The eventual outcomes of the current global tariff and trade convolutions are yet to be fully known. But regardless, developing contingency plans for supply chain issues and business interruptions is wise – notwithstanding your company’s specific exposure. Your supply chain and your business are vulnerable to much more than just tariffs, which are essentially taxes on imports. Consider the impacts of weather, natural disasters, labor disputes, politics and regulations, theft, and wars to name a few.
And it’s not just companies that make “physical things” that are vulnerable to supply chain disruptions. Service-based businesses (e.g., consulting, law firms) also have suppliers such as airlines, office-supply companies, and computer and technology vendors.
An article in Forbes has some advice on reducing your exposure to supply chain disruptions:
- Integrate risks and mitigation plans into your overall corporate business strategy. This is more than just a problem for “the supply chain team”.
- Using a US supplier doesn’t mean you’re immune to tariffs or global supply chain issues – your US supplier is likely using imported materials of some kind.
- Assess how a supply chain disruption at your company would affect your customers, and communicate your mitigation plans and the potential price-impacts with them. Ask your customers whether reliability or price is more important to them.
- Avoid a narrowly-defined supply chain, and have at least a few alternatives. Ideally, expand to several suppliers in multiple locations; don’t just rely on the one supplier that has the best product at the lowest price.
Armor-plating your supply chain strategy can be time consuming and expensive, but reducing the potential risks could turn out to be a very good investment.