Guest: Maggie Barnett of LVK on managing supply chains with on-again off-again tariffs; The logistics economy picks up speed; The challenges of applying Generative AI
Feb 7, 2025
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Maggie Barnett discusses the recent turmoil surrounding tariffs, especially the unpredictable changes affecting Canada, Mexico, and China. She offers insights on how supply chains can adapt in this fluctuating environment. The logistics sector is experiencing notable growth, driven by rising inventory and economic activity. Meanwhile, the adoption of generative AI is on the rise, yet companies face challenges in achieving significant productivity gains. The conversation highlights the need for better AI integration and the evolving role of third-party logistics providers.
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Quick takeaways
The recent uncertainty in U.S. tariffs, especially for Canada and Mexico, necessitates that supply chains adopt flexible strategies and reassess logistics operations to mitigate potential costs.
Despite widespread adoption of generative AI in supply chains, organizations face challenges in productivity and ROI, emphasizing the need for innovative applications and employee training to achieve better outcomes.
Deep dives
Impact of Tariffs on Supply Chains
The recent tariff announcements, particularly those affecting Canada and Mexico, have created significant uncertainty for U.S. supply chains. While these tariffs were postponed, companies must still prepare for potential implementation, as the timelines are short and unpredictable. Many U.S. businesses, particularly in e-commerce, have traditionally relied on strategies to avoid tariff expenses through models that benefit from de minimis exemptions. With the possibility of these exemptions being removed or adjusted, companies are now required to reassess their logistics strategies and anticipate additional costs associated with incoming tariffs.
Importance of Optionality in E-commerce
In light of the changing tariff landscape, e-commerce companies are urged to prioritize flexibility and optionality in their supply chain strategies. As the operational environment becomes more volatile, businesses are encouraged to establish relationships with multiple vendors and explore new fulfillment partners rather than rushing into changes. This strategic adaptability can provide a buffer against sudden regulatory changes and market demands. It's vital for these companies to approach fulfillment as a partnership rather than a transactional relationship, ensuring that they choose partners aligned with their long-term goals.
Generative AI Challenges in Supply Chains
The integration of generative AI in supply chains has demonstrated mixed results, with many organizations reporting mediocre returns on productivity despite significant test usage. Productivity gains noted in desk-based roles have not seamlessly translated to overall team productivity, often heightening employee anxiety regarding job security. A report suggests that organizations should not only focus on time-saving measures but also explore innovative applications of AI, invest in employee training, and shift from automation metrics to innovation outcomes. This highlights the necessary balance between leveraging technology and maintaining employee confidence and productivity within supply chain operations.
Our guest on this week's episode is Maggie Barnett, CEO of third party logistics company LVK. It has been a whirlwind week in Washington. First the administration announced shocking new tariffs. Then within hours those new tariffs for Canada and Mexico were called off and postponed for a month. New Chinese tariffs remain. With all of the back and forth and uncertainty, how are supply chains to plan for their future? Our guest offers some advice and also discusses the changing de minimis rules for importing small-value items that had formerly been exempt from tariffs.
Economic activity in logistics expanded in January, growing at its fastest clip in more than two years; that’s according to the latest Logistics Managers’ Index (LMI) report, released this week. We look at the solid numbers and what they mean for the near-term future of supply chains.
Artificial intelligence is one of the biggest buzzwords of the year, but a new study shows that although most supply chain organizations are testing it out, a lot of them are running into challenges. This news comes in a new survey from the analyst group Gartner that found that generative AI (GenAI) is being deployed by 72% of supply chain organizations, but most are experiencing just middling results for productivity and ROI.
Supply Chain Xchange also offers a podcast series called Supply Chain in the Fast Lane. It is co-produced with the Council of Supply Chain Management Professionals. A series of ten episodes is now available on the "State of Logistics." The episodes provide in-depth looks into the current states of key transportation modes, such as trucking, rail, air, and ocean. It also looks at inventory management, 3PLs and more. All ten episodes are available to stream now. Go to your favorite podcast platform to subscribe and to listen to past and future episodes. The podcast is also available at www.thescxchange.com.