Tariffs and trade wars: Not for the faint of heart
The most recent headlines have been around the United States administration threatening tariffs on their southern neighbor over the continued “fear” of mass illegal immigration. Regardless of which side of the political fence you sit, the reality for our supply chains is these actions, or just threat of actions, have a deep impact. Mexican food chain, Chipotle, has already warned that their supply chain could be negatively impacted by any tariffs. The restaurant chain uses 450,000 avocados daily, the majority of which come from Mexico. Recently their share prices have felt the pinch for the tariff sabre rattling coming from 1600 Pennsylvania Avenue – shedding 3% of its value. So, what does this mean for our supply chains? And what can we really do about it?
Treat tariffs as you would any disruption
Supply chain professionals are well versed when it comes to handling disruption. Whether it’s a container ship cut in half in the ocean, a warehouse fire, weather disruptions, port strikes, and the list goes on, these are regular occurrences in the life of a supply chain professional. This is no different with a trade war. When a government threats a tariff on another, you need to understand what the implications are on your supply chain. So, what can you do with this type of disruption?
Lean on your supply chain network to understand what the implications are
The network on which your supply chain sits is what you can turn to when navigating these waters. Our supply chains are truly intertwined networks; the problem is sometimes we aren’t sure how an action at one node of the supply chain will impact another. Whether dealing with a tariff or any other supply chain disruption, one needs to have a deep understanding on what is happening across the extended supply chain. What is your exposure within different nations? How are you sourcing your products? Where is your manufacturing based? These are all issues that supply chain professionals need to know, so that they are better prepared when disruptions such as tariffs occur. What should supply chain professionals plan for moving forward?
Leverage existing tools to provide a real-time understanding of what’s happening
Research from Gartner highlights the importance of multi enterprise supply chain business networks, how these networks allow businesses to better understand their underlying supply chain network. They have a better view and understanding of all the moving parts that go into their businesses. Supply chain leaders need to lean on these organizations when it comes to handling issues such as tariffs. How quickly can they identify the knock-on effect of tariff? Can they clearly understand what their exposure is with regards to the sourcing, manufacturing, and movement of their goods? Leaning on your multi-enterprise network allows you to quickly identify the impact of these disruptions. But also gives you an understanding of what is possible when it comes to options to deal with these disruptions quickly and efficiently.
Disruptions are all around, whether they come in the form of whimsical trade wars or an act of God. Supply chain professionals tend to have the battle scars associated with dealing with these issues. When it comes to tariffs or temperamental actions from our leaders, our supply chains need to be prepared to react and deal with them. Change and disruptions are the norm, lean on your supply chain network to better deal with this new norm.
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