All types of economic activities on this planet, directly and indirectly and even remotely, pave way for the ultimate lifestyle options of its people living in it. The activities may range in myriad ways yet essentially its main aim is to foster more comfortable and easier lifestyle options of the people. These economic activities are of numerous types and they are all to a significantly large extent supported by firms that are associated with one or more supply chain activities that are based in a region, country, continent or the whole world. This would mean that the economic activities, employment and growth of a region, country or the world would greatly depend upon the vibrant activities of its supply chain and the resulting increase in its inventories and increase in capacities. However, economic growth alone and the increase in capacities need not necessarily translate into job opportunities and increase in employment.
It is for the reason of employment alone that a more evolved and comprehensive study must be made in the light of the activities that take place in a nation in particular the supply chain activities. As jobs are the essential driving forces for any economy and for its people to pave way for more positive goals and better lifestyle options it is mandatory on the part of the authorities or the governments to understand the functions of the different supply chain activities of an economy.
It is of utmost importance that the financial market rather than act independently support these supply chain for a more sustainable economic growth and future of the citizens. Again, this also would mean that the financial institutions are more compatible to the activities of the supply chains both for the existing ones and also the newly added ones.
Expansion and Contraction of Supply Chains
Expansion of supply chains occur when there is growth in overall economic activities of a country and contraction of supply chain occurs when there is a fall in the economic activities. Firms within the supply chains expand and become profitable due to the vibrant growth of the economy and there is rise in GDP. The reverse is the case when the GDP growth rates falls.
In the former case most firms expand and are profitable even if there is competition from other similar or more or less similar supply chains. Few however, may operate with just marginal profits without putting in any extra efforts or making use of technology. The rest will be making high to abnormal profits and resort to expansion setting in a chain of expansionist efforts within the whole of supply chain activity. Firms supplying to more than one supply chains will be reaping in extraordinary profits. There will be increased entry of newer firms too for increasing capacities. There will be constant increase in employment and newer and challenging employment opportunities. Lifestyle options for the people in general will be several. This in turn may lead to growth of even newer supply chain activities.
In the case of slight fall in economic growth most firms will have difficulties in making profits and may resort to less expansionary trends even though some may still adopt capacity expansion and put in extra efforts at marketing. Very few and quite insignificant firms may suffer loss or just about remain operational with no profit or loss due to less efforts being made to change the style of functioning and not being receptive to technological improvements. There will be sluggishness in employment generation and opportunities and this may vary from firms to firms. Some firms may exit due to idle capacities. Lifestyle options of the people will remain as it is without any significant shift towards improvement.
In the case of sharp fall in economic activities or negative growth a significantly large number of firms will be affected by it. These firms will contract their activities due to low demand and there will be larger unutilized capacities for most firms operating within the supply chain. Most firms will suffer loss and many under undue pressure from market conditions and low demand may even close down business. The overall supply chain will shrink and so also the contraction of the lifestyle option of the people in general and so too employment. In fact, unemployment will rise up horribly so as to create social unrest. There will be far less opportunities for newer careers for job seekers.
From the above we can gather that there is a strong interrelationship between the economic variables namely the level of output of goods and services, financial support and providing liquidity, employment and the growth of the economy. Here, financial support is not just a service like any other service, but is a separate entity to highlight its importance as well as to demarcate it separately. In fact it serves to identify and monitor all funding, provisioning, updating, segregations of funds into specific channels, subsidies, anomalies resulting out of monetary misuse and the overall influence it exerts on all the supply chain activities of the economy.
The above factors are real economy variables and the monetary system is part of the whole economy that gives active support to the real economy. This means that the real economy is the achiever and the financial economy is the facilitator where the real economy has to be kept a few stages above or at par for easy liquidity in the overall economic system.
Studying the supply chain activities within an economy and analyzing each of their performance is mandatory to introduce remedy into the system during times of downturn and shortfalls faced by the system for smoother functioning of the whole supply chain. In order to study the supply chains it is also imperative to learn the types of supply chain that exists in an economy and the reasons behind their existence for the growth of a country’s GDP and direct influence it exerts in employment.
