Manufacturing Leaders' Practical Guide: Overcoming the Obstacles of 2025 in the Council's Perspective
Greg Pitstick, Managing Director of Supply Chain at Huron Consulting, navigates the complex world of global trade policies that leave manufacturing businesses at risk of significant disruption. Despite efforts to diversify supply chains, the industry remains tightly linked across the globe.
Unpredictable events like disruptions due to Baltimore bridge collapses, Microsoft outages, port shutdowns due to labor strikes, and unexpected tariff hikes pose an ongoing challenge for businesses. This guide provides practical strategies to help businesses handle these shocks and develop a robust plan for managing tariff changes and other supply chain impacts.
Strategies for Supply Chain Preparation
1. A Comprehensive Impact Assessment
Assess risks by examining the impact of tariffs on your products, raw materials, and components. Identify potential capacity constraints and examine market dependencies for foreign suppliers or markets. Evaluate the overall cost structure to determine the potential impact of tariffs on profit margins and production costs.
2. Strengthen Supply Chain Capabilities
Upgrade stock and operations planning processes with modern forecasting and planning tools. Diversify sourcing strategies by fostering relationships with multiple suppliers and focusing on building a multi-dimensional supply chain. Implement automatic purchasing systems and improve inventory management through enterprise-wide inventory visibility. Foster collaboration with suppliers by sharing forecasts and capacity updates, allowing your organization to respond quickly to tariff shifts.
3. Develop and Execute a Comprehensive Action Plan
Launch short-term planning and execution strategies, such as scenario planning, role-assignment, and sprint-based improvements to mitigate risks. Avoid overbuying materials to stay ahead of tariffs and instead focus on pre-buying with well-thought-out criteria.
4. Invest in Long-term Resilience
Integrate sourcing with other functions, such as product development, planning, quality, manufacturing, and select suppliers to build long-term supply chain resilience. Invest in developing regional supplier partnerships, focusing on partnership evaluation, training, and gradual scaling towards a dual-sourcing strategy.
5. Monitor and Communicate Proactively
Identify key individuals responsible for monitoring tariff developments and keep your organization informed about potential impacts, contingency plans, and changes in global demand. Communicate with external partners, including suppliers and customers, to build trust and ensure smoother collaboration during challenging times.
By taking these proactive steps, manufacturing leaders can successfully navigate evolving trade policies, maintain profitability, and maintain operational efficiency in the face of unpredictable global events.
References:[1] "Integrating Multi-level Risk Assessment and Supply Risk Rating in the Automotive Industry," John Anton, Mohamed Mohammad, Ryan Dwyer, and Joseph Johnson[2] "Diversification of Supply Chain for Competitive Advantage," Arindam Roy[3] "Technology Trends Transforming Adaptive Supply Chain Management," Kunal Gaur[4] "Supply Chain Resilience through Proactive Time-Based Management," Dan Bosch, Daniel Lacic, and Peter Welch[5] "Lean Supply Chain Management," Robert L. Stanton and Shunji Nakajima
- Given the rise of tariffs and their impact on profit margins, Gregory Pitstick suggests manufacturers conduct a comprehensive impact assessment to evaluate these costs.
- To fortify supply chains against unforeseen tariff hikes and outages, Pitstick recommends strengthening supply chain capabilities through the use of modern forecasting tools and the cultivation of relationships with multiple suppliers.
- In the long term, Pitstick advocates for manufacturing leaders to invest in resilient supply chains, such as building regional supplier partnerships and integrating sourcing with other functions, to mitigate risks and ensure operational efficiency in the face of tariff changes and global events.
