Advertisement
Nigel Duckworth

With the United States and China facing off in an escalating tariff tit-for-tat, U.S. companies face an uncertain future, with the likelihood of higher costs on their incoming supplies and higher selling prices on the materials and products that they sell to China. This is a major threat to profits, competitiveness, and their very existence for some domestic organizations. To prepare for this possibility, it is critical that companies act now to streamline their global supply chains for simplicity, flexibility, agility, and efficiency. If executed correctly, they will be well armed to counter this threat and others and prepare for an uncertain future.

The U.S. Administration is proposing tariffs against China to counter unfair trade practices, ranging from violations of intellectual property rights to the practice of mandating technology transfers from U.S. companies to Chinese companies in exchange for access to Chinese markets. Under China’s “Made in China 2025” program, China aims to reduce dependence on foreign technology imports by reproducing the technology domestically. However, China has recently vowed to end their technology transfer practice.

Regardless of the reasons for the policies on both sides, American businesses and consumers will feel the effects of both Chinese and U.S. tariffs. The Strait Times reports that U.S. aluminum and steel tariffs are already exacting a toll on businesses, including, “farmers, manufacturers, construction firms and food shippers,” who are re-evaluating their purchases and growth plans due to the increasing costs of equipment and infrastructure.

Neutralizing the Effects of Tariffs: How the Right Technology Can Help

While companies should continue to voice their opposition to tariffs, they should also take steps to counter the possible repercussions and other potentially hazardous effects of a trade war. However, there is a much bigger opportunity that companies can capitalize on now and reap the benefits whether or not tariffs are imposed; simplify and streamline their supply chains to reduce friction across their supply networks. The truth is, global trade is fraught with unnecessary costs, delays, and errors that undermine service and value for all trading partners.

There is a lack of transparency with data scattered across companies and locked in disparate silos. While the delays and costs in reconciling this data are significant, stale, and conflicting data lies at the heart of most supply chains. This increases supply and demand variability and leads to poor decisions, operational inefficiencies, and increased costs.

All of these problems can be addressed by modernizing the supply chain and transforming it from the serial, batch sequenced chain, into a dynamic, real-time digital network driven by real-time data.

Benefits of a Multi-Party Network Platform

A multi-party network platform connects all trading partners to a single network with a single connection. It provides one, trusted version of the truth for all trading partners, and enables data to flow freely and in real-time, eliminating information lag and reducing both supply and demand variability. Business partners too can share critical information, gaining visibility to orders, inventory, and shipments across the supply chain as they occur.

This real-time streaming data puts supply chain managers in control of their operations, and it enables the optimization and automation of crucial operations such as inventory management and transportation. On a real-time digital network, information can be shared and processed automatically and virtually instantaneously. A digital network “connects the dots” across the supply chain and across operational functions and enables supply chain planning and execution to be integrated, optimized, and automated.

Advanced multi-party networks incorporate new technologies such as artificial intelligence and autonomous agents that enable the supply chain to run on auto-pilot. In fact, many of the more trivial operations are also managed by intelligent, autonomous agents. These agents can identify problems and often resolve them. When they are beyond the capabilities of agents to resolve, the issues are escalated to human planners.

With real-time visibility to supply, demand and inventory across all tiers of the supply chain, multi-party network platforms supporting intelligent agents, can perform sophisticated global supply-demand matching not possible with enterprise-centric solutions. So, for instance, if there is a supply disruption to a critical factory, autonomous agents can survey inventory positions and lead times, and then recommend an alternative source of supply and finally execute the order. This minimizes disruptions to production and customers, while keeping inventory and costs low.

A key advantage of multi-party networks in global trade is their extensibility and adaptability. While traditional enterprise systems are difficult to customize and enhance, multi-party network platforms are built with a modular architecture and come with Software Developer Kits (SDKs) to support the easy customization and extending of modules or building completely new modules where needed. 

The cost of joining a multi-party network is much lower than implementing traditional enterprise software as well, because the costs are distributed among all parties on the network. In addition, they provide simpler connectivity, superior optimization, and real-time collaboration, to deliver better results.

A Platform for the Real-Time Global Economy

Trade relations between the U.S. and China are uncertain at this time, but whether tariffs materialize or not, this should be a wakeup call to organizations worldwide. Companies with inefficient supply chains are at a major disadvantage in today’s global economy, where dangers such as competitors, tariffs and other trade barriers, weather contingencies, and political and economic upheaval are ever present. 

The key to remaining competitive will be a flexible platform that connects with partners and breaks down the silos of enterprise boundaries to foster closer collaboration. With a multi-party network, companies are connected with all trading partners with a single connection to the network. This makes adapting to change and creating new business processes and relationships much easier.

Also, by connecting to a multi-party network, companies effectively join a community; an ecosystem which opens up new possibilities. Businesses can forge new relationships and partnerships with companies across industries and across the globe, mitigating tariffs or disrupted supply and falling demand with alternative partners and customers.

Tariffs are but one threat to businesses today. Perhaps the larger threat is disruption or obsolescence. This is why nothing less than a major shift from chains to networks will suffice. Multi-party networks make companies more agile, while giving them the tools and technologies to counter not only tariffs, but also the uncertainties and rapid change that is sweeping through every industry today.

Nigel Duckworth is marketing strategist for One Network Enterprises.

Advertisement
Advertisement