Types of Supply Chains in an Economy
There are few types of supply chain activities that dominate in playing an important role in increasing employment in the real economy and growth of a country’s GDP. Identifying these supply chains is also important from the point of governance of the country’s economy. The government would know the actual numbers of such supply chain activities and the categories they each belong to. It is by ascertaining the statistical data of each category of supply chain that a proper decision can be made as to how to improve, disengage, invent and repair such chains as well as providing impetus to other facilitating supply chains so that unemployment can be addressed and improvements can be made. Proper laws, rules and regulations and taxation both direct and indirect, form the immediate tools for addressing the unemployment and growth problem in these supply chains. The supply chains are of the following types.
Growth Oriented Supply Chains:
These are supply chain activities which are in a growing stage mainly due to a robust economy or because of a ground breaking technology paving way for a spurt of business activities with firms joining in the race either expanding from other supply chains or sprouting as fresh starters for making the most out of the vast scope provided by the new area of economic activity. One may see several instances of such new supply chain activities and this is especially so in the case when new set of industries starts to grow and invest in newer types of business activities like the mobile telephony, health care, a revolutionary product, newer types of energy sources and so on. Education and growth of knowledge forms one of the significant areas of improving the growth stages of this supply chain and linking with the rest of the economic activities of a country. In fact, the education and knowledge institutions are by themselves supply chain activities that run corollary to this main supply chain and so also other supply chains. The same holds true with financial institutions and their supply chain activities that give support to firms belonging to any of these and other supply chain activities. As stated earlier it is the real economy that acts to achieve the increasing growth rate of the economy and employment while the financial sector acts to facilitate that objective and so also education and all these acts together to give the stable numbers towards growth of GDP. There will be further need to create liquidity within the economic system due to such high growth. There will be wide range of lifestyle options for the people in general.
Receding Supply Chains:
These are supply chain activities within an economy when there is stiff competition due to which the firms in these particular supply chains start to recede slowly. These may occur when the firms are subjected to cheaper products due to change in technology or through imports. There may be unemployment but also sudden displacement of labors that would need to be accommodated in other supply chains or given special training and new skills to compete for new jobs. The firms here may not recede into oblivion, but may start off with several adjustments and maneuvering in order to regain their lost grounds. The displacement of labor in such cases may be only a temporary phenomenon. There will be increased unutilized capacities within firms in this chain which some firms may try to rectify. The lifestyle options of the people may not change significantly due to this as they can depend upon other supply chains. Liquidity within an economic system may not be affected significantly.
Contracting Supply Chains:
These, unlike receding supply chains, mainly occur due to sudden introduction of improved or ground breaking technologies in other supply chains. The firms within this chain starts to contract and may not loose out overnight yet they manage to remain within their niche market with fewer customers who are die hard supporters of their products or services. They may remain so for long stretch of time yet wouldn’t be able to regain their lost glory. They may be just profitable or existing under no loss or profit basis. Some firms may even start to supply to competitive supply chains with improved technology while still retaining the product supply to their original supply chain. There may be displacement of labor due to job loss resulting out of shrinkage in overall capacity. Further, newer supply chains with high technological inputs may not retain as many numbers of employees as the older supply chains. In fact, there will be shortage of general jobs while on the other hand there will be heavy demand for specialists. Lifestyle options for the people are generally affected in this case. There will be severe unemployment in the society in such case too. Identifying such supply chains may become necessary in order to get some sort of support from the government. There will be excess liquidity in the system which would need to be addressed.
Vanishing Supply Chains:
These are supply chain activities which are either phased out of the market or have to go off on their own due to severe pressure from the society and the government. They may or may not face any competition and may have remained at the zenith of their profitability, but for the action against them which may become mandatory so that they sooner or later have to exit the scene. A few good examples are of the tobacco industry and also that of drugs (legal or illegal), specialized arms and ammunition and others. A good deal of labor force may get displaced in the short to long run and may have to look for jobs in totally different types of firms within other supply chains. Here, new skills and training are of utmost importance in order that they may get equal opportunities elsewhere. There will be severe unemployment and life style options of the people will be forced to change significantly. Yet these supply chains may have to be phased out due to problems that the society may have to face in near or long terms. There will be excess liquidity within the system as there may not be adequate asset backing to support it due to the phasing out such supply chains.
