On December 3, the Wall Street Journal’s “The 10-Point” email daily news summary asked its readers: “What are your thoughts on the trade truce reached by the U.S. and China over the weekend?” (Sorry, but you will need a subscription to read that link)
With supply chain managers trying to mitigate the cost of recently enacted tariff increases and second guessing upcoming threats, I felt it was important to summarize my view of the situation. My reply (below) was published today…
Colin Taylor from New Jersey said: “While a truce provides a little short-term relief, the administration’s volatile trade strategy will continue to cause disruption and burdens for U.S. companies. While Trump and Xi position and jockey for a more equitable win-win, manufacturers and retailers with global supply chains are seeking alternative sources of supply, which will ultimately shift the administration’s focus and tariff increases to the next low-cost country. There is, however, a silver lining to this slow-moving cloud beyond the ‘return to U.S.’ goal seen by Trump. U.S. companies are working out how to make their global supply chains more agile to leverage the lower cost of overseas labor while protecting against geopolitical turmoil. More than ever, agility is key for competitive performance.”
Of course, in such a high-level view it is easy to state that agility is key. Executing and transforming global supply chains to higher levels of agility is not so easy. It takes attention to detail and a cross-functional, innovative approach to optimize processes and leverage technology solutions for more agility. Additionally, do not look solely at the supply chain or global sourcing function for an agile supply chain strategy. In retail, for example, the merchandising function sets price points and some other constraints for sourcing strategies, compliance oversees regulatory issues affecting imports, logistics manages customs entries, global sourcing manages suppliers, a collaborative effort sets the harmonized tariff code, and so on. In manufacturing - research, product design, development, industrial engineering, production, quality and marketing all influence supply chain agility by the choices they make and levels of risk they accept. In other words, think holistically to achieve agility.
Product lifecycle management and global trade management systems are tools to help enable greater agility. Exploring current and available footprints of such systems is a valuable part (but only a part) of your global supply chain agility makeover.
Contact Cleaca Consulting LLC to help you think through your supply chain agility improvements.