Study Finds That Global Manufacturers Will Change Their Supply Chains in Response to Economic Nationalism

New LLamasoft survey finds that nearly half of manufacturers are considering alternate suppliers and are concerned about increased operational costs thanks to taxes and duties.

Supply Chain

A recent study by Llamasoft found that 66 percent of manufacturers would change their supply chains in order to tackle economic nationalism. In addition, 50 percent of respondents also said economic nationalist policies will increase operational costs, meanwhile, 45 percent of respondents said they are considering alternative suppliers, representing almost $3.1 trillion worth of business globally. 

The report surveyed 725 senior supply chain decision makers in manufacturing organizations across Europe, the United States, Asia and Latin America, noting that economic nationalism is recognized as one of the most severe challenges facing manufacturing supply chains. When asked to choose their biggest global concerns, respondents placed economic nationalism second only to taxes and duties. 

In the U.K., 64 percent of respondents are worried about economic nationalism, especially Brexit. However, that concern is limited to that one region. As a result of Brexit, 45 percent of respondents globally are likely to change their supply chain design. The figure increases to 53 percent in the U.K., 54 percent in France, 56 percent in Germany and 51 percent 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,” says 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.”

Current climate is expected to raise costs around the world, though to different degrees. When asked about the impact economic policies will have on their operational costs, 50 percent said those costs are likely to increase. The U.S. is anticipating cots to raise the most, with 61 percent expecting them, closely followed by the U.K. with 59 percent. In contract, only 37 percent of respondents in France and 47 percent in Latin America are anticipating higher costs. 

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