INTHEBLACK November 2023 - Magazine - Page 20
F E AT U R E
Chatham House
What is deglobalisation?
CLICK TO LAUNCH VIDEO IN A NEW WINDOW
“If you’re in the US, you are almost certainly
seeing deglobalisation, because you can sustain
a local industry,” he says.
“You can make your own semiconductors,
for example. You can source them locally,
and it is more or less financially viable. It
won’t blow up the price of your product by
incorporating a US-made semiconductor.”
Coldrick works with clients to map out
their supply chains. This involves analysis of
not only their suppliers, but also who supplies
their suppliers. This process can even extend to
looking at fourth and fifth-party suppliers.
This “fanning out” process of suppliers often
reveals a point where they meet up. “Perhaps
in the same hole in the ground in Western
Australia where all the iron ore comes from,”
Coldrick says.
“Even before you get to that point, they
typically start to reconvene,” he adds. “What
looks like hedging could turn out to not
be hedging at all. Companies are having to
put a lot more due diligence into who their
secondary supply sources are.”
20 INTHEBLACK November 2023
Businesses need to think about other
ways to achieve the same goal, while
understanding with absolute clarity that
buying everything locally is not the goal,
Coldrick says.
“The goal is to have a resilient supply chain
that is also cost-effective, that you’re not
compounding with wage increases, energy
price increases and massive increases in the
price of raw materials,” he says.
In today’s selectively deglobalised business
environment, organisations must mitigate
the risk of a potential source of failure in
their supply chain. Turning that single risk
area into two less problematic ones without
dramatically increasing the cost of the
product or service is a challenge.
MEANINGFUL HEDGING
Coldrick’s clients often look for “meaningful”
hedging – and the meaningful aspect is
important. “Oftentimes what looks like
hedging – getting two suppliers of the same
thing – ultimately has no hedging impact
