An article in The Wall Street Journal this week gives details of companies such as Crocs shoes, Yeti beer coolers, Roomba vacuums and GoPro cameras moving production of goods to other countries to avoid U.S. tariffs of as much as 25% on some $250 billion of imports from China. Apple is also reported to be considering moving final assembly of some devices out of China to avoid US tariffs.
These companies represent a small percentage of similarly determined retailers and manufacturers taking action to improve the bottom line and maintain competitive pricing. Changes in trade policies and business environments are not new... just becoming increasingly hard to predict. Who knows if/when similar tariffs may be levied on imports from other countries in Asia or Europe?
Consequently, assessing costs, evaluating sourcing options and re-engineering supply chains needs to become a continual, proactive process that prepares manufacturers for a more agile response to future (as yet unknown) change. The relatively small investment in supply chain strategy resources to perform such continual analyses will pay for itself over and over when needs dictate change.
Avoiding price increases and keeping product landed costs down are essential for keeping customers and growing businesses. If analysis shows that moving production out of China is the best option, then securing capacity in smaller non-China manufacturing plants ahead of the competition is imperative. Advanced planning is the only way to come out on top.
Building continuous assessment and improvement into suply chain operations and Identifying alternative partners for manufacturing and logistics in advance is key, but only part of the answer. Digital automation also plays a role.
Digitizing, streamlining and automating parts of global trade enablement and real-time visibility will not only improve speed of day-to-day supply chain operations, but also make importers more nimble. This is vital when adapting supply chains to newly imposed tariffs or other geopolitical factors.
Technology providers in this space are gaining traction. E2open’s acquisition of Amber Road shows that global trade enablement systems are gaining momentum, while Arviem AG is an example of IoT combining with services to provide real-time tracking and monitoring for imports in a price-per-move model.
These and other tools that improve speed and visibility move the dial when it comes to supply chain agility. The only thing we all know for sure, is that change WILL continue to happen.
Those choosing procrastination over action, will pay the price.