Fallout from the Present Political Climate
The political situation in the US iscurrentlyd be best tackled by putting the required changes in place today. When the old order changes giving place to the new one, some adjustments are always necessary. It is for this reason that today, business analysts are busy debating which way the wind will blow and how global trade relations might shift.
Today the kind of supply chain management solution`s we are in search of, are for a different set of problems. The major problem right now seems to be to find quick adaptations in preparing for future disruptions in global supply chain issues. Sudden shifts in trade among nations have ranged in the past in results between minor inconveniences to those caused by war. Operations have similarly ranged between going slow to a total collapse of the supply chain altogether.
Things are likely to be different now with the change in the executive leader in White House. Trade relations between the US and another country cannot be taken for granted any longer. There might be changes in the foreign policies and the outsourcing patterns. Due to a sudden imposition of either tariffs or even sanctions, a company may find that raw materials are unavailable bringing the supply chain to a grinding halt. This could set off higher import prices and shortage of availability of product and therefore disruption of service to the consumers in the US.
The day may never come but it is important for the planners of logistics in the US that they assume the worst will happen and be ready for it when it does happen. The question is how to prepare for shortages or total collapse of the supply chain. The answer is to prepare the supply chain services and solutionsfor having regional backups but remaining global for the primary suppliers.
Plans A and B
Both plans are formulated in order that the companies in the US remain both strong and successful. However, it is also true that the most important among both the global as well as the regional supplier nations are today bordering on the edge of a diplomatic breakdown that will lead to repercussions in trade. This kind of problem can be solved using the age-old solution of seeking global multi-sourcing. Plan A is to go global when you are seeking out a preferred source and Plan B is to go for regional suppliers when you need a few backup suppliers.
This is among the best supply chain management solutions since it’s only the global market that will give you the cost advantage even considering the cost of global shipping which will be easily offset with the help of competitive pricing especially when ordering in bulk.
On the other hand, regional sources will probably work out more expensive but these are always very helpful as backup. One can relax even when the global supply fails to deliver since the regional supplier’s delivery will be that much quicker even though the cost may be higher. So far due to the peaceful expansion of global economy, international disruptions have been very rare and then also for only a temporary period. Plan B has therefore not been necessary so far.
In the case of the apparel industry if Plan A is Asia, Plan B could well be Turkey or North Africa for the European garment manufacturers and Central America for the US. The writing is on the wall. The US may have no backup in case of supply chain problems with both Asia and Mexico.