Economic Nationalism Challenges Global Supply Chains

Sixty-six percent of manufacturers responding to a new survey of global senior supply chain decision makers by software company LLamasoft say they would change their supply chains in order to tackle economic nationalism. In addition, 50 percent of respondents say economic nationalist policies will increase operational costs, and 45 percent are considering alternative suppliers, representing nearly $3.1 trillion of business globally, according to World Bank 2017 data.

Economic nationalism is recognized as one of the most severe challenges facing manufacturing supply chains, the survey finds. When asked to choose their biggest global concerns, respondents place economic nationalism (46 percent) second only to taxes and duties (50 percent).

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

Higher costs as a result of the current climate are also anticipated around the world, though to different degrees. When asked what impact economic policies will have on their operational costs, 50 percent of respondents globally say those costs are likely to increase. The United States is anticipating these increased costs the most, with 61 percent expecting them, closely followed by the UK (59 percent) and Germany (53 percent).

In contrast, only 37 percent of respondents in France and 47 percent in Latin America are anticipating higher costs.