Blog
How to Prepare Your Supply Chain for 2024 Election Results
PUBLISHED ON:
June 7, 2024
Here’s How to Prepare Your Supply Chain for 2024 Election Results
2024 is a significant year for elections. Across the globe, over 50 countries will elect new leadership. These changes in authority (and agendas) will significantly impact trade policies.
Read on to learn more about preparing your supply chain for the 2024 election cycle so you can withstand potential political storms and their impact on the global economy.
How 2024 Presidential Election Outcomes Might Impact Trade Policies
The 2024 election cycle impacts U.S.-based companies on two fronts: the U.S. election and global elections. Below, we break down the implications of both.
1. The U.S. Election
The opposing Democratic and Republican parties hold polarizing views regarding trade policy matters. The results of the presidential election in the fall will have major effects on policy in one direction or another. Topics like trade with China and reshoring potential will be at the forefront of policymakers’ minds and will significantly affect the performance of supply chains.
2. Global Elections
Two conflicting global trends shape the framework of current elections: the balance between globalization and the drive for nationalism and protecting national/local interests.
For the last few years, this political tug-of-war has carried on as countries and governments change their policy positions between presidential terms. Depending on election results, these views will begin shifting current paradigms, treaties, and policies. Companies must be adaptable and agile to compete as they adjust to the economic back-and-forth.
How to Prepare Your Supply Chain Strategy for Potential Disruptions and Changes
This election cycle has introduced many potential shifts in government regulations and policies. Companies must proactively adapt supply chain strategies and mitigate these disruptions.
Incoming supply chain risks require organizations to explore scenarios and build contingency plans for those scenarios based on their location, markets, etc. The ability to quickly test potential scenarios empowers businesses to prepare for critical shifts and manage nuanced changes to protect their supply chain design and bottom line. Understanding the cause-effect relationship between supply chains and the disruptive impact of political events allows designers to assess potential effects and build resiliency into their design.
But what’s the best, most efficient, most effective way to do this? With the right technology, data, and time, organizations can identify and understand the underpinnings driving behavior changes in their supply chains. Then, they can anticipate the possible effects of changes throughout their operation.
One thing is sure: stagnation is not an option. Your organization needs a proven and trustworthy method to run scenarios and assess all possible outcomes so you can be prepared for whatever comes your way.
Considering Historical Data and Previous Election-Year Trends in Supply Chain Design
Every election year presents challenges and factors affecting supply chains in the U.S. and globally. While specific signals for disruption vary, elections tend to affect four economic and supply chain-related issues: trade policy, labor policy and availability, infrastructure investment, and economic policy.
Supply chain designers have a wealth of historical data at their fingertips. And while past patterns and trends can be helpful, they don’t give organizations the complete picture of what’s possible (or likely) today. Changing environments, relationships, and leadership decisions significantly affect supply chain operations. Having access to real-time data empowers businesses to make the most informed design decisions built around these four historically significant issues:
1. Trade Policy
In the past, trade policy has been impacted either by shifts between globalization and nationalization or by constraints on territories, tariffs, and taxes. Each of these varies depending on the general inclination of governments (for example, the influence of a Republican or Democratic president in the US or right- or left-leaning leadership in Latin America and Europe).
2. Labor Policy
Decisions regarding immigration laws, union management, wage discussions, and healthcare coverage, among other key topics, significantly affect labor policy. Immigration laws are an incredibly weighty factor regarding supply chain design. Warehousing, transportation, and customs work: many of these roles are filled by immigrants, and a labor shortage would significantly impact operations.
Most of these jobs require multiple shifts and training, which presents challenges if companies experience high turnover. This could result in detrimental bottlenecks, like the ones experienced during the pandemic years in supply chains worldwide.
3. Infrastructure Investment
Infrastructure is another factor affecting supply chain design. As supply chains evolve and consumer trends shift, infrastructure must adjust to properly support supply chain goals and priorities, which means designers must strategically plan and execute investments in that infrastructure.
Given the size of such projects and the time they require, careful, preemptive infrastructure planning and timely completion are essential to avoid potential bottlenecks.
4. Economic Policy
Economic policy, changes in interest rates, and tax adjustments historically alter consumer spending, directly impacting supply chain performance. New trends and consumer behaviors may shift demand and, with it, the need for supplies, which would alter production cycles and product availability.
Each political party has a different approach and outlook on economic policy priorities. The party in power will likely make changes that shift these behavior patterns. While these shifts cannot be stopped, supply chain designers can understand potential scenarios and their impact on an organization. It’s in these situations that leaders must develop action plans for all possible outcomes.
