Cross-border outsourced manufacturing has changed forever.
Irrevocable (but far from settled-down…) changes in the world trade system have replaced the trade world our processes and policies were accustomed to. Systemic uncertainty defines the foreseeable future, and there’s no longer any normal to go back to.
The world we now live in is a world of partial, shifting, collapsing, unreliable, or no trade agreements, not the free-access world we based our supply chains on.
Supply chain survival today means continuous adaption and the ability to change very quickly.
How will you — as a manufacturer or a vendor — be able to continuously adapt and survive?
How can the supply chains you rely on become resilient enough to ensure you can keep making and selling, and stay in business?
What are the “new normal” risks affecting your supply chains, logistics, and ability to sell?
Here are some of the ones wreaking havoc:
- Supply-chain destroying trade wars without a clear exit-ramp: US vs China, US vs Europe, Japan vs. Korea
- Unpredictable & retaliatory tariffs & counter-escalations
- World Trade Organization adjudication of disputes is immobilized indefinitely by lack of the Appellate Body’s quorum
- “New trade deals” are of little help
- Deals like EU+Mercosur are brittle and on-again off-again. Deals like CETA, remain not fully implemented long after their “conclusion”
- Multiple parliaments must approve deals (e.g. Wallonia vs the Canada-EU CETA)
Furthermore, new types of issues that didn’t previously enter into trade negotiations are challenges to new agreements, including:
- Data protection and privacy
- De-carbonization & environmental requirements
- New security restrictions due to geopolitical conflicts
Even with new trade deals, non-tariff barriers and Rules of Origin (ROOs) present big challenges to supply chains as they change:
- “Temporary” tariffs hanging on indefinitely even after the supposed conclusion of trade agreements
- Brexit isn’t “done” since the trade outcome is still completely unpredictable — and the ripple effects of Brexit extend far beyond just the UK and EU.
- Markets and supply chains lost to trade conflicts are often lost for good, never to be regained.
Are there any winners?
There are some “winners” (for now) from the trade wars: Việt Nam, Malaysia, and, in some areas, Taiwan.
For them, the challenge is not how to recover lost business in a rapidly changing world, but how to consolidate gains and hold on to their new customers as the trade system continues to be torn apart.
How at-risk is my supply chain?
If you’re in one of the following businesses, very:
- Consumer electronics
- Medical equipment
- Telecommunications equipment
- Semiconductors and semiconductor-manufacturing equipment
- PCBs and PCB-making equipment
- Automotive, motorcycles, bicycles, auto parts
- Computer and data storage equipment
- Solar panels and other greentech
- Agricultural products and food
- Home appliances
- Clothing, shoes, luggage, and textiles
What’s the solution?
The solution is a new kind of thinking about how you can keep making, selling, and stay in business — the concept of a dynamic and adaptive supply web instead of a supply chain.
Like the Internet, the supply web is always growing and has the ability to “route around the damage”.
How do I achieve this?
You need a dynamic platform that constantly accumulates knowledge about vendors, suppliers, performance history, delivery, and quality into a many-to-many persistent model of the world manufacturing system.
You need a platform that lets you, as a manufacturer, find new vendors at the drop of a hat to respond to changing trade conditions. Or lets you, as a vendor, quickly find new customers for your capabilities when geopolitics destroys your old customer relationships.
You need Omnae.
Future blog posts in this series will focus on specific trade risks and solutions for the businesses and countries touched on above.
Vice President of Sales