Key takeaways
- Concentration and limited substitutability can turn the efficiency gains from global supply chains into vulnerabilities. However, the consequences of chokepoints depend on their underlying nature.
- The rare earths industry illustrates a persistent dependence on concentrated processing capacity. By contrast, flexibility and effective crisis management can speed up recovery from a temporary disruption, as seen in hard disk drive production after the 2011 Thailand floods.
- Resilience measures should match the vulnerability: alternative capacity and technologies can address persistent dependencies, while inventories, supplier redundancy and geographical flexibility can cushion temporary disruptions.
The views expressed in this publication are those of the authors and do not necessarily reflect the views of the BIS or its member central banks.
