By Diego Pantoja-Navajas, VP of WMS Cloud Development
If your supply chain is involved in moving goods to the United States or the United Kingdom then you may already be anticipating a bumpy stretch of road ahead that will begin impacting business as soon as September/October—just as most companies move into the beginning of high season.
As if that weren’t stressful enough, this bumpy stretch of road is actually now the new normal and it will stretch beyond High Season and really begin to rattle nerves during the first quarter of 2020. In fact, James Bullard, the St. Louis Federal Reserve Bank President, stated in Reuters that he expected the US Central Bank to be stuck with a volatile global trade environment for years.
Last week President Trump announced that a new round of tariffs will begin on September 1. These tariffs—on top of the tariffs that went in place earlier this year—will almost certainly raise the price on most of the consumer goods that US citizens buy everyday. Everything from toys, to toilet paper, to transmission belts, to iPhones—if it comes from China, or if its components come from China—it’s about to get more expensive.
And if that weren’t rough enough, meanwhile—let’s just say it out loud—on October 31 the UK looks increasingly likely to walk out on its marriage to the European Union without a negotiated exit deal in place. This drama has been going on for so
long that many UK businesses have been squirreling away inventory in anticipation
of disruption. In fact, most have done this twice already based on the original deadline of March 29 and the revised date of April 12. After two false starts, it is little wonder that companies are understandably concerned as to how seriously they should now plan around the October 31 date. Reports of UK warehouses already being filled to capacity with stockpiled inventory in anticipation of the October exit simply compound the challenge. If the growing threat of a “No Deal” exit is actually realized, companies will then have the headache of potential tariffs on inventory currently on the sea and in transit to or from the UK.
None of this is pretty. Not at anytime, but especially not during high season.
High season is that one time of the year—that one time!—when supply chain professionals absolutely do not want to have to be dealing with any problems. Their whole purpose is to meet and fulfill increased consumer demand before and during the holidays. It’s a challenging enough task as it is. Over the last few years businesses have spent a lot of money on being able to meet a fulfillment gap that ultimately solved the problem of connecting supply chains to device connected consumers.
But now, with the real worry about both trade wars and Brexit—supply chains are moving beyond solving purely for scale and fulfillment, but also have to deal with added complexity, volatility, and disruption. Supply chain professionals are suddenly faced with having to figure out how to deal with front-page geopolitical shenanigans that can escalate based on a single Tweet and switch direction by 180 degrees from one day to another!
What are the implications for warehousing, transportation, and order management? How can sourcing issues be alleviated? How can a conglomeration of disparate supply chain software solutions be used to manage the disruptions impacting physical supply chains whether upstream or downstream?
Fortunately, help is at hand. This is where a true cloud strategy comes into play and where cloud and advanced technologies such as IoT can really help. A true cloud strategy means that supply chains can solve the massive problem of fulfillment as caused by mobile shopping—thereby solving the problem of scale. But it can also encourage operational flexibility, meaning wherever a business needs to stretch its supply chain—upstream or downstream—it can, and thereby solve the problem of complexity. New functionality can be delivered via regular releases throughout the year, negating the traditional onpremises headache of having to wait perhaps two or three years for an upgrade to a new version before being able to take advantage of new capabilities.
Volatility is not going away anytime soon, but a cloud strategy that includes an end to end cloud solution can make it a lot more manageable and enhance the ability of a business to be a lot more flexible—and that will be worth its wait in gold this high season…and possibly next high season as well. These are issues that aren’t going to be resolved soon.