Cultural and Religious Supply Chains:
These supply chains exists out of the need to preserve the society’s heritage which has roots in the past cultural and religious activities. They may be unique to a country and differ in smaller to larger extent and in some countries they have formed deep roots so as to be a significant part of the overall economic activity. In other words, these include all activities like mass spiritualism, mass congregations, celebrations, cultural and religious events, spiritual practices, charity, products and services and finance arranged and distributed for furthering the cultural or religious event and so on. In fact, these are all viable economic supply chain activities that may add to the GDP in less or more ways. It is for the government to take a decision whether to bring these supply chains under the ambit of law and taxation or not. Even if they are allowed to remain separate from other economic activities they are almost parallel activity and may bring about a second economy if not integrated with the main stream economic activities. They also affect the profitability of the mainstream commercial supply chain activities. This is the actual interpretation in terms of economic activities and it is for the government or the society to make improvements to bring about further integration with the mainstream economy lest a second economy comes into being threatening the actual economy. Lifestyle changes may or may not be significantly felt and employment potential improves and decreases with changing season and the inherent strength of these supply chain activities. These particular supply chains can be both a store of wealth earned from the interaction with the mainstream economy and a hub for expenses on promotional and publicity grounds. It is also seen that though a dozen people may be spiritualistic or culturally driven for selfless non profit seeking motives yet if more people than these numbers are involved then it becomes an economically viable supply chain activity.
Creating and Inventing New Supply Chains:
When there is downturn in the economy and there is low investment in the country resulting in widespread unemployment, it is mandatory on part of the government to encourage investments in all sectors. However, such investments may or may not yield the required results if the existing supply chains are under pressure to perform like the above and therefore there is need to analyze the existing supply chains and any potential for future growth. In this context the government of the country would necessitate steps to bring about newer types of supply chain activities that overtime would serve the society positively and paving way for the newer life style option for the people. Even in case where the economy is in upswing the government of a country may contemplate upon the idea of introducing a new supply chain activity so as to boost the existing economic growth, employment including allocation of human resources for more self fulfilling career and challenging areas of job opportunities as well as to absorb the excess liquidity from the system by providing essential equity base support for the currency in circulation. Larger the supply chains the greater will be the need to introduce more liquidity into the economic system. Here, while introducing the newly invented or created supply chain activity there will be equal participation in the process from the private sector and this needn’t be confined to the government only. Here, the government would play as the regulator and the initial investor while the private players would move in tandem within the supply chain to make it a success.
Most of these created and invented supply chain activities may have been introduced with some deliberate thinking and brainstorming by participants that are from the government, industries, individual entrepreneurs, social experts, scientists, scholars and thinkers. A good example of such a supply chain is possible if space tourism is given a boost. Here, an entire lot of industries, firms, suppliers, technologists, and medical services, insurance and so on may sprout up giving enormous support to the activity. Here, just sending passengers frequently to space a few meters above the stratosphere is sufficient to set in chain of unprecedented economic activity. Initially, the space tourism may work out something like the a staged drama much like the roller coaster rides tourists take in a theme park, but over a period of time this may lead to more sustainable and ambitious projects and programs. Once, the space is manned commerce and other opportunities will automatically follow including human needs and thus enhancing the life style option of the people.
Similarly too, is the case with under sea tourism and under water hospitality centers that again can set off a range of supply chain activities. The above are to serve as examples and this needn’t be restricted to these areas only. It is for the society and the people to understand the need to create and invent newer supply chain activities to give the right type of positive spirit and nourishment to the evolving human race.
Once, people set out on such journeys there will be problems and hurdles which will necessitate newer types of supply chain activities to address these difficulties. There will be huge employment potential for the economy and life style option of the people will change drastically. There will be multifold growth in GDP too.
Some of the down to earth new potentially significant invented supply chain activities that may be invented could be compulsory pollution control in industries, waste renewal and management throughout the country and others which experts may think out to be quite positive for the overall well being of humanity.
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