Although warfare is a pervasive geopolitical risk, its effects on firms’ day-to-day operations are poorly understood. In the latest issue of The Takeaway, “Warfare Is a ‘Train Wreck’ for Global Supply Chains: What Can Governments Do to Mitigate Its Ill Effects?“, Andres Jola-Sanchez, Assistant Professor of Information and Operations Management at the Texas A&M Mays Business School, presents recent evidence on how war influences firms’ operations and suggests public policy measures to address those effects.
The article details how warfare makes keeping inventories dangerous, leading firms to replace inventory with cash, which leaves those firms less able to respond to incoming orders. Jola-Sanchez not only explains the problem but also outlines policies that can help prevent conflict-country suppliers from turning into global production bottlenecks.
The Takeaway is a publication of the Mosbacher Institute for Trade, Economics, and Public Policy at the Bush School of Government & Public Service at Texas A&M University.