As tariffs create economic uncertainty for firms and consumers alike, supply chain plasticity could be the key to helping firms navigate and survive the constantly changing trade environment, according to researchers at Florida Atlantic University and two other schools.
As tariffs create economic uncertainty for firms and consumers alike, supply chain plasticity could be the key to helping firms navigate and survive the constantly changing trade environment, according to researchers at Florida Atlantic University and two other schools.
Supply chain plasticity, or the ability to respond ahead of unknown threats, will decide which firms flourish during current economic uncertainties and which firms struggle to bring the same product to consumers. Rather than focus on resilience or adaptability, supply chain plasticity takes it a step further by redesigning structures and networks to better adapt to disruptions and unplanned shifts.
“The whole goal is to withstand the next disruption better rather than scrambling to come back from it,” said Steven Carnovale, Ph.D., associate professor of supply chain management in FAU’s College of Business. “Whether that is how firms design the structure of the supply network, where they curate sourcing arrangements, or where they put production facilities, it’s about firms utilizing their strengths proactively before the next emergency.”
The study, “Supply Chain Plasticity: A Responsive Network Capability to Ensure Resilience,” was published in the Journal of Business Logistics by Carnovale and fellow researchers Laharish Guntuka, Ph.D., assistant professor at Rochester Institute of Technology, and Ellie Falcone, Ph.D., assistant professor at Texas Christian University.
To best employ plasticity, firms need a mix of three key factors to withstand backlashes from tariffs and other unexpected events: structural holes or finding a way to bridge gaps between various companies; clustering coefficients, or how connected regional supply bases are; and centrality, or how connected a firm is to the rest of the firms in a network.
Many firms are already diversifying their manufacturing and supply bases in an example of supply chain plasticity by expanding to other countries to manufacture from, as well as repositioning where the inventory is coming from, according to Carnovale.
“Firms and businesses that are applying solid supply chain practices ahead of possible disruptions will not be as impacted by disruptions to the global supply chain,” Carnovale said. “By doing this, consumers are likely to have continued access to goods.”
-FAU-
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