Giving Compass' Take:

• In the wake of the coronavirus, Equitable Growth urges U.S. policymakers to focus on salvaging American supply chains with lower-risk, personnel-oriented designs.

• Why is it so difficult to encourage economically minded supply chains to shift their focus? How can you support the move to more morally sound, personnel-oriented supply chains?

• Here's another way in which supply chains can take the high road towards a more sustainable future.

U.S. economic policymakers need to heed the fast-accumulating warning signs as the global coronavirus outbreak exposes weaknesses in supply chains crucial to American economic well-being. As these weaknesses come to light, U.S. policymakers and supply chain managers should take the opportunity to reduce the fragility of the global supply chains that provide the products and services that Americans rely on every day for their health, their jobs, and their overall economic prosperity.

There’s another way to design supply chains so that all the players—shareholders, workers, and consumers worldwide—are less exposed to the risks and social costs inherent in today’s global supply chains. Specifically, in the United States, private- and public-sector leaders could build “high-road supply chains,” whose greater collaboration between management and workers along the length of the supply chain would promote sharing of skills and ideas, innovative processes, and, ultimately, better products that can deliver higher profits to firms and higher wages to workers.

One small step to encourage decision-makers to design high-road versus low-road supply chains is to encourage a new approach of global sourcing decision-making: Total Value Contribution, a term the three authors of this column propose in a new working paper now under revision for peer-review publication. Our TVC method encourages managers to first consider how decisions affect value drivers, before considering costs.

The current coronavirus outbreak is a clear reason for policymakers to act. High-road supply chains built from global sourcing decisions employing the Total Value Contribution approach—with nudges from policymakers that adjust the measurable costs and benefits of foreign production in favor of domestic—would smooth out product flows in global transportation so that future pandemics would put less risk on U.S. firms, workers, and consumers.

Read the full article about salvaging American supply chains from coronavirus wreckage by Susan Helper, John Gray, and Beverly Osborn at Equitable Growth.