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More Than Half of Global Manufacturers Will Change Their Supply Chains in Response to Economic Nationalism

Razat Gaurav (pictured)
CEO, LLamasoft
More Than Half of Global Manufacturers Will Change Their Supply Chains in Response to Economic Nationalism
A new global study by LLamasoft, a global leader in supply chain optimization software and solutions, has found that 66 percent of manufacturers said that they would change their supply chains in order to tackle economic nationalism. In addition, 50 percent of respondents said economic nationalist policies will increase operational costs, and 45 percent are considering alternative suppliers, representing almost $3.1 trillion worth of business globally (World Bank 2017 manufacturing data).

The survey of 725 senior supply chain decision makers in manufacturing organizations across Europe (U.K., France and Germany), the United States, Asia (China and Japan) and Latin America (Mexico), found that economic nationalism is recognized as one of the most severe challenges facing manufacturing supply chains. When asked to choose their biggest global concerns, respondents placed economic nationalism (46 percent) second only to taxes and duties (50 percent).

In the U.K., the world’s sixth biggest economy, 64 percent of respondents are most worried about economic nationalism, namely Brexit—but that concern is not limited to that one region. As a result of Brexit, 45 percent of respondents globally are likely to change their supply chain design. This figure increases to 53 percent in the U.K., 54 percent in France, 56 percent in Germany and 51 percent in North America.

“Today’s global economy—and the supply chains that keep it moving—are truly interconnected; shifting regional economic policies are having major impacts on manufacturers’ supply chains globally, causing them to re-evaluate their current designs more frequently than ever before,” said Razat Gaurav, CEO, LLamasoft. “As the political stance in various countries evolve, it’s imperative that businesses have the data foundation and analytical capabilities to create digital twins of their supply chains and evaluate alternate scenarios to combat the uncertainty and risk these policy changes create.”

Higher costs as a result of the current climate are also anticipated around the world, though to different degrees. When asked about the impact economic policies will have on their operational costs, 50 percent globally said those costs are likely to increase. The United States is anticipating these increased costs the most, with 61 percent expecting them, closely followed by the U.K. (59 percent) and Germany (53 percent). In contrast, only 37 percent of respondents in France and 47 percent in Latin America are anticipating higher costs.