February 25, 2020

Opinion | Covid-19, O-rings and the worry over supply chain disruptions

In this article for Mint, Niranjan Rajadhyaksha discusses supply chain disruptions due to COVID-19 and the O-ring theory. Excerpts: 


"Even a small crack in the supply chain can throw entire industries into turmoil. Think for a moment about the O-ring problem. The American space shuttle Challenger exploded into a ball of fire soon after taking off in January 1986, killing all seven crew members. The commission set up by the US government to examine what went wrong showed that the sophisticated space shuttle was brought down because of one small component—the O-ring, a gasket that seals two surfaces. Physicist Richard Feynman famously showed during a televised hearing how the O-rings that went into the space shuttle malfunctioned at low temperatures."


On coronavirus and global supply chains: 


"And the coronavirus has hit the very centre of contemporary global supply chains, rather than some extremity. The supply shock also poses a policy challenge. Expansionary fiscal policy will have little impact when the problem emanates from factory shutdowns in China."


Read the full article here.

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