SUPPLY CHAIN CRISIS.

 Supply chain is the network between a company and its suppliers to produce and distribute a specific product or service. Management of supply chain or flow of goods and services includes all processes that transform raw materials into final product. It involves the active streamlining of supply side activities right from procurement of inputs and production to maximize customer value and gain competitive advantage in the marketplace. In other words supply chain can be explained in terms of  a,original sourcing or extraction of raw materials b,refining or manufacturing materials into basic parts, c,Assembling basic parts into finished products and d,selling and delivering finished products to end users or consumers. A good supply chain management can improve the efficiency of plants,warehouses and transportation vehicles. The cash flow is directly increased because of the timely delivery of the product to consumers.

  Transnationationalisation of production coupled with international division of labour and globalization have been making major impact to global supply chain. Firms were locating their factories in countries where labour and infrastructure are cheap and taxes are low.Accordingly China became world's most attractive destination to set up factories for firms across the globe due to its cheap labour, infrastructure and low taxes. China accounted for 28.7%of total global product goods and $2.6 trillion of exports and China is termed as the world's factory. Transnationalisation of production in a globalized society is so interdependent that even in the production of IPhone 43 countries manufacturers it's parts before finally assembled in China. 

 According to IMF "The global recovery continues but the equilibrium has weakened hobbled by the pandemic..death toll has risen to 5 million. Pandemic outbreaks in critical links of global supply chains have resulted in longer than expected supply disruptions further feeding inflation in many countries ".Up and down the global supply chain there are many problems raising concerns that could disrupt global economic recovery. Closed factories, clogged ports, absence of truck drivers, raw material shortage etc led to a crisis.On the other hand with people working from home and shopping online demand for cardboard to deliver packages has surged.Both construction and furniture industries also witnessed increased demand.  According to Wallstreet Journal "Supply chain crisis fuels latest retreat from globalization. Covid19, climate and geopolitics shatter integrated global production threatening to end the era of low costs and endless varieties.....As lock downs lifted demand has rocketed and supply chains that were disrupted during the global health crisis are still facing huge challenges and are struggling to bounce back...Different parts of the world have experienced supply chain issues that have been exacerbated for different reasons ".For instance power shortage in China have affected production in recent months. In UK Brexit led to shortage of truck drivers. While US is also battling for truckers Germany witnessed large backlogs at its ports.In fact supply chain bottleneck is witnessed in power,labour availability, containers, shipping, ports, trucks, rail road,air and warehouses. 

      Supply chain crisis has impacted the earnings of the companies differently as some issues like labour shortage can be worked out gradually.However low margin companies in sectors like transportation, general retail, construction and automobile,face a threat.Least impacted companies are those with wide profit margins, limited raw materials costs and small work force like technology and health care sectors.

      The ever-increasing trade and political tensions between China and USA also have added another dimension impacting supply chain.As supply chain involves multiple players and demand returned after Covid 19 declined ,but supply remained disrupted. Japan had already mooted the Supply Chain Resilience Initiative in the QUAD meeting as a quadrilateral Initiative between USA,Japan, India and Australia.QUAD grew out of realisation among the four countries that almost complete dependence on China for critically important supplies.The supply chain initiatives provide India to become a major manufacturing hub, Australia to provide resources and skills training with US and Japan providing technology, innovations and key investment .In the recently announced other QUAD forum between USA, India, Israel and UAE, discussed not only possibilities for joint infrastructure projects but also made trilateral arrangements between India UAE and Israel for Indian manufacturing,UAE financing and Israeli innovation.

 Measures like relocation of manufacturing units to achieve supply chain resilience will be both complicated and time consuming. As far as India is concerned despite border crisis China India trade is set to cross $100 billion in 2021with India importing 90% of its solar equipment,70% of active pharmaceutical ingredients, substantial part of electrical machines, automobile parts, ppe kits, ventilators etc. In any case excessive dependence on any particular economy is bound to create problems. Scanning for alternatives should continue within the framework of both multilateral and regional groupings so as to achieve supply chain resilience.