The Global State of Affairs
The bottom line: It is a mess!
What is going on? Unfortunately, there is a lot of volatility, and it will not smooth out anytime soon. For example:
Russia/ Ukraine war:
The Russia/ Ukraine war rages on and shows signs of escalation. There are critical commodities in the region, creating scarcity, shortages, and risks for any industry dependent on oil, computer chips, and certain food supply such as grains. The question isn’t who will be impacted; instead, the question is who isn’t impacted! These issues are widespread and will have long-term implications.
Taiwan produces the majority of advanced computer chips in the world. Now that China’s President Xi has been elected to a unprecedented additional term, his plans to take over Taiwan put the region at great risk. What more is there to say? This situation will have far reaching impacts throughout the world.
California Energy Grid & the War on Energy
Why put California’s energy grid in a section about the world? Well, California is the 5th largest economy in the world, and it is a sign of things to come if we continue down this path. The infrastructure is insufficient, and there is no way industry can meet the regulatory requirements coming down the pike on time and yet still serve customers. There is risk on the energy grid, brownouts and blackouts causing issues for essential industries, and yet energy is vital to fueling our way of life. Look no further than Europe. They are struggling mightily to figure out how they will get through the winter season with limited Russian oil and with natural gas pipelines shut off. Yet Germany is a manufacturing powerhouse. It is a volatile mess.
Natural Disasters Such as Hurricane Ian
Weather events and natural disasters are commonplace around the world. Recently, Hurricane Ian pounded the Florida coast. This is a great example as many agriculture products are grown in Florida, and Florida is home to Mosaic Co., which supplies 50% of North American farmers’ supply of granular phosphate fertilizer and 12% of the global supply. Delays and shortages will persist.
Potential Rail & Port Strikes
Although the US delayed a rail strike recently, there is still not a deal. If there is a rail strike, it will have a huge economic impact estimated at $2 billion per day and impacts 30% of the transportation system. This will impact commodities, grains, and much more. The ports are also still negotiating to avert a strike. The unions don’t want automated terminals; however, the US is vastly behind China and other countries in the ability to automate and use advanced technology.
The Great Resignation
The baby boomer generation is retiring rapidly and leaving a wake behind them. The pandemic made people rethink their life and change careers. The talent and skills gap remains a top concern. Additionally, family owned businesses are selling off in high numbers. The Great Resignation is changing the talent landscape.
What is the bottom line?
We must reshore and nearshore to friendly countries (also known as friendly shoring) immediately!
Starting with essential industries such as food, healthcare (products, medical devices, medtech, biotech, etc.), energy, water, computer chips, advanced technologies, and industries related to national security, we need to go far beyond putting our toe in the water. We need to gain capabilities rapidly and produce at scale!
Reshape Your Supply Chain
To reshore, nearshore, expand & upgrade manufacturing and supply chain capabilities, you will need to reshape your supply chain. Think about the following priorities:
- Manufacturing footprintWhere will you produce and invest in manufacturing capabilities? Reshore, nearshore, friendly shore, expand capabilities, find new partners?
- Your end-to-end supply chainWhat risks do you have in your end-to-end supply chain? How can you secure supply of critical items?
- Supplier footprintDoes your supply footprint support your manufacturing footprint?
- Suppliers or partners?Who are you partnering with to ensure your end-to-end supply chain performs?
- Logistics partnersDo you have the appropriate partners in place to support your customers and your supply chain partners? Remember, supply chain is a system of systems and partners.
- TechnologyDo you have the appropriate ERP, technologies & data and business intelligence systems to support your business?
- FinancialsDo you have the appropriate finances in place to support your path forward?
- SIOP ProcessDo you have a SIOP (sales, inventory and operations planning) process in place to support highlighting and making the appropriate strategic and tactical decisions to ensure resilience and success in today’s volatile and risk laden environment?
Talent, Talent & More Talent
Talent, talent, and more talent will be needed to make this happen. The war on talent is real. We recommend leaders act quickly:
- Find your starsIn every client in 17 years of consulting, we’ve found a star. Many are overlooked, and so companies have vast potential with underutilized resources.
- Provide mentoring, coaching & training opportunitiesThey are all quite distinct. Mentoring provides practical examples and is often the best path forward. Coaching provides proactive support, and training can provide new skills. With the fast rate of retirement of baby boomers, JUMP on this while you can.
- Leadership & performance managementThose companies with strong leadership and performance management processes are at least twice as successful as the rest.
- Project management80% of success is not in formulation; it is in implementation.
- Supplement your talentWe have been working with several clients to upgrade their processes while also jumping in “hands-on” to support and supplement their resources. Find partners to help design, upgrade, expand, maintain, source, and more. Leverage your options to upgrade and scale more quickly.
- Automate, Digitize & Thrive Provide the tools and technologies to support your talent.
There will be more risk – and more opportunity – than at any time in history. The strong will get stronger, and the weak will wind down and exit. Although challenging economic times are ahead, the geopolitical risk is even greater. The smart will invest wisely and thrive for decades to come. Will you be on that path?
Refer to our blog for volumes of articles on these topics and read more about these types of strategies in our eBook, Thriving in 2022: Learning from Supply Chain Chaos. If you are interested in talking about how to reshape your supply chain, get in front of it with a SIOP process, and successfully navigate these waters, contact us.
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The Case for US Manufacturing