Executive Briefings

Supply Chain Readiness In A Time Of Uncertainty

When I first moved to California in 1990, I was told by Stanford's campus housing people to keep an earthquake emergency box on hand at all times. Its contents included a radio, flashlights, warm clothes, medical supplies and a few other items. Later in Boston, I stuck with the idea, but added stuff suited to hurricanes, blizzards and extreme cold. After Sept. 11, the kit got still bigger - food, water, fuel, camping supplies, even weapons. It became known as the Anarchy Closet.

Supply Chain Readiness in a Time of Uncertainty

Happily I've never needed it, but this year, who knows.

The past week saw both Theresa May's much anticipated Brexit speech and Donald Trump's inauguration as President of the United States. Meanwhile in Davos, world leaders gather to jockey for position at the front of a pack of nations itching to take the lead in world affairs going forward.

Will tariffs suddenly rise? Which currencies will surge and which will plunge? Will the European Union survive? These kinds of questions are increasingly topical for supply chain executives trying to prepare for 2017. Risk factors are interacting and multiplying as geopolitical and regulatory uncertainties accompany fresh fractures in the institutional foundations of our global economy. In the words of Jens Nordvig, the Danish economist and currency specialist: “It is a complex world with messy answers to questions that seemed simple fairly recently… in this world, significant macro shocks will be more prevalent.”

Data from our Future of Supply Chain survey, collected after Brexit but before the US election, points to a high level of worry about risks arising not so much from traditional business factors like supplier failures or capacity shortfalls, but from political externalities. Legal and regulatory issues including taxes, trade policy and environmental laws is third most worrying of all supply chain risks, just behind shipping disruptions, which also escalate with tensions between trading nations.

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Happily I've never needed it, but this year, who knows.

The past week saw both Theresa May's much anticipated Brexit speech and Donald Trump's inauguration as President of the United States. Meanwhile in Davos, world leaders gather to jockey for position at the front of a pack of nations itching to take the lead in world affairs going forward.

Will tariffs suddenly rise? Which currencies will surge and which will plunge? Will the European Union survive? These kinds of questions are increasingly topical for supply chain executives trying to prepare for 2017. Risk factors are interacting and multiplying as geopolitical and regulatory uncertainties accompany fresh fractures in the institutional foundations of our global economy. In the words of Jens Nordvig, the Danish economist and currency specialist: “It is a complex world with messy answers to questions that seemed simple fairly recently… in this world, significant macro shocks will be more prevalent.”

Data from our Future of Supply Chain survey, collected after Brexit but before the US election, points to a high level of worry about risks arising not so much from traditional business factors like supplier failures or capacity shortfalls, but from political externalities. Legal and regulatory issues including taxes, trade policy and environmental laws is third most worrying of all supply chain risks, just behind shipping disruptions, which also escalate with tensions between trading nations.

Read Full Article

Supply Chain Readiness in a Time of Uncertainty