Supply Chain Economics: A Fresh Lens for Holistic Analysis

Abstract

Global pandemics, military conflicts, and natural disasters are crescively disrupting increasingly complex supply chains. But neither the social science of economics or decision science of supply chain management were sufficient to anticipate, much less mitigate the depth, breadth, or duration of the disruptions and damage wrought by COVID-19 or Russia’s invasion of Ukraine. Economics is the study of production, distribution, and consumption of goods and services, and creation and transfer of wealth. Supply chain management is the management of a network of organizations, internal and external, by which an organization pursues its own goals and objectives. Process focus is integral to supply chain management, as operations management is the management of an organization’s processes to pursue its goals and objectives. Adherence to processes is necessary for organizations to consistently reach their goals and objectives. When organizations execute consistently, they can leverage that quality for lower costs, greater volume, higher prices, or additional stakeholder goodwill. By combining these concepts, supply chain economics can be framed as the systematic study of the production, distribution, and consumption of goods, services, and capital by networks of organizations, internal and external, with which any given organization pursues its goals and objectives.