TAKEAWAYS
PLANNING GETS PRIORITY Given the extreme supply chain disruptions companies have faced in the past few years, it’s no surprise that crisis mitigation and prepping for disruptions have become increasingly important. New data from intelligent planning technology provider Board International confirms this: Senior supply chain professionals are placing a renewed focus on scenario planning in response to a volatile business landscape, according to the new Board 2024 Global Planning Survey. Overall, 73% of decision-makers are taking planning more seriously , with the Ukraine War, cost-of-living crisis, and ongoing supply chain disruptions acting as major catalysts, the survey shows. The key business threats decision makers are currently planning for: • Cyberattacks: 36% • Labor shortages: 35% • Fluctuating oil prices: 34% • Blockage of key supply chain channels: 27% Despite an emphasis on planning to help navigate ongoing disruptions, many supply chain professionals continue to face challenges planning effectively. The survey reveals signs of planning fatigue within many companies, highlighting a 14% decrease in how seriously companies are taking planning compared to last year. In addition: • 77% of supply chain decision makers admit their organization makes planning decisions based on assumptions. • 29% of respondents report that ineffective planning has impacted profitability, productivity, and the ability to drive innovations and new products or services. • 72% of supply chain professionals usually disregard the most extreme scenarios when planning, suggesting most companies are leaving themselves open to risk should the unexpected happen.
SOUNDING OFF ON TARIFF INCREASES
In May 2024, the White House announced a flurry of tariff increases impacting imports of everything from electric vehicles (tariffs are raised from the current 25% to 100%) to lithium-ion EV batteries (jumping from 7.5% to 25%), steel and aluminum products (increasing from 7.5% to 25%), and semiconductors (raising from 25% to 50%), among others. What’s the impact? Here’s what experts are saying: The White House tariff hikes on a number of China-made imports into the U.S. is the latest sign that the U.S. is ‘walking the walk’ when it comes to onshoring supply chains and encouraging domestic industry. Something that needs to be considered is the potential impact on net zero. China-made EVs, clean energy technologies, computer chips, and minerals were bringing the cost of decarbonizing the U.S. economy down, and a balance will need to be struck between bolstering domestic industries and continuing to progress to net-zero goals.” —Simon Geale, Executive Vice President of Procurement, Proxima New tariffs on Chinese goods like lithium batteries, critical minerals, and semiconductors will significantly impact U.S. companies and manufacturers. These tariffs will increase the cost of essential components, squeezing profit margins and raising production costs. Companies reliant on these imports will face higher prices, which may lead to increased prices for consumers or reduced competitiveness globally. The tariffs will disrupt supply chains, compelling companies to seek alternative sources or to reconfigure their supply chains before the tariffs go into effect, which can be time- The new tariffs are another hit to supply chains as they try to manage ongoing risks and build resiliency. Whenever tariffs are increased, regardless of the rationale for doing so, the impact goes beyond cost increases to companies and consumers. Discussions on redesigning supply chains surface through considerations for reshoring as one way to offset costs. Supplier relationships are strained as contract re-negotiations to offset tariff impacts become commonplace. Companies may also adjust their inventory positions through increased buffer stocks to account for delays or disruptions in the supply chain. All of this leads to additional risk and complexity in an already strained supply chain environment.” —John Donigian, Senior Director of Supply Chain Strategy, Moody’s Analytics consuming and expensive.” —Keith Hartley, CEO, LevaData “ “ “
18 Inbound Logistics • June 2024
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