While Supply Chain Matters is certainly not a social and political focused blog, one cannot ignore the immediate or longer-term industry supply chain impacts related to the current U.S. government shutdown that began earlier this week.
There are, of course, discernible direct and indirect consequences, and the longer this shutdown continues, the more impactful they will become. While larger, globally extended firms can adsorb short-term or unplanned impacts, small and medium sized firms are more impacted, and so are their supply chain teams.
Product and service-centered supply chains supporting various U.S. governmental agencies and their procurement needs are certainly impacted. Those focused on military and defense related products and services that were already impacted by the effects of the earlier U.S. sequestration budget cutbacks are now ever more impacted. Today’s edition of both the printed and online edition of the Wall Street Journal featured an article profiling a number of military related suppliers and contractors, both large and small, that are now encountering troubling impacts such as delayed or absence of orders. Some threaten layoffs if the shutdown continues.
There are also the indirect but other meaningful impacts. Boeing has warned that ongoing deliveries of its 787 Dreamliner aircraft built at its assembly facility in South Carolina could be delayed because FAA inspectors servicing that facility have been furloughed. Food and pharmaceutical supply chain contamination risk governance are now potentially impacted because of temporary elimination of early-warning inspectional resources.
In transportation areas, U.S. port operations that process import and export shipments could be impacted by the lack of governmental customs clearance or cargo inspection staff. In the coming weeks, goods ordered for the upcoming holiday buying surge period are inbound to ocean container facilities. Similar thoughts could be appropriate for compliance aspects related to global air cargo movements. Congestion or glitches in one aspect of global movement invariably impacts all other inter-modal segments. If a major natural disaster or transportation related accident were to occur in the U.S., how quickly could supply chains recover without federal agency response?
While on the topic of the upcoming holiday buying season, consumers either directly impacted by furloughs or salary cutbacks, as well as other consumers concerned about long-term impacts to the U.S. economy may be compelled to cut-back on holiday buying and service-related plans. According to the President of the National Retail Federation (NRF), similar actions occurred last year with the “fiscal-cliff” crisis spooking holiday purchases during the last few weeks of the year. The mood of the consumer has far broader retail and other industry supply chain implications.
We have called attention to building momentum and the resurgence of U.S. Manufacturing, yet a small faction of legislators practicing radical brinkmanship and narrow ideological politics can well temporarily or permanently derail such momentum.
Advanced planning technology provides opportunities for supply chain planning and operations teams to practice what-if scenario planning and more predictive analysis of expected product demand. Unfortunately, advanced technology cannot accurately predict the probabilities of outcomes associated with a dysfunctional political process.
