Steering Through Supply Chain Turbulence: Strategy Over Panic

By: Blake Lerner

For those who work in or have any involvement in any aspect of supply chain management, two of the most dreaded words you can hear are “uncertainty” and “variability”. After all, the best and happiest of supply chain operations are those that run in the background seemingly unnoticed by anyone else other than those directly involved. After the recent U.S. presidential election global supply chains and industries around the world have been scrambling to predict and get in front of any proposed tariffs by the new Trump Administration. We saw large corporations such as Walmart, Costco, Target, Stanley Black and Decker move to expedite and stockpile inventory ahead of President Trump's January inauguration. Others such as Steve Madden, Yeti, and Traeger were rapidly exploring avenues to shift manufacturing from China to Mexico, Vietnam, and Cambodia. So how should owners of small to medium size businesses or anyone involved in supply chain management react?

As a recreational pilot, one of the first things repeatedly engrained into my brain early on in-flight training was the importance of never forgetting to “keep flying your airplane” during an emergency, i.e. don’t let the distractions and blinking lights of the cockpit pull you away from the most basic task of sustaining safe controllable flight. Supply chain and logistics operations should be approached no differently. Any change to procurement, logistics or inventory management should be taken in a planned, strategic and systematic approach. The companies we saw at the end of 2024 stockpiling inventory or moving manufacturing locations to lessen impacts from potential tariffs took on an incredibly large amount of risk and expense to do so. Businesses need to consider all aspects of their operations instead of making logistical changes on reactionary or emotional sentiment. What additional expenses will be incurred from storing all that extra inventory? Will there be expedited shipping fees on suddenly high demand low-capacity routes? And most importantly what is the risk of potentially having all that inventory expiring, becoming outdated, or going on sold? In short, any proposed changes in response to a situation should not create more issues than the original problem itself. One could argue there are potential opportunities for those businesses to leverage better pricing terms with manufacturers and shippers as others vacate geographic areas. 

Already this year we have seen President Trump threaten and subsequently delay proposed tariffs on previously unexpected countries such as Colombia, Canada, Mexico while taking a lesser stance against China. Ecuador has threatened increased tariffs against Mexico. And the UK has recently taken steps to strengthen business ties with the EU, something seemingly unthinkable only a few years ago post Brexit. The truth is, nobody knows where, when and for how long global trade policies will impact certain products and subsequent supply chains. As a business owner or manager, it is imperative to not get swept up in the moment and “keep flying your airplane”. Any changes to supply chain sourcing and logistics operations should be part of a systematic, long-term diversification and risk mitigation strategy