66% of manufacturers would change supply chains in response to economic nationalism

A new global study by LLamasoft has found that 66% of manufacturers said that they would change their supply chains in order to tackle economic nationalism. In addition, 50% of respondents said economic nationalist policies will increase operational costs, and 45% are considering alternative suppliers, representing almost $3.1tn worth of business globally (World Bank 2017 manufacturing data).

The survey of 725 senior supply chain decision makers in manufacturing organisations across Europe (UK, France and Germany), the United States, Asia (China and Japan) and Latin America (Mexico), found that economic nationalism is recognised as one of the most severe challenges facing manufacturing supply chains. When asked to choose their biggest global concerns, respondents placed economic nationalism (46%) second only to taxes and duties (50%).

In the UK, the world’s sixth biggest economy, 64% of respondents are most worried about economic nationalism, namely Brexit—but that concern is not limited to that one region. As a result of Brexit, 45% of respondents globally are likely to change their supply chain design. This figure increases to 53% in the UK, 54% in France, 56% in Germany and 51% in North America.

“Today’s global economy—and the supply chains that keep it moving—are truly interconnected; shifting regional economic policies are having major impacts on manufacturers’ supply chains globally, causing them to re-evaluate their current designs more frequently than ever before,” said Razat Gaurav, CEO, LLamasoft.

“As the political stance in various countries evolve, it’s imperative that businesses have the data foundation and analytical capabilities to create digital twins of their supply chains and evaluate alternate scenarios to combat the uncertainty and risk these policy changes create.”

Higher costs as a result of the current climate are also anticipated around the world, though to different degrees. When asked about the impact economic policies will have on their operational costs, 50% globally said those costs are likely to increase. The United States is anticipating these increased costs the most, with 61% expecting them, closely followed by the UK (59%) and Germany (53%). In contrast, only 37% of respondents in France and 47% in Latin America are anticipating higher costs.

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