Supply Chains at Risk: The High Cost of Uncertainty - Survey
Published on 14 August 2019
Never in the history of American enterprise has the lifeline of supply been so fragile, or seemingly so. This may not be a true statement, but for a multi-generational workforce spanning Boomers and Millennials, nothing in memory can compare to the uncertainty now faced across quite literally every industry from car parts to semi-conductors.
When we think back to our youths, and this is a ‘Xer’ talking, we may recall the experience of going down to the corner electronics store, laying down some cash and walking proudly home with a brand-new Zenith. We may forget, however, all those sparks and strange colored smoke that would emerge or the tell-tale black hole like a wisp of a fried tube. Certainly, technology has come a long way; But, one could argue, the pace of its advance is as many thanks to innovation as it is to the supply chains, so meticulously laid, that has fed and nourished it for the last half-century.
Though today we take for granted that stuff just works, that has come as much of the innovations themselves as from the quality of the work of the manufacturers contracted to supply the parts. Like frogs in a slow boiling pot of water, we haven’t noticed the massive change in the stuff that surrounds us, but now, fast forward to 2019, we face at very least mass uncertainty, and at worst, a bolt to the very heart of our consumerist society. What impacts the current period will have long term is anyone’s guess, but are better left to the pros who closely watch and quickly recognize these patterns. Dr. Mary Lovely, Economics Professor at Syracuse University suggested on NPR recently that there’s a painful wakeup call coming for brands and their customers.
“It's not only just the production process itself,” says Dr. Lovely, “there's a whole host of other things. When we look at something like an iPhone, you're seeing a process where at each point along the way, Apple has a role to play with a very specific technology that's done in a very specific way to very high standards. And moving that kind of supply chain from the people you know and trust and have had relationships with for a long time is going to be costly and much more difficult.”
Continuing the analogy, this kind of mass disruption, will be more like being flung into a pot already boiling. We can expect it on a massive scale simply due to the scale of that being disrupted, namely a supply chain with China worth some $540 billion annually. But to the earlier issue, there’s more than just production costs on the line.
Anyone in today’s direct-to-consumer, Amazonified customer experience creation will understand the high cost and potential brand damage that could come from establishing new manufacturing partnerships in countries like India.
“You know, we kind of take for granted if we buy a television set that's made in Asia that it's going to work.” Dr. Lovely says. “This wasn't always the case. Products have gotten to be very good. And as we shift supply chains, you know, we'll see those types of costs going up where you get a piece of equipment, and it's what we might call a lemon, and you take it back to the store. That's going to raise the costs for the companies that are involved in that business.”
How has the current trade war affected your strategy going forward? This is particularly interesting for any of our readers and customers that may maintain supply lines to China. Are you currently looking for an alternative, and if so, what countries look the most promising, and more poignantly most reliable?
If you have a minute, we would love to hear your voices on the subject by taking our quick “Supply Chains at Risk” survey.
As always, if you are looking to learn more about de-risking you supply chain with Agile, Change-ready solutions like the Generix Supply Chain Hub, we’d love to show you how its productivity, visibility, and efficiency gains can be put into effect for you and your business.