Each month in writing this column, I attempt to share insights on trends we are seeing in supply chains. Most of these trends follow patterns that are detectable, repeatable, and somewhat predictable, and they normally provide direction for moving forward.
Supply chains run best with good planning based on historical norms and predictability. Over the decades, supply chain managers have honed their craft in an effort to make the operations they manage highly predictable, efficient, and cost-effective.
Notice that I have mentioned “predictable” several times already. That’s no accident. Predictability is the basis of good supply chain management. Supply chains run on certainty. However, 2025 has been anything but predictable and certain.
The uncertainty is mainly a result of economic upheaval caused by the current administration’s fiscal policies. Predictability has been discarded in the attempt to fix overnight trade imbalances that have been decades in the making.
As a result, consumer confidence has dropped to the lowest level in years, major retailers are closing stores, unemployment is rising, growth is expected to slow, and the Fed’s long-anticipated interest rate reductions keep getting delayed—all because of uncertainty. New and ongoing military conflicts are also affecting world markets, adding to the uncertainty.
The world is holding its breath to see what comes next.
As I write this, tariffs are still pending. While business leaders hold out hope that deals will be reached, few have actually happened. If the goal was to balance trade and boost domestic production, most economists believe it would have been better to offer incentives than impose tariffs. Time will tell.
I do know that we cannot just turn on the manufacturing spigot overnight. We lack both the manufacturing expertise and the skilled workforce needed to restore domestic production quickly. Automation will help, but that will only increase the costs of goods produced, which will fuel inflation.
We can’t count on foreign companies moving production here either, as foreign investment is down and many overseas investors have lost confidence in America and the U.S. dollar, driving its value down to the lowest level in several years.
There is no easy solution for supply chain managers. Most are taking a wait-and-see attitude, realizing their costs will probably rise and they’ll have to raise prices. We all have to make a profit, right?
We have been here before during the pandemic. Only then, it was more of a worldwide problem and not one of our own making.
As we approach peak season, it is our hope that reason will eventually prevail, and that good leadership will restore the certainty and predictability that we all count on to manage our supply chains every day.
