MNCs and the Global Supply Chain Management Term Paper

MNCs and the Global Supply Chain
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1. How are MNCs likely to reconfigure their supply chain, will they keep their supply chain as-is, or will they shift from one foreign location to another, or will they re-shore significant parts back to the U.S.?
MNCs will likely shift from one foreign location to another and broaden from heavily relying on Chinese suppliers. Chinese manufacturers play an essential role in the global supply chain, and there is a focus on lean manufacturing principles. However, it has also meant that the suppliers are less flexible as there have lockdowns in China and Chinese factors are not fully operational. Thus, there is likely to be decentralization in manufacturing to other parts of the world, such as Vietnam and Mexico. This is essential to improve flexibility in the supplier base, and some US companies trying to bring some part of the supply chain to the US or Mexico. Diversifying away from China is one way to build a more robust supply chain such that economic slowdown, shutdowns and reduced production in China have less impact on the global supply chain network.
Heavy dependence on few suppliers, mostly from China, has affected global trade when there is a slowdown in economic activities, reduced trade, supply shortages, and declining demand. Besides the COVID-19 pandemic, the US-China trade war and Brexit may further affect supply chain disruptions, but shifting the supply chain to more locations will reduce the risk of supply chain disruption. On the other hand, re-shoring significant parts back to the US are expensive. The global economy is closely intertwined, and there is a need to diversify the global supply chain and reduce reliance on China, which is a major factory and m...