As the ongoing trade war between the United States and China continues to resonate through the supply chain, some businesses are out.
Companies that could not pivot or adapt have been priced out of the market while others have embraced the change, redefining their business models to adopt a more agile posture.
The bottom line is, for better or worse, the trade war is affecting the whole supply chain from end-to-end. But, as in most crises, solutions have come forward. By embracing these solutions, organizations, and the supply chain at large, stand to benefit, if certain changes are implemented.
How the Trade War is Affecting the Supply Chain
Starting on July 6th 2018, the United States government has introduced significant tariffs on goods and raw materials coming from China. China retaliated with their own tariffs, further inflaming the situation.
The idea was to stimulate domestic production and energize industry. Unfortunately, it has instead shuttered many businesses that could neither manage the changes to their business model nor adjust their pricing model to the degree that it still offered value to their customers.
Companies that managed to survive took an adapted approach, switching to alternative raw materials, sourcing components domestically, and in some cases, raising prices to the end-user. In some cases, companies initially dropped certain products from inventory because they were no longer cost-effective to import or manufacture. This trickled-down to other businesses as well, resulting in empty warehouses and idle staff, sometimes to the point where people lost their livelihoods entirely.
Over time, the landscape shifted, and we started to see a surge in components and finished goods coming from other regions, such as Central and South America, and other Asian countries not under the tariff purview. The once-idle warehouse spaces that companies struggled to fill were now overfull, creating yet another imbalance that had to be managed.
On-Demand Warehousing To The Rescue
As businesses adapted to market volatility, it became clear that a flexible approach was essential to survival. Organizations that prioritize cost efficiency are the ones that will prevail.
Unused space and idle staff represent wasted resources, but there needed to be a way to respond to demand through the peaks and valleys.
On-demand warehousing helps businesses in several ways:
It provides flexible warehousing options when and as needed.
It does not require a long-term financial commitment.
It allows operators to rent out their unused space and keep their staff busy.
Businesses can expand and augment their current services with options like JIT fulfillment, kitting, and improved customer service.
Allows manufacturers to test new markets with low risk.
Enables transparency throughout the supply chain.
To summarize, on-demand or flexible warehouse solutions connects businesses that have empty warehouses, racks, and idle staff to businesses that are looking for more space for inventory and additional, albeit temporary, staff to fulfill their orders.
Business success is a balancing act. Flexibility, agility, and the ability to adapt to the changing environment is essential. On-demand warehousing provides the solutions that keep us moving forward, no matter what tomorrow brings.
Reach out today to find out how we can help you solve your supply chain dilemma.