The new administration in the U.S. is beginning to make changes to trade policy, such as President Trump’s renegotiating of the North American Free Trade Agreement (NAFTA) and withdrawal from the Trans-Pacific Partnership (TPP). When changes like these occur, those concerned about the global supply chain pay careful watch to see how tariffs and trade rules will be affected.
With Change, There is Risk
You often hear people say that they don’t like change. Why don’t we generally like change? Because it’s risky. With the eminent changes to U.S. trade policy coming our way, what are the possible outcomes? In the recent Manufacturing Automation article, Risk in the New Global Supply Chain, Luc Janssen, senior director of R&D, Manufacturing and Supply Chain Solutions at QAD, suggests that depending on how NAFTA is handled, the U.S.’s economic relationship with Canada may be severely impacted.
“Trade in services with Canada and the U.S. (exports and imports) totalled an estimated $83.7 billion in 2016. Services exports were $54.2 billion; services imports were $26.9 billion. So the implications for redefining the NAFTA terms could be unfortunate for our free flowing and profitable supply chain between Canada and the U.S,” states Luc in his article. Not to mention that the U.S. exports of goods and services to Canada supported about 1.6 million jobs in 2016, according to the Department of Commerce. What can supply chain executives do in the face of change and various possible outcomes?
Minimizing and Preparing for Global Supply Chain Risk
The thing about change, is that you may not know exactly what the future holds, but you can look ahead, predict outcomes and try your best to be prepared. There are various supply chain planning (SCP) software tools that can help you get ahead of future risk. More accurate forecasting and network optimization can put you on the right track to be ready for the unknown. As Luc mentions in his article, “If risk isn’t planned for at this time of change, access to new business opportunities or existing operations could be in jeopardy.” Read his full article in Manufacturing Automation.