There is undeniable value in cultivating a resilient supply chain mindset and setup. It builds flexibility into the design to handle the different changes, directions, and disruptions a multi-election year like 2024 will likely bring. Organizations cannot wait for all pieces of the resultant supply chains to fall into place. They must take a proactive approach to ensure a stable, agile, sustainable supply chain.
The Best Strategies to Optimize Supply Chain Networks Post-Election
With a heightened focus on domestic manufacturing and reshoring initiatives, companies can and should adopt strategies to optimize their supply chain networks and understand the behavior of the supply chain under new policies via simulation. Below, we outline the best strategies for preparing supply chains for post-election economics and optimizing them for long-term stability and success.
1. Preparing for “What If” Situations
What-if scenarios could be created using optimization but also leverage simulation to understand long term behavior and predict possible effects considering the variability present in supply chains. These testing and prediction activities are critical requirements for post-election preparedness.
2. Reshoring and Domestic Manufacturing
As more organizations seriously consider reshoring, nearshoring and domestic manufacturing, these decisions carry weighty implications for supply chain design, from managing supplier networks (which could be multi-echelon and complex on their own) to impacting pricing and revenue management strategies in customer interactions.
Designers need to understand the practical, real-time behavior of the supply chain and how it responds to these changes. Scenario modeling and simulation make this possible. Leveraging these capabilities will help supply chain teams better prepare for rapid decision-making when inevitable changes arise.
3. Understanding Breaking Points
Preparing for the election season requires designers to understand the structure and breaking points of their supply chains. Historical experience is a solid starting point for identifying these factors.
The pandemic taught us numerous lessons about understanding breaking points and homing in on supplier relationships and alternatives to manage flow through the supply chain. Understanding your organization’s unique supply chain’s strengths and weaknesses empowers you to enter any situation with confidence of a resilient, balanced supply chain design built to handle any disruption.
4. Gaining Consumer Visibility
Supply chains have many moving parts. Businesses understand the importance of visibility for suppliers, but understanding the impacts on consumers is equally essential for a robust supply chain design.
Smart supply chain design includes systematically reviewing inventory levels and demand patterns to understand the likelihood of shortages or obsolescence. Designers need technology solutions that enable them to analyze inventory position, anticipate requirements based on future changes, and identify the buffers required to manage potential variable change.
Preparing for Future Supply Chain Risks Considering Protectionist Trade Policies
Elections in over 50 countries this year will significantly impact the supply chain as many countries move toward protectionist trade policies. In light of this, the primary risk-mitigation strategy for supply chains requires
- Maintaining enough visibility end-to-end to understand what type of changes might be impactful
- Analyzing potential scenarios of disruption
- Identifying viable solutions
- Controlling execution and adaptation in the overall operation
The more supply chain teams understand their supply chain and the causes and effects of its behavior, the better equipped they will be to handle the upcoming changes toward protectionist trade.
Creativity and understanding are essential as supply chain leaders look to this future. Designers need a mechanism to marry these two concepts to test possible outcomes, discuss alternative solutions, and focus on the behavioral traits that can hinder or propel the supply chain forward amidst known and unknown possible changes.
Facing the unknown is part of operating in today’s shifting economic market. But with the right tools, you can plan for any number of potential scenarios and set up your supply chain to balance your priorities.
The Next Best Steps for Supply Chain Leaders
When organizations (and people) fear uncertainty, they tend to delay decision-making. What are the next best steps supply chain leaders can take considering the 2024 election cycle? The first is to fortify their understanding of their supply chain design.
The upcoming elections can result in any number of potential scenarios. Supply chain designers must cultivate a meticulously detailed knowledge of their supply chain, ensuring they can realistically run potential scenarios with their teams and prepare for shifts and disruptions that might arise. Cosmic Frog is the perfect tool for understanding, building, analyzing, and executing supply chain design.
Cosmic Frog is the most powerful, thorough supply chain design solution on the market. The platform allows you to
- Balance your supply chain for cost, service, and risk
- Run hundreds of future-state supply chain scenarios simultaneously
- Identify strengths and weaknesses in your supply chain
And because it runs 40 percent faster than competitor solutions, you don’t have to waste time, power, or money waiting to make the best design decisions for your current supply chain needs.
The upcoming elections will rock global supply chains. Supply chain leaders must plan and prepare for any number of outcomes. Cosmic Frog provides data-driven modeling tools that empower you to make the right decisions for your supply chain at any given moment under any circumstance.
