Supply Chain Chaos! How To Manage Through Global Volatility
In the past few years, the world has seen an unprecedented wave of disruptions that have caused chaos in global supply chains. The once predictable and stable systems we relied on to deliver goods on time and within budget have been tested to their limits. From trade wars to natural disasters, inflation, labor shortages, and geopolitical conflicts, supply chains are under constant strain.
At first, it seemed that the worst was over. However, surprises continue to abound, and new disruptions are often right around the corner. The question is: how can a supply chain professional stay afloat in such turbulent waters? What can we do to maintain supply while minimizing cost impacts and, most importantly, keeping our customers satisfied?
In this blog, we’ll explore some key observations on the state of the supply chain, the impact of these global disruptions, and offer strategies to ensure resilience and agility in an unpredictable world.
Recent Observations
Tariffs and Retaliation
Initially, many believed that the tariff wars between the U.S. and countries like China were simply a negotiation tactic, one that wouldn’t have long-term consequences. However, reality has proven otherwise. Recently, we’ve seen new tariffs implemented—such as another 10% increase on Chinese imports and 25% tariffs on goods from Canada and Mexico. New tariffs are also being proposed for European goods.
These tariff hikes have led to increased costs in logistics, as well as currency fluctuations, all of which can severely affect supply chain stability. In some cases, businesses will need to absorb these extra costs, while others may need to pass the cost increases onto their customers. Unfortunately, neither of these options is ideal, especially for companies that previously moved production closer to the U.S. in an attempt to nearshore or avoid these very kinds of risks.
USMCA Free Trade Agreement
The United States-Mexico-Canada Agreement (USMCA) is another area of concern. With ongoing tensions in global trade, this agreement could be in jeopardy and might be void by 2026. This agreement has been particularly beneficial for industries like automotive manufacturing, batteries, and semiconductors, all of which rely on cross-border trade between the U.S. and Mexico. If the USMCA is canceled or altered, the fallout could disrupt industries and cause significant supply chain delays and cost increases.
Natural Disasters
Regardless of the debate surrounding global warming, it is undeniable that the frequency and severity of natural disasters have been on the rise. In fact, there has been a 300% increase in natural disasters since 2010, and disruptions caused by these events are now a regular occurrence.
For example, California’s devastating wildfires in recent weeks have had long-lasting effects on the local economy and supply chains, with production and distribution networks being temporarily halted or slowed. The agriculture industry has also been impacted, with avian flu disrupting food supply chains and causing prices to spike, especially with eggs.
Geopolitical Conflicts
The ongoing conflicts in the Middle East, coupled with the Russia-Ukraine war, are adding another layer of volatility to global supply chains. Geopolitical instability creates uncertainty and can disrupt key trade routes and supplier relationships. Moreover, the U.S. is taking a more isolationist stance, which could exacerbate tensions and hinder trade with some of its key partners.
Inflation and Monetary Policy
The rise of inflation is perhaps one of the most impactful consequences of these disruptions. Trade policies and retaliatory measures are driving up the cost of goods, and as inflation continues to soar, many businesses find themselves facing skyrocketing production costs. In addition, the volatility of ocean freight costs and currency exchange rates is making it more difficult for companies to predict their logistics costs accurately.
Top 5 Agility Strategies for Navigating Supply Chain Chaos
Despite the many challenges, there are strategies supply chain professionals can implement to manage risk and build resilience. Here are five key agility strategies that can help businesses stay afloat during times of uncertainty:
1. Supplier Mapping and Risk Assessment
One of the first and most important steps in managing supply chain volatility is to map your suppliers. This means understanding where your suppliers are located and evaluating the risks posed by geopolitical tensions, natural disasters, and tariff changes in those regions.
Create a list of critical suppliers—especially sole-sourced suppliers—and conduct a risk assessment on each. What is the likelihood of disruption? Is there an alternative supplier nearby? By understanding the vulnerabilities in your supply base, you can prioritize your efforts and focus on mitigating high-risk areas.
2. Mitigation Playbook
Once you have assessed your suppliers' risk levels, it’s time to develop a mitigation playbook. This playbook should detail both short-term and long-term actions to take if a disruption occurs. For example, what are the steps you can take in the event of a natural disaster, a labor strike, or tariff imposition?
Being prepared with pre-planned responses to specific scenarios will help you act quickly and efficiently, reducing the impact of disruptions. Scenario planning will ensure that your team is not caught off guard, and you can maintain business continuity during challenging times.
3. On-Shore and Friendly Shoring
Wherever possible, consider diversifying your supplier base and shifting production closer to home or to countries with more stable political climates. While near-shoring to neighboring countries like Canada and Mexico offers potential cost savings and faster delivery times, it may also expose you to risks related to tariffs and trade agreements.
Having alternate sources in regions less likely to be impacted by global volatility will increase your flexibility and reduce your dependency on any single country or region. However, keep in mind that shifting production may come with its own set of challenges, including higher costs or potential supply chain delays.
4. Value Analysis
In times of crisis, it’s critical to work cross-functionally with other departments to identify ways to reduce costs without sacrificing quality or supply. Value analysis allows you to review your product design, sourcing strategy, and logistics operations to uncover potential cost savings.
Consider simplifying your products, sourcing from friendly lower-cost regions, or investing in more efficient transportation options. Engaging your suppliers early to discuss cost-saving opportunities can also help maintain price stability and avoid supply chain disruptions.
5. Supplier Relationship Management
One of the most effective ways to overcome disruptions is by fostering strong relationships with your suppliers. Rather than viewing your suppliers as just vendors, treat them as partners. Collaboration is key, especially when challenges arise.
If a supplier faces a disruption, such as a factory shutdown or a shortage of raw materials, work together to identify alternative solutions. Many Chinese suppliers, for example, have already started investing in alternative production regions, allowing them to diversify their risks. Employing a “China Plus One” strategy—where China goods are transformed in another country—can help you avoid excessive exposure to tariff risks or supply chain bottlenecks.
Conclusion
The supply chain landscape is more volatile than ever, and the world’s interconnectedness means that disruptions in one part of the globe can have a ripple effect across industries. There is no one-size-fits-all solution to managing these risks, but by implementing the strategies outlined above, supply chain professionals can build resilience and agility in the face of uncertainty.
The key is to remain calm and prepared. By having a plan and a playbook that includes contingency strategies, you can better navigate disruptions, minimize their impact, and continue to meet your customers’ needs. While it’s impossible to predict every scenario, a truly resilient supply chain is one that can adapt quickly to the unexpected.
So, don’t panic—prepare, plan, and stay agile.
Ready to Future-Proof Your Supply Chain?
Don’t wait until a disruption impacts your operations—start preparing now. Hoagland Management & Consulting (HMC) specializes in creating resilient, agile supply chain strategies tailored to your business needs. Let us help you navigate uncertainty and position your company for long-term success.
Contact us today to schedule a consultation and ensure your supply chain is ready for whatever comes next.
About the Author
Anthony Cardinale is a seasoned supply chain expert with over 35 years of experience in high-tech manufacturing across industries such as Aerospace, Electronics, and Telecom. Specializing in optimizing sourcing strategies, team leadership, and cost efficiency, Anthony has successfully managed supplier transitions, reduced inventory, and implemented lean, compliant processes.
Read Anthony’s full bio to learn more about his background and expertise.