Joseph Stiglitz on How to Build Shock-Proof Supply Chains

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Jul 11, 2024

Joseph Stiglitz, a Nobel Prize-winning economist, dives into the complexities of supply chain resilience post-pandemic. He discusses why companies hesitate to maintain extra inventories, emphasizing the inherent risks of underinvestment. Stiglitz advocates for strategic reserves and long-term economic practices to ensure stability and equitable growth. The conversation critiques the existing international economic structures, addressing the necessity for policies that benefit all, particularly in developing nations.

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INSIGHT

Underinvestment in Resilience

Companies underinvest in supply chain resilience, even during stable times.
This happens because individual firms don't consider the broader impact of their capacity decisions on others.

ANECDOTE

Just-in-Time Inventory Failures

Just-in-time inventory systems, while seemingly efficient, proved disastrous during crises.
They assumed flawlessly functioning logistics, ignoring real-world disruptions like pandemics.

ADVICE

Promote Long-Term Thinking

Encourage long-term thinking in markets to improve risk assessment.
Use tax systems and corporate governance to reward long-term investments over short-term profits.

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