Supply Chain Management in an Uncertain Economy
The current global economy is on fairly shaky ground. Between trade issues with China and a decade-long bull market that will inevitably come to an end, it’s no wonder. Most economists agree that a market downturn, both nationally and globally, is on the horizon in the next few years. Should supply chain management strategies reflect the impending recession? Of course!
Don’t Wait to Prepare for Recession
One of the keys to weathering the storm of economic uncertainty is to prepare. That must start before things take an irreversible negative turn. Supplies or prices may be compromised in the event of a recession, and not preparing in advance may mean the inability to provide a consistent supply.
Risk is always something you must mitigate in supply chain management, but the ideal risk management strategy may require a more conservative path during economic uncertainty than when the economy will likely be booming for the foreseeable future.
In order to reduce risk, you must be able to see risk coming. To do that, you must consider all the potential factors that may affect your supply chain: geopolitical conflicts, national politics, natural disasters, and the like.
It’s also important to consider that supply chains are a complicated web. While you may not be dealing with companies in a country affected by a specific destabilizing event, your suppliers or your suppliers’ suppliers may be.
Your mother maybe told you not to put all your eggs in one basket, and this old adage applies to supply chain management, as well. A diverse network of suppliers mean that it’s unlikely all of your suppliers will be affected by a specific supply chain-altering event.
Bring Your Supply Chain Closer to Home
Reshoring and nearshoring are growing in popularity as a way to help mitigate risk and improve consistency with supply chains in the US over the past several years as the worldwide political climate has shifted just to the right of globalization being the unequivocal cheapest and most effective means of supply chain management.
The use of tariffs to control trade alone make re-shoring and near-shoring seem far more appealing as the risks associated with overseas supply chains have grown.