Like if the world needed more moving pieces and instability-triggering forces, we are enduring an unprecedented trade war. A war initiated with the idea of rebalancing global trade, which has yet to prove itself. The manufacturing industry must address this with a focus on tactical moves, operational adjustments and strategic interventions to sustain results. What can our supply chain and manufacturing leaders do to mitigate this geopolitical uncertainty?
Mitigating practices are being discussed in many forums where supply chain leaders share their experiences coping with this reality. We are revising our base operating principles and making changes to sourcing, inventory policies and supply routings. These tactical and operational adjustments are often costly. The task of delivering goods and services to final users is increasingly complex. The need to modernise our supply chain and manufacturing capabilities is now an imperative. Data-based decision making, on-the-fly operational and tactical adjustments, acceleration of operational excellence and value creation technology incorporations ought to be top of mind for those managing operations.
Given that tariffs are an added cost that will likely pass onto consumers in the form of pricing and to businesses as profitability loss, they call for the use of alternative routings, fragmentation of the supply chains, and other traditional adjustments to reduce exposure. They also call for the acceleration of cost reduction programmes. Many times not enough to cope with the situation.
The new trade landscape and macroeconomic environment expand the concept of value creation that the manufacturing and supply chain operations leaders have to embrace. It is no longer about optimising the operations; it is about understanding the environment and being ready to deliver goods and services where needed with minimal to no effects on pricing and/or on profitability.
We dance with the concepts of agility and resiliency to the point that they have become the buzzword of the moment. We certainly want those in place, but we seem consumed with managing the issue of the day, which holds us back from true resilience and agility. Even worse, some of our traditional solutions, like inventory builds to protect service, have a limited effect. It is like we are moving from just-in-time to just-in-case, compromising cash and increasing cost pressures to ourselves.
By looking at the battlefield of any sport, I have seen how coaches and teams adjust and manage their approaches as the game takes place. They all have a playbook containing pre-thought and fully rehearsed plays. The plays are defined by the experts who can brainstorm for “what could happen” and “what could be done.”
The stronger the playbook, the better prepared the team is to tackle the situations that arise during the game. The book might have 100s of plays, the team might normally use only 20 of them, but the team is ready to play all of them.
I think we need to ask ourselves, where is our operations playbook? Do we understand what market and geopolitical changes would lead to changing the play of the moment? Are we ready to execute the plays in the playbook… Is this a way to bring to reality the meaning of resilience and agility?
I strongly suggest this playbook concept opens an incredible opportunity for all operations. It is an excellent complement to many of the processes available in the arena of supply chain management, like scenario planning, revenue management capabilities, supply chain visibility, manufacturing technological solutions for throughput, quality consistency and on-the-fly adjustments. It also opens a new horizon, refocusing our organisations from traditional problem-solving to proactive plays that we are all ready to execute.
Tariff uncertainty is likely to remain a feature of global trade for the foreseeable future. But it doesn’t have to be a threat. With the right systems, visibility, and mindset, and a strong playbook, we have the opportunity to sharpen our performance rather than limit it. Those who prepare with clarity and agility will not only manage through uncertainty – they’ll be positioned to lead in it.
Gustavo Ghory is a C-level supply chain executive with more than 40 years of experience, including 35 years at Procter and Gamble Co. and as Senior Vice President and Chief Supply Chain Officer at Kimberly-Clark. In 2017, Gustavo co-founded SmarterChains SA, a technology start-up helping manufacturers create value by incorporating technological solutions. To combine his experience in operations, innovation, logistics, and work systems with his interest in diplomacy and world geo-dynamics, Gustavo is currently setting up the Institute for Supply Chain Diplomacy to make these capabilities available to the world.
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