult proposition. Over a decade, the promotion and implementation of austerity measures as the only alternative option to ‘save’ the otherwise sunk, current economic model in times of crisis, further expanded the gap between rich and poor, creating a world of two-speed economies. At the same time, the pandemic’s severe impact on the economy led to the rise of trade protectionist measures as a means to confront shortages in key product categories and increased state intervention to deal with fall in demand.
The rhetoric surrounding the days following COVID-19 are once again bringing austerity to the forefront, with discussions over the ‘hard days ahead’ and the imperative to further increase production in order to ‘save the economy’ even at the expense of the environment and millions of lives. The emerging post-COVID crisis has brought forward a set of timely topics related to the foundations of the dominant economic model (e.g. labour rights, ownership of means of production) and the fetishism surrounding economic growth and free-trade policy. In addition, the global environmental crisis that predates the pandemic, provides an incentive to go beyond environmental standards to environmental planning in order to take into account the complexities of local ecosystems along with the needs of local society.
Being the domain which is concerned with the provision of product and services, SCM should move beyond the scope of the firms which constitute, guide, control and lead supply chain networks and additionally consider the role which the dominant economic system has played in shaping supply chains up to this point. This pandemic crisis underlines the imperative need to move beyond the prevalent reductionist view of the economy, and subsequently develop supply chains for social good, not for profit. Despite the efforts of literature focusing on global value chains (GVC) and global production networks (GPN) literature to bring in the domain of political economy in supply chain literatures, their focus on governance dynamics is characterised by a persistent firm-centrism, overlooking the role of state authority within them. Acknowledging this gap, the academic discipline of SCM should move away from its supposed apolitical and neutral stances, and critically engage with the current issues we are facing, in terms of both research and teaching.