Winding up The Supply Chain Doomsday Clock (Part 1)
With challenges coming from every direction, it’s time to step back and take stock of your risks.
The concept of a doomsday clock is self-explanatory. The goal is to prevent disaster before it strikes midnight.
How close is your supply chain doomsday clock to midnight?
Are you focusing on the right things, or spending too much effort worrying about risks that don't actually matter? It's time we took a look at the biggest problems plaguing the modern supply chain and where they find themselves on our doomsday clock.
Supply Chain Doomsday Scenarios: A Practical Guide to Risk Mitigation
There are far too many risks and challenges in the modern supply chain to focus on all of them at once. Instead, manufacturers should understand where each of the major issues fall, and prioritize accordingly.
While none of these issues on their own will cause a doomsday scenario in your supply chain, a combination of them unchecked could cause untold amounts of damage. Risk mitigation starts with the right mindset and an understanding of the problems you face:
Crisis #1: Tariffs and Trade Wars - 15 Minutes to Midnight
Trade wars and tariffs have weighed heavy on the minds of manufacturers in a variety of industries since October of 2017. It started with solar panels and washing machines, but it has since ballooned into billions of dollars in tariffs, all in the name of "protecting" American manufacturing.
Data indicates that the war is having the reverse affect, with reports from the Institute for Supply Management reporting that shrinking export orders and supply chains moving out of China to avoid tariffs have caused a contraction in US factory activity for the first time in three years.
It's clear that this constant back-and-forth is not going to facilitate the goals of the US or China. To this end, China's Ministry of Commerce Spokesperson Gao Feng told reporters on October 17th, 2019 that the country had one singular reason for fighting this trade war:
"The ultimate goal of the consultations between the two sides is to stop the trade war and cancel all the additional tariffs, which is beneficial to China, to the United States, and to the whole world."
I couldn't agree more. It seems like this will have to be the eventual outcome. In the meantime, it's important to keep an eye on current events, but the most you can do as an individual is simply plan ahead and look to absorb costs wherever possible. In the end, the ultimate outcome is up to the US government and the Chinese government.
Crisis #2: A Growing Talent Gap - 10 Minutes to Midnight
For years, various levels of the supply chain, manufacturing, and technology industries have been feeling the effects of a growing talent gap. It's a combination of factors like the lack of proper education or skill sets, the massive growth of the industry, the changing expectations for each job role, and a general lack of enthusiasm from new prospects.
Hiring skilled workers continues to be one of the most significant challenges for the supply chain industry, according to the latest MHI Industry Report. Not only that, but this has been a reported issue for the last four years.
As the talent gap widens, companies will have to compete to acquire the right kinds of people for both present and future roles. While many are concerned about the rise of automation and robotics in manufacturing, the truth is that new roles will emerge that require different and more advanced skill sets, thus creating new demand for higher paying and higher quality jobs.
As a supply chain professional, what can you do to stay ahead of this mounting issue? Luckily, there are options:
- Cross-train employees to share skills across the company. Utilize "reverse mentoring" to teach veteran employees skillsets that the younger workers bring to the table.
- Partner with local universities to promote and encourage education programs for upcoming supply chain professionals.
- Accept the connotations surrounding a career in the supply chain and work to change them. Shift the perspective towards facts, information, and the value of someone within this role to the greater organization
Crisis #3: The Pressure to Transform - 5 Minutes to Midnight
The industry has been rife with buzzwords like "digital transformation" for some time now, and yet, many organization have failed to take the leap. They are clinging to manual and outdated processes like emails and spreadsheets to handle crucial supply chain tasks.
If you're struggling to win quotes as an EMS, or failing to secure components as an OEM, odds are it's because your teams are using inefficient tools. All of this may sound like a sales pitch, but the fact of the matter is that 70 percent of organizations have already begun implementing a digital transformation strategy.
Resistance to digital transformation will not only drag down your bottom line, it's going to leave you in the dust when your competitors have smarter, faster, and more efficient solutions.
To Be Continued...
The supply chain industry is both demanding and dynamic. This is by no means an exhaustive list of the issues the industry faces every day.
In part two, we will look at more globe-spanning concerns and risks, and how you can remain competitive as the hands of the clock move closer or further away from midnight.
