In March we wrote about the coronavirus and the tunnel vision of macroeconomics. Today, let’s flip to the microeconomic view. Looking at Supply Chains from that perspective illustrates the complexity that every supply chain practitioner faces every day and is too often absent from the macroeconomic perspective.

There is an interesting article on a Stanford website, “The idea is that the flapping of a butterfly’s wings in Argentina could cause a tornado in Texas three weeks later. By contrast, in an identical copy of the world sans the Argentinian butterfly, no such storm would have arisen in Texas.”

Supply chains are not the closed systems that macroeconomists posit. There are always unexpected external influences at the microeconomic level. Sometimes the disruptions are specific, like a local labor action. Sometimes they are international, like the coronavirus. No matter the source, these butterflies can be disruptive.

Government policy lags. While it is likely that in coming years more government emphasis will focus on near-shoring, on-shoring, and local sourcing business leaders engaged. It isn’t only about low cost anymore. It’s a best value, and that means supply chain leaders must address Supply

Chain Risk Management (SCRM).

Buy a net. Go looking for butterflies.