Rethinking your Supply Chain Strategy
As global trade dynamics shift with new constraints such as the impending new tariffs and logistics constraints, supply chains and operational costs are sure to be unsettled significantly. It’s crucial for businesses to proactively prepare for these changes to maintain resilience and competitiveness. Here’s a simplified roadmap to help rethink your SC strategy:
1. Identify all the inputs & origination points for your products. Work backwards through all tiers of suppliers, identifying critical components and mapping out alternatives for short and long-term.
2. Evaluate if and how to regionalize your supply chain closer to the demand.
3. Evaluate ways to reduce the scale required for efficient production. This is particularly important for enacting a regionalization strategy. It will also strengthen the resilience and agility of your supply chain, mitigating risk more effectively.
4. Plan to avoid geopolitical instability – Assess and find relatively more stable regions for your labor-intensive products to mitigate risks associated with geopolitical instability.
5. Conduct a comprehensive cost-benefit analysis of reshoring production in light of new/possible tariffs. While reshoring is not going to be an easy pill to swallow, it may make sense in the long term when coupled with regionalization.
6. Logistics and shipping are not commodities anymore. Build in contingencies to account for multiple logistics and shipping options as you are redesigning the supply chain network. Also take into consideration your inventory levels to account for disruptions.
A critical reminder for every step along the strategic redesign process: Supply chains serve to materialize the company’s unique value proposition – ensure that the revised SC strategy is aligned to continue to deliver and even better – strengthen your core competency.
By addressing these items, you can develop a robust strategy to navigate the impending global trade disruptions and maintain your organization’s competitive edge.
Reach out if you need assistance along the way.
ABOUT OUR AUTHOR
Meltem Korkmazel
Co-Founder and COO