The “longevity economy:” Seniors need innovative supply chains

From the September-October 2023 edition of Supply Chain Management Review.

September-October 2023

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The MIT Supply Chain 2020 project that I managed the launch of in 2004 focused on understanding possible futures for six macro factors:

1. changing demographics;
2. rising oil prices;
3. the rise of Eastern economies;
4. formation of trading blocks;
5. green/environmental laws;
6. technology.

Early in the project, I met Dr. Joseph F. Coughlin (the founder and director of MIT’s Age Lab) to discuss his research into what he termed “disruptive demographics.”

He is also the author of a book, The Longevity Economy, that has the subtitle: “Unlocking the world’s fastest-growing most misunderstood market.” Dr. Coughlin has spent his career helping organizations tap into this emerging market that is defined by AARP as follows:

“As people live longer and healthier lives, they are contributing to communities and fueling economic growth well past the traditional retirement age. The contributions of people 50-plus benefit society and Americans of all ages, as growing numbers of older adults work, pay taxes, support the job market, give time and money to charitable causes, and provide caregiving support to family and friends.”

As a result, my sixth Insights column was titled, “Disruptive demographics” (September 2007). I discussed the fact that the world was getting older. This was due to the fact that fast-growing, less-developed countries were getting younger, and slower-growing more-developed countries older. Thus, in the future, older and richer more-developed countries—such as in North America and Europe—would have the lion’s share of the buying power for goods and services. Meanwhile the less-developed ones would have the major share of the younger labor needed to work to supply them. Thus, an older more affluent population than ever before would significantly drive the demand-side of future supply chains. This begged at least two research questions addressed by the project: What would this future demand look like, and how should supply chains change to meet the demand?

I included an update on this topic in the May/June 2021 Insights titled, “SC2020 Project update: Uncertainties.” I reiterated that older, affluent populations will consume more goods and services, while younger people will possess the physical prowess and stamina to do the manual work needed to create them. Thus, in the future, there will be geographical dislocations among consumers purchasing products and laborers needed to supply them. Having longer-living, healthier, wealthier, and highly educated seniors, developed countries will have a substantial portion of their economies generated by non-working elderly. These “longevity economies” will demand myriad innovative new products made specifically for seniors.

From a supply perspective, labor to produce these products will need to be outsourced to developing countries, involve significant immigration from the developing into the developed countries, and replace labor with automation. Indeed, these past two decades have seen substantial outsourcing and immigration. A large swatch of the outsourcing has been to developing countries in Asia. We’ve seen large migrations into the European Union (EU)/UK from the Middle East and Northern Africa; and into the United States from its southern border. While demographic impacts are glacial in nature, the COVID-19 pandemic, various wars, droughts, and climate change have exacerbated these trends.

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