KKR Releases “A New Era for Supply Chains”

Rhea-AI Summary

KKR has published a new publication titled A New Era for Supply Chains by Neil Brown and Frances Lim, emphasizing the need for businesses to adapt their supply chain strategies amid significant disruptions. The authors highlight that COVID-19, economic nationalism, and geopolitical tensions have adversely impacted traditional supply chains. They emphasize five key considerations for business leaders: building resiliency, evolving supply chains, adopting a holistic view, focusing on vulnerabilities, and leveraging opportunities for sustainability and automation. The publication suggests a shift from global to domestic demand and greater emphasis on ESG solutions.

Positive

• Opportunity for businesses to pivot towards domestic and regional demand over global demand.
• Potential growth in infrastructure and logistics sectors as companies adapt.
• Increased automation within supply chains is anticipated.
• Continuing upgrade of China's manufacturing capabilities.
• Emphasis on diversification strategies in supply chains.
• Heightened demand for ESG (Environmental, Social, and Governance) solutions.
• Prospects for opportunistic investments in resilient supply chains.

Negative

• COVID-19 lockdowns and global disruptions have negatively impacted conventional supply chains.
• Geopolitical risks and inward-looking national policies increase uncertainty in supply chain operations.
• Overemphasis on mitigating risk may lead to spiraling costs without substantial returns.

NEW YORK--(BUSINESS WIRE)--KKR today announced the release of a new KKR Viewpoints publication authored by Neil Brown and Frances Lim. In A New Era for Supply Chains, Brown and Lim discuss how business leaders and investors around the world must evaluate and adapt the way they think about supply chains, particularly at a time of immense disruption to existing business models.

“Over the last year, COVID-19 lockdowns, product scarcity, limits on medical equipment and therapeutics, increasingly nationalist economic policies and heightened geopolitical confrontation, have each had significant – and largely negative – effects on conventional supply chains,” said Brown and Lim. “Amidst this complexity, we believe business leaders must extend supply chain thinking beyond margin maximization to address issues of resiliency, sustainability and geopolitical risk. In our view, they must think of supply chains as less of a chain and more a mesh of interlocking inputs.”

In the piece, Brown and Lim outline five key considerations for business leaders and investors considering supply chain design:

1. Building resiliency is key to securing supply chains post-COVID. Resiliency strategies for businesses vary and include diversification, mirroring production of critical components, stockpiling and distributing logistics nodes.
2. Supply chains will need to evolve as they continue to face uncertainty from a more volatile geopolitical environment, more inward-looking national politics and increasing supranational risks such as climate change and public health.
3. Supply chain thinking needs to incorporate a more holistic view – one that sees the traditional supply of goods as being embedded in a ‘mesh’ of interlocking inputs, each with its own risks and value levers.
4. Focus on a supply chain’s critical nodes of vulnerability. Trying to mitigate risk along every link in the broad mesh of inputs in which supply chains sit will lead to spiraling costs for greatly diminished returns.
5. This period of supply chain rethinking presents an opportunity to build for a future in which supply chains adapt to the need for environmental sustainability and adoption of automation technologies.

In their report, Brown and Lim explain that while change can always be challenging, the adjustment to global supply chains can also present opportunities for businesses and investors, including: 1) domestic and regional demand over global demand; 2) new infrastructure and logistics; 3) increasing automation; 4) continuation of China’s manufacturing upgrade; 5) new emphasis on diversification; 6) greater demand for ESG solutions; and 7) increased prospects for opportunistic investments.

Links to access this note as well as an archive of KKR’s previous publications follow:

• To read the latest Insights: click here.
• To download a PDF version: click here.
• To download the KKR Insights app for iOS click here, and for Android click here.
• For an archive of previous publications please visit www.KKRinsights.com.

About Neil Brown

Neil R. Brown is a Managing Director at the KKR Global Institute and KKR Infrastructure. Mr. Brown works at the intersection of finance and geopolitics to invest in new markets globally, analyze global trends and risk, and build strategy. Mr. Brown also specializes in global infrastructure and energy, and he has been involved with KKR investments on five continents. Mr. Brown is a Senior Fellow at the Atlantic Council of the United States. Previously, Mr. Brown served for more than eight years as Senior Staff Member of the U.S. Senate Foreign Relations Committee, leading legislative efforts and oversight on global energy security and governance, environment, and domestic energy, and he worked on countering weapons of mass destruction. Learn more about Mr. Brown here.

About Frances Lim

Frances Lim is a Managing Director and Head of Asia Macro on KKR’s Global Macro, Balance Sheet and Risk team. She also leads portfolio management and asset allocation for KKR’s Strategic Partnership effort (KSPI). Prior to her role with KSPI, Ms. Lim was based in Sydney, working alongside investment teams in Asia in her capacity as the Head of Asia Pacific Macro and Asset Allocation. Prior to joining KKR, she was a vice president at Morgan Stanley Investment Management (MSIM) and a member of the Global Macro and Asset Allocation team. Ms. Lim focused on macro trends and top-down global analysis and was a co-portfolio manager of the MSIF Absolute Return Currency Fund. Learn more about Ms. Lim here.

About KKR

KKR is a leading global investment firm that manages multiple alternative asset classes, including private equity, credit and real assets, with strategic partners that manage hedge funds. KKR aims to generate attractive investment returns for its fund investors by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation with KKR portfolio companies. KKR invests its own capital alongside the capital it manages for fund investors and provides financing solutions and investment opportunities through its capital markets business. References to KKR’s investments may include the activities of its sponsored funds. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR’s website at www.kkr.com and on Twitter @KKR_Co.

The views expressed in the report and summarized herein are the personal views of Neil Brown and Frances Lim of KKR and do not necessarily reflect the views of KKR or the strategies and products that KKR offers or invests. Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be relied on in making an investment or other decision. This release is prepared solely for information purposes and should not be viewed as a current or past recommendation or a solicitation of an offer to buy or sell any securities or to adopt any investment strategy. This release contains projections or other forward-looking statements, which are based on beliefs, assumptions and expectations that may change as a result of many possible events or factors. If a change occurs, actual results may vary materially from those expressed in the forward-looking statements. All forward-looking statements speak only as of the date such statements are made, and neither KKR nor Mr. Brown nor Ms. Lim assumes any duty to update such statements except as required by law.