January 2017 | Commentary | Checking In

Wild Ride?

Tags: Legislation, Public Policy, and Regulations, Logistics, Supply Chain

Keith Biondo is the publisher of Inbound Logistics magazine.

When the IL team came up with the original issue theme for the 2017 Logistics Planner—The Upside of Down—we were anticipating yet another long term of challenging economic stagnation. The theme was that our mantra of demand-driven or inbound logistics practices would help enterprise managers and owners squeeze every last ounce of value out of company operations to position them in tight economic sectors. They could still improve logistics practices to achieve an upside.

And then something happened in the political realm that turned our issue theme, and the rest of the world, upside down.

Will the coming political change reverse the slow economic growth many had anticipated for the next four years? Many think so. The International Monetary Fund (IMF) recently raised its forecast for U.S. economic growth, citing President Trump's policies.

The IMF projects growth at 2.3 percent for 2017 and 2.5 percent for 2018. U.S. growth for 2009-2016 averaged only 1.5 percent, the poorest performance in modern history.

The expansion and reshoring of manufacturing, and projected job and spending growth, will kick domestic consumer spending into high gear. Walmart, Kroger, Ford, GM, Apple, SAP, Foxconn, Softbank, Dow, Bayer, IBM, and more all made job promises. And Amazon.com recently promised tocreate 100,000 full-time jobs in the United Statesover the next 18 months. Many more companies too numerous to list say they will increase hiring and investment in the United States. With jobs going up and taxes coming down, businesses and consumers will be poised to spend.

Housing starts are already up and proposed infrastructure spending will generate greater need for transport and logistics services. Will capacity be tighter? Likely. Foreign direct investment in the United States will increase dramatically, according to news reports.

So while four or eight more years of slow growth was expected, the opposite is likely. How will that impact logistics and supply chain networks? Are your logistics operations positioned to scale up efficiently?

But higher interest rates and a trade war could wipe away any business gains resulting from tax and regulation cuts, the IMF cautions. Today's supply chain networks were carefully crafted over the past decade, as were vendor and supplier relationships, import strategies, technology links, and carrier, forwarder, and 3PL contracts. Is all this supply chain infrastructure at risk given the uncertainty in the global trade arena?

More importantly, if this man-caused disaster happens, can your supply chain network live through it or will your enterprise operations skid to a halt?

So which will it be for your business—a fast scale up or a business free-fall? You might say that, given Trumpism, many business leaders are riding a rollercoaster—fast and upside down—with no sure end in sight, their supply chains bumping around in the last car.

World-class logistics practices can't answer those questions. But one thing is for certain: demand-driven logistics delivers agility and flexibility to help you navigate the twists and turns of any future ups and/or downs.

Real GDP Growth by President, Post-WWII

Percentages reflect the best year of growth during each president’s term.

Source: U.S. Department of Commerce’s Bureau of Economic Analysis Figures compiled by Jeffrey H. Anderson, Hudson Institute






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