Wednesday 13th Dec 2017 - Logistics Manager

Time to put agility back on the supply chain agenda

Last year the United States gave 505,010,020 Apple iPads to China – a handsome gift indeed, equal to 5,800 tons of pure gold.

It didn’t actually happen that way, of course. What we are talking about is the US trade deficit with China, which reached $252 billion in the first 11 months of last year.

Not surprisingly it is causing a lot of grief in the US, where demands are increasing for China to revalue its currency.

The results of this growing campaign are likely to have a significant impact on supply chain strategies over the coming years.

In fact, there has already been some movement – the yuan has edged up slightly against the dollar and euro in recent months. That, of course, makes Chinese goods more expensive in the US and Europe.

Not only that, Chinese wages are expected to continue rising at 20 per cent a year or more over the next few years. In fact, The “Wall Street Journal” this week reported that labour shortages were looming in some of the key manufacturing zones.

And some of those organisations that have used China as manufacturing source are now starting to say that rising costs there mean that it is no longer the default location for sourcing products.

So the search is now on for suitable alternatives. The other BRIC countries – India, Russia and Brazil – are obvious contenders, but there are plenty of other options which might well become more attractive. And it is a reasonable assumption that there will be a continuous process of change.

Increasingly, last year’s supply chain certainties are being questioned as new challenges arise. During the recession the focus was firmly on managing risk and building resilient supply chains.

But , all the signs are that over the next couple of years it will be agility that rises rapidly up the list of priorities.

What do you think the alternatives are? Tell us on the Linked In group: