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In the News: Is ‘friend-shoring’ the solution to global supply chain woes?
March 9, 2023
Contributed by: John Lorinc, Globe and Mail
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Friend-shoring, of course, is also a response to the supply-chain chaos inflicted by COVID-19, raging inflation, labour shortages, marooned cargo ships and, more generally, a globalized trading system that’s become too brittle for its own good. Indeed, some observers are talking about replacing the 30-year-old “just-in-time” approach to managing supply chains with a more prudent “just-in-case” philosophy.
While “shoring” is often used as a trade-related suffix—think re-shoring or near-shoring—friend-shoring may have a different objective.
“To me, friend-shoring has a geopolitical agenda behind it,” says Candice Chow, who teaches strategic management at McMaster’s DeGroote School of Business. She argues that friend-shoring can be a pragmatic response to instability. Others are less persuaded.
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The problem is that global supply chains have developed over several decades, and can’t be uprooted and moved overnight.
“There are so many factors to consider,” says DeGroote’s associate dean, Elkafi Hassini, who chairs the Smart Freight Centre, a Greater Toronto and Hamilton Area logistics research group.
He uses 12 supply-chain metrics—including labour markets, transportation routes, and risks like environmental disasters and war—to evaluate optimally configured supply chains and the locations of suppliers. Political instability doesn’t even make his top five; it ranks seventh.
In any event, Hassini doesn’t think the West’s preoccupation with friend-shoring will do much to alter the networks that have built up since the early 1990s, when the World Trade Organization and General Agreement on Tariffs and Trade dictated the terms of post–Cold War globalism.
Read the full article in The Globe & Mail.
