At Cerasis, the topic of Amazon and its impact on logistics and manufacturing comes up often. Amazon is taking a major share from every company involved in the global supply chain. Dan Gilmore, Editor of Supply Chain Digest, may have described it best as “the Relentless Amazon Assault on Everything.”
So, we must re-evaluate how we view Amazon’s impact on supply chains. The company does have many advantages over small to medium shippers, much like your company, but there is a light at the end of the tunnel. Your organization must take note of Amazon is doing and use that information to create a more efficient, productive and compliant supply chain. Meanwhile, the incoming Trump administration has promised big changes, and although some fear changes, the supply chain is not one to back down.
This two-part series will be broken down into the two key driving forces of change in the supply chain, the incoming administration, and Amazon’s new services. So, let’s think about what the new administration means for supply chain entities before we get into how supply chain entities can truly compete with Amazon throughout 2017.
5 Things Supply Chain Entities Need to Focus on In Trump’s Administration
1. Ethics and Visibility Are “Top Priorities.”
President Trump is a businessman. He made great promises to reduce regulations, but he has also made significant promises to the middle class. Regardless of how you voted, his promise to the middle class is more likely to stand over the next four years because its success or failure will determine his chances for re-electability in 2020. Thus, your organization needs to look at the incoming administration with intense resolve to maintain compliance and improve visibility.
The incoming president is also not afraid of using social media to change the direction of public perception. In other words, if your company is not being honest and maintaining visibility, you could be in the crosshairs of the next Tweet. Obviously, this is the driving concern in the global economy, explains Jonathan Webb of Forbes magazine. In other words, the time to invest into better accountability and visibility measures, such as Software-as-a-Service (SaaS) platforms that enhance visibility, has arrived.
2. Companies Will Be Tested by the New Administration.
This does not mean that the incoming administration is going to send out a scorecard, but your company will be subject to any changes in international policy regarding trade. However, companies that have already integrated supply chain operations with third-party tools may be able to avoid failing the tests.
Integrated companies outpace nonintegrated companies by more than 30 percent, reports IRMS 360. These organizations have backup operations in place to back up failed backups.
Essentially, the more options a company has today will allow greater flexibility in the face of challenge or evaluation by the new administration. By the end of the year, trade with Mexico and China will likely decline as well.
3. Procurement Will Need to Adapt.
The “Made in America” slogan has gathered attention around the country, but not everything that comes from China or Mexico is a finished product. Supplies and raw materials originate in these countries too. Meanwhile, Europe is trying to negotiate the complexities of Brexit, leaving doors to some resources unattended. Unfortunately, this confluence of events means that simply getting the raw materials needed for your products could become much more challenging throughout 2017. In fact, up to 33 percent of supply chain entities expect a disruption in supplier availability in 2017, reports Material Handling and Logistics.
Procurement must evolve this year. Even in a worst-case scenario, a 35-percent tariff on imports, your company can still survive if you can negotiate the best rates for the raw materials available. Thus, having strong alternative suppliers in place will be essential to your operation. Furthermore, collaboration between differing supply chain entities will help to create more diverse procurement opportunities, explains Made in USA News. Specifically, collaboration must focus on the following procurement processes:
- Suppliers must derive contracts and opportunities from manufacturer success.
- Shared strategic objectives must be defined.
- Manufacturers must advocate for suppliers.
- Suppliers should have authority to refuse or negotiate certain terms of services.
- Both manufacturers and suppliers should promote an inclusive approach to procurement.
4. Business Self-Interest Will Drive Investments.
There is no way to tell exactly what the state of imports and exports will look like at the end of 2017. The new administration’s current actions suggest all investments in the supply chain will be the result of business self-interest. In other words, businesses are looking to invest in their own companies to avoid possible persecution or alienation. Moreover, self-interest investments are not as risky as investing in other aspects of the supply chain while regulatory oversight is being reviewed, reconsidered and changed by the new administration.
More importantly, according to the ASQ 2017 Manufacturing Outlook Survey, reports Material Handling and Logistics, up to 74 percent of companies expect average salaries of workers to increase. Meanwhile, 46 percent of companies expect to expand existing workforces. Consequently, these companies are growing even during uncertainty, so your company needs to think about expanding and optimizing operations as well.
5. Fleet Investment Will Dominate Supply Chain Trends in 2017.
Of the promises made by the new president, investment in infrastructure appears to be one of the most likely to come true. The country’s deteriorating infrastructure gained media exposure throughout the election cycle. Thus, the country’s roadways may be on President Trump’s top list for immediate attention.
Better roads mean many things to supply chain entities. Primarily, investment into new or upgraded fleets can finally be achieved without the worry of a crumbling infrastructure, explains Capacity LLC. In other words, better roads will reduce accidents and wear and tear on new vehicles. New fleet investments, such as increased research and application of self-driving trucks, will help to reduce the driver shortage and stimulate the supply chain.
What Does It Mean?
The new administration is quite simply causing some turmoil, but that does not mean that supply chain entities will face doom and gloom over the next few years. Instead, the new administration is giving supply chain entities the perfect reasons to expand their operations and reduce risk by holding them more accountable for their actions. Essentially, the new administration is spurring investment out of uncertainty, and these investments will continue to have positive returns regardless of what actions are taken.