The Bank for International Settlements examined how concentration and limited substitutability create supply chain vulnerabilities, emphasizing that resilience measures should distinguish persistent dependencies from temporary disruptions. Rare earths illustrate persistent dependence on concentrated processing capacity, which alternative capacity and technologies can help address. By contrast, the recovery of hard disk drive production after Thailand’s 2011 floods shows how flexibility and effective crisis management can accelerate recovery from temporary disruptions. Inventories, supplier redundancy and geographical flexibility can cushion these interruptions.
Bank for International Settlements assesses distinct responses to persistent and temporary supply chain chokepoints
The Bank for International Settlements used rare earths and hard disk drives to illustrate why supply chain resilience measures should match the underlying vulnerability. Alternative capacity and technologies can address persistent dependencies, while inventories, supplier redundancy and geographical flexibility can cushion temporary disruptions.