Managing the Shifting Dynamics of Supply Chains
On this week's new episode of the Thomas Industry Update Podcast, Tony Uphoff sits down with Robert Handfield, a prolific author, Distinguished Professor of Supply Chain Management at North Carolina State’s Poole College of Management, and the founder and executive director of the Supply Chain Resource Cooperative (SCRC).
The SCRC is an industry-university partnership dedicated to advancing supply chain management by connecting Fortune 500 businesses with future supply chain managers for a uniquely hands-on learning experience.
How Will the Tariffs Impact the Industrial Supply Chain?
In light of the shifting tariffs between the U.S. and China, Uphoff and Handfield discussed the short and long-term impacts Handfield sees the negotiations having on the industrial supply chain.
“I don't think that these tariffs are a flash in the pan," he said. "They are going to be here for a long time; they're not going to go away."
When considering the impacts from a long-term standpoint, he continued, "then the Trump tariffs are really just sort of the tip of the iceberg. I believe what we're going to see over the long term is a period of increased trade wars between different regions [and] trade blocs starting to emerge. Maybe the U.S., Canada, and Mexico will start to emerge as a trading bloc. Maybe Europe and Eastern Europe and possibly Britain, [and...] also Asia, China, and other places."
Industrial businesses are handling the current and future tariff impacts in a variety of ways - some with more success than others. "There are those that are treading water and hoping that it goes away, which I don't think is a very good strategy," said Handfield. "We're seeing others that are sort of taking short-term tactical actions. One company went ahead and developed a free-trade zone, so they're importing steel, and then once it's in the free-trade zone, they're petitioning the U.S. Department of Commerce to try to get an exception so they can use it.
"But there are others that are actually in the process of relocating their supply base," he continued. "A few are relocating to places like Vietnam and Indonesia; but what they’re finding there is those places are full and the logistics are difficult in those regions as well.
Other industrial businesses planning ahead more effectively for potential impacts "are saying, 'maybe we need to really rethink this," said Handfield. "'Maybe we need to be looking at the total cost of ownership of bringing suppliers closer to us in Mexico or even back to the United States, and at what are we paying in terms of transportation and working capital for the long lead times from Asia. Maybe there are other benefits that we're not aware of by having them more local.'"
What Role Does Manufacturing Play in the U.S. Economy?
Despite the uncertain future of the global industrial supply chain, Handfield is certain the future of American manufacturing will remain strong.
“Manufacturing is core to the economy; it's where value is created. Manufacturing is the core of what the U.S. was built upon, and it's the core of what we do," he explained. "I think we're also seeing a shift [where] people are saying, ‘Well, manufacturing is all done overseas now.’ It's not; that's a misconception."
As for the types of future projects manufacturing businesses will see in the next few years, Handfield believes U.S. manufacturers will see an uptick in "low-volume, customized kinds of products and materials. I think that's something we're likely to see more in the future. In fact, I know we will."
How to Manage Shifting Supply Chain Dynamics
Learn more about Handfield's perspectives on industrial data analysis, effective collaboration among suppliers and partners, and finding and retaining key supply chain managers in episode 5 of the Thomas Industry Update Podcast.
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