Life after COVID-19: Butterfly effects and why we need to care about our supply chain
Do you know where a) the clothes you buy, b) the snacks you eat or c) the car you drive are produced?
Do you know what raw materials are used in the process or how it is delivered to your doorstep?
Does your consumption harm the environment, or does it affect people in far-off places?
Should you care as long as you are personally safe and healthy?
Yes. You should care. We all should.
In the past 30 years, we have lived in the golden age of consumerism. We walk into a grocery store and there are hundreds of varieties of peanut butter or toilet paper. Our choice of car, computer, food or fashion has never been more limitless.
But something strange has been happening over the past year.. Stores are running out of toilet paper, cars have a 4 month waitlist, and a barrel of oil went from being -$37 (yes, negative!!) to $66 in less than a year.
The simple answer is that COVID-19 has caused havoc in global supply chains and that is causing these strange issues. But the real answer is a lot more nuanced.
If there is one thing that COVID has taught us, it’s that the world is a vulnerable and fragile place. The very globalisation that gave us technology, progress and growth, is now a hindrance as it leads to unintended consequences. This leads us to a term that you will hear a lot more of in the future:
The butterfly effect
The butterfly effect is an often misunderstood phenomenon wherein a small change in starting conditions can lead to vastly different outcomes
Think of the world as a complex system, with many moving parts. Each element of this system is interconnected and interdependent on the other elements.
This makes it difficult to predict the future, as successes and failures can appear seemingly random. This is the result of the exponential impact of subtle changes made by companies, governments and consumers themselves.
All this leads to the volatile world we live in today. Where it becomes increasingly difficult to plan and predict. Where a single ship stuck in a shipping canal can cause global chaos.
The full impact of the Evergiven’s Suez mishap is not known.
Why should this matter to us, the consumer?
Let’s divide the supply chain into 3 simple buckets:
- Primary Sector (Farm/Mine/Ocean)
2. Secondary Sector (Processing, Manufacturing, Packaging)
3. Tertiary Sector (Warehousing, Distribution, Retail, E-commerce)
We usually focus on the Tertiary Sector, the retail store we purchase from or Amazon.com, without really caring about what goes into the product:
Which mine does the metal come from, who manufactures it and who ships it to your door.
From the Butterfly Effect, one thing is clear, the outcome of any process is sensitive to its starting point.
So the answer is simple.
We need to start start caring about the environmental, social and economic impacts of our consumption, i.e. from the starting point or Primary Source.
Until we do so, we will never be fully prepared for the unintended consequences of the Butterfly Effect.
