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Who is the weakest link? A better understanding of global supply chains

“In the current context where a pandemic is spreading in the world, industry output has already been severely impacted and supply chains have been disrupted. The full effect of this will only become apparent in coming months and years, but it’s clear that COVID-19 has already caused ‘kinks’ in the movement of goods and services around the globe,” said lead author Dr Mahendra Piraveenan from the Faculty of Engineering.

“Our study has sought to understand whether types of businesses play more central or local roles, and how shocks might cascade along the chain of firms.

“Governments often provide bail-out packages to large organisations in a bid to save jobs. However, organisations which are central to supply chains should also be supported, even if they are relatively small, because they may be more important to a country’s economy.

“For example, there is no point bailing out a car manufacturer if many of the companies that supply the necessary parts go bankrupt – that will mean the car manufacturer cannot get back on its feet regardless.”

School of Project Management academic, Dr Petr Matous said that when the operations of some organisations are disrupted by social distancing policies, they may send shocks “downstream” to their clients who cannot access their components, which in turn triggers disruptions to the clients of clients.

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