Trade associations are making a comeback as industry-wide challenges loom

Cracks and fissures in global supply chains existed before the pandemic. Many of these weaknesses have been exposed during the pandemic, and supply chains are buckling under the strain.

The problems—and the reasons for them—are many and complex, but they begin with the simple fact that between 80% and 90% of the world’s goods travel at some point by ship, and shipping is in the midst of a perfect storm.

Surging demand, container shortages, port bottlenecks, shipping price increases, trade imbalances, and so on are roiling the economies of the world.

We are subject to global interconnectedness, interdependence, and interrelatedness, and it requires new thinking. This starts with a move away from “just in time” approaches to thinking that incorporates “just in case.”

Today’s focus is too siloed. Every company is doing its darndest to figure out its supply-chain problem, and solutions appear out of reach. A more expansive approach, one that incorporates collaboration and innovation within industries, is a more likely way forward.

Industries bring the collective wisdom, insights, and scale necessary to build practical and durable solutions. Approaching it from this perspective, industries can build their structural frameworks consisting of their own supply chains, study points of failure, and build precompetitive strategies that help ensure durable and resilient supply chains.

Such strategies to address macro policy and logistics concerns are already being implemented. For example, American Eagle has reached outside traditional thinking and built out a logistics platform that can be used by others in the apparel industry. As is the case with other new innovations, the global pandemic accelerated the launch of this unique strategy. The effort is led by Shekar Natarajan, chief supply chain officer at American Eagle. Almost 50 other companies are using the platform, and Natarajan is seeking to add an additional 200 brands.

Strategic partnerships between industries and their trade associations are also proving invaluable. Trade associations are accelerating their traditional roles as industry advocates, and they are ready to meet the moment.

They can be positioned as strategic business units, serve as neutral integrators, and collect information on points of failure throughout the supply chain. From there, they develop policy solutions, implement advocacy strategies, shape a favorable business environment, and deliver road maps leading to resilient supply chains.

These strategic partnerships between industries and their trade associations already help deliver unified advocacy strategies and convey outcome-focused messages to government officials. For example, the recreational boating and baking industries have built their own strategic partnerships with their trade associations.

For their respective industries, the National Marine Manufacturers Association and American Bakers Association serve as strategic business units, and they are changing the game. Through an impressive ecosystem, the National Marine Manufacturers Association and the recreational boating industry promoted the great outdoors and the boating experience when the economy went into lockdown. NMMA’s Discover Boating and the Recreational Boating and Fishing Foundation launched a Take Me Fishing promotional campaign.

Consumers stuck in quarantine would learn about opportunities to break free and enjoy the great outdoors. The strategic initiative helped the recreational boating industry achieve a 20% year over year (2019 to 2020) increase in revenue.

In another example, the strategic partnership between the food industry and the American Bakers Association really mattered: Through a Food and Beverage Industry Alliance, the baking industry and all food companies were designated as critical infrastructure: Plants and factories were kept open owing to their work with regulators, where they collaborated to design effective worker safety protocols.

These types of partnerships provide a way forward on everything from developing industry fail-safe options to where and how to store excess parts and goods in the next national emergency. Industries and suppliers seeking to reshore production can leverage their strategic partnerships to build cooperative local government relationships. For example, they can work with state and regional transportation authorities and advocate to secure the necessary transportation or rail infrastructure to ship goods.

Supply chains are not the types of things that are easily fixed. We all want the shelves stocked on our next shopping trip. It’s time for industries to reimagine the supply chain by leveraging their collective assets and strategic partnerships with trade associations.

Dan Varroney is the CEO of Potomac Core Consulting and the author of Reimagining Industry Growth.

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