“Hope for the best, expect the worst. Some drink champagne, some die of thirst. No way of knowing which way it’s going. Hope for the best, expect the worst!”
Who knew that Mel Brooks, the esteemed actor, comedian, filmmaker and songwriter, has a side business advising clients on manufacturing strategy and international trade? But not really – the italicized passage above is taken from the soundtrack of Mr. Brooks’ 1970 movie, “The Twelve Chairs”.
What’s happened to global supply chains during the past six weeks can be distilled down to “No way of knowing which way it’s going…” Tariffs are placed on Canada and Mexico. And then they’re not. The 321/De Minimis exclusion for retail orders is dead. Only kidding! There’s an additional 10% tariff placed on most goods produced in China. And then another 10% on top of that. Not kidding in this case.
We’ve all been whipsawed by these abrupt and disruptive changes. We’re fielding countless calls from our clients and others who are desperate to do “something”. There’s a chaotic rush towards low-cost country production, and we’re asked to shift complex manufactured products to new suppliers overnight. We’re asked to wave our magic wand to “fix” all of this.
There is no magic wand. There IS the integrated activity of countless far-flung individuals and companies who, over the course of many years, have established reliable supply chains. We rely on those very supply chains for every specialized product we oversee. All that integration was carefully planned and timed so that when you place a P.O., the goods appear on time and at the price that you’d negotiated. And no one person or single company coordinated it (thank you Adam Smith and the Invisible Hand).
Building complex products cannot be orchestrated by a supply chain captain (or major or general). The global ecosystem of designers, engineers, components, materials, packaging, laboratories processors, laboratories, shippers, etc. is elaborate and interconnected. No one person cracked the whip over all those people, coercing them to come together to build your device. It emerged from that ecosystem of self-interested players, working together, which took decades to establish, evolve, and mature.
So, failing the arrival of that magic wand, we all need to hang on for a bumpy ride. At EastBridge, we’ve always been internationalists and continue to build out global supply chains. Our team of engineers in East Asia, Southeast Asia, Eastern Europe, Latin America and the US continue to expand our vendor base, while carefully and thoughtfully modeling and setting up new supplier relationships. So be patient, screen out (some of) the noise. We’ll get there together.
Cheers,
Jack Daniels.