The #GlobalSourcerer Looks into his Crystal Ball for 2020

By Mitchell Rona, Executive Vice President, #GlobalSourcerer

Words of wisdom on the continuing tale of the tariff…

The “Phase One” USA / China Trade deal garnered some attention from weary global sourcing professionals as it was signaled and then formally announced in mid January. But the reduction in tariffs from 15% to 7.5% only affected the group 4A HTS codes. Group 4A is largely consumer-related products and does not include the vast majority of the products that casting consumers are concerned about.  Unquestionably, there are many other issues under negotiation in this mega trade deal, but for most procurement leaders, focus remains on the bottom line.

Many in the casting arena are resigned to the fact that the 25% tariff on most iron components for B to B operators are here for a longer time with no clear end in sight. As a result, those who have not made any major departure from their current supply chain are left pondering next steps for their sourcing needs.

Alternative sourcing partners and suppliers themselves have been inundated with inquiries. As a result, the turnaround time for quotes is longer and the interest in marginal opportunities is lackluster. Many may find a glimmer of hope through some initial positive dialog or even a first sample which “meets the print”. However, global sourcing is truly a marathon and not a sprint! It can take 12-18 months to know definitively if you have chosen a reliable, trustworthy partner. If you have enjoyed a sound and reliable supply chain from your current sourcing partner, it is difficult to contemplate a disruption.

The only thing that is constant is change. With that notion in mind, we all need to take a collective deep breath, make prudent decisions, and move forward. Choose a route that provides some easier wins to build confidence in both directions. Whenever possible, balance between the existing, or known supplier and the new, unknown source to hedge against unforeseen occurrences.  Evaluate after the necessary honeymoon period to assure your supply chain continuity is preserved. Build on small successes, keep adding to them, and maintain momentum to create a longer-term strategy. Don’t be afraid to invest to build the proper sustainable future. It costs now but it will pay off later!

SIGMA OEM is practicing what we preach. We focus and build on success, and we make sensible, practical changes where possible. At the same time we are truly respecting the long standing partnerships we have established, enjoyed, and benefited from for many, many years and we look forward to continuing these productive collaborations for many more to come!