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Supply Chain Volatility: The New Norm

Despite my years in the electronics industry, I continue to be fascinated with the global supply chain and remain amazed at its overall efficiency.

However, I also recognize the constant presence of supply chain volatility — a volatility that has now become the new norm impacting every supply chain decision we make.

Contributing to this volatility is a number of macro factors that, individually and collectively, are changing the supply chain landscape. Focusing on the top factors can put the scope of this challenge in perspective and provide us with an approach and strategy to manage through this volatility.

Feverish: Supply-chain volatility is the new norm, but focusing on a  few top factors can provide perspective and yield strategic insight.

Feverish: Supply-chain volatility is the new norm, but focusing on a
few top factors can provide perspective and yield strategic insight.

As you would expect, my list of macro factors change as world dynamics change. However, my top three have remained constant over time and I believe that these should be on the radar of every supply chain professional:

Global economic conditions: Not a day goes by at my company when there isn't a deep discussion of world economic conditions. One day the dialogue may be about the US economy and the anticipated effects of the sequester. On the next day, the focus may shift to China's growth rate and the following day the topic may be on productivity trends or tax policies in Latin America. These discussions are not limited to the direct impact of these issues on our company but include an expansive evaluation of how these economic conditions influence our trading and transportation partners.

Of course, you would all expect that the leadership of any global company to be constantly evaluating these issues, but my point is that all supply chain professionals should be equally concerned with global economic fluctuations, follow these changes closely and view the evolving conditions as precursors to changes in the supply chain landscape.

The political climate: I think we all tend to view the political climate through the prism of the politics within our own country. Unfortunately, that perspective tends to distort our interpretation of events elsewhere in the world and bias our understanding of geo-political trends. Hand in hand with the diversity of political initiatives around the world is the diversity of cultural perspectives that underscore and drive regional political dynamics.

Every supply chain professional must work to understand and appreciate the political and cultural environment in each of the countries and regions that influence the vitality of their supply chains. This is not an easy task and requires multiple sources of informational input.

The legal and regulatory environment: The degree of global regulatory complexity is staggering and becoming more so each day. As a result, the wider the dimensions of your supply chain the greater your exposure to trade compliance risk. Understanding the detailed requirements of emerging regulations is absolutely essential to successfully navigate through the regulatory maze. However, that is easier said than done.

Too often, as new regulations go into effect, there is a lack of clarity and a cloud of misunderstanding within our industry. Proactive involvement is necessary along with the active participation of our industry associations to drive consistent standards between industry trading partners.

Of course, there are many more factors driving supply chain volatility and my top three are really just the tip of the iceberg. Later this month, I will be presenting at the Manufacturing Supply Chain Officer Summit in Shanghai, China, and will be addressing these and other top trends affecting the electronics ecosystem in 2013.

I look forward to seeing some of you at the summit and will be sharing insights gained at the conference in future blog posts.

I look forward to your comments.

3 comments on “Supply Chain Volatility: The New Norm

  1. Brian Fuller
    March 8, 2013

    Gerry, great post and thank you. 

    Volatility is certainly the watchword for these times, and I think we all secretly realize it IS the new norm and not just a product of these last several sluggish/lousy/unsettling economic years. 

    I hope you'll share with us your experiences at the China summit!

     

  2. prabhakar_deosthali
    March 9, 2013

    As has been rightly said, the supply chain volatility is the result of the globalization of the supply chain so much so that each and every event in any corner of the world is likely to affect your company's supply chain – be it a workers strike in a factory in China , or an embargo on a nation based on its nuclear warfare or a terrorist activity disrupting normal life somewhere, a flood or cyclone – you name it and it has some or the other effect.

    To keep one's supply chain moving in an orderly fashion has surely become an herculean task but at the same the global connectivity and associated tools are there to help you maneuver your supply chain in such troubled waters.

    This also underlines the importance the human decision making in the supply chain context to mitigate the risks, in my opinion.

  3. Brian Fuller
    March 10, 2013

    @prabhakar, great insights as always. Here's my question for you: Yes, the human element is important in understanding and reacting to supply chain volatiliry, but often the human element is based on “gut instinct” rather than data (or chooses to minimize what the data tell us).

    How do you balance the two? (sometimes we ignore the data at our peril).

     

     

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