The Fragile World

For the last 30 years, the global operational strategy was singular: Chase the lowest cost. Companies offshored manufacturing to Asia and used Just-In-Time (JIT) inventory to keep warehouses empty.

Then, the COVID-19 pandemic happened, followed by geopolitical tensions and blocked canals. The world realized that while JIT was extremely efficient, it was incredibly fragile. If one factory in Taiwan shut down, the entire global auto industry couldn't build cars because they lacked microchips.

Today, the major theme in MBA operations is Resilience vs. Efficiency. Companies are willing to pay slightly more to manufacture closer to home (Nearshoring) or keep extra inventory on hand (Just-In-Case) to ensure they can survive global shocks.