Globalization: What’s Actually Happening and What’s Not?

Will:
All right, everybody get excited. Your favorite podcast is back. I am with Dan Magida. This is Will Davis and you are listening to Safety Stock. Dan, how are you doing today? Good, sir.

Dan:
Doing great. How are you? How are you doing today?

Will:
I’m fantastic. Excited for the first couple of days of fall and I’m also excited for what we’re talking about today,

Dan:
Same globalization,

Will:
Globalization, where are goods being produced and how is trade doing across the board? Dan, I think, you know, as if you’re working for a brand today, what is good to know is that you’re continuously able to see more and more places having the opportunity to produce the products you’re looking for, you are not being held to one location and having that thought is probably actually a detriment to you. You should ultimately be open to looking at the availability for your good to be produced are. And Dan, what are we seeing in terms of some of the numbers right now?

Dan:
Yeah, I mean one of the main takeaways from we’ve seen in just the trends with Covid would say is probably one of the big things. The war in Ukraine, Russia, and then rising inflation costs. We’ve seen that actually trade has grown faster in 2022 and 2023 than it did in the previous decade, which kind of surprising when you look at some of like the importation numbers or just like what we’ve seen on translate, like how people are storing like in the US like a lot of inventory on hand of late, but those headwinds aren’t deterring trade, which is a very good thing and could be a good thing for the economy in the years to come as well for for the US and but mostly for the world too.

Will:
Yeah, I think the interesting thing is is that, you know, if you’re a brand and you’re trying to look at numbers and get an idea of, you know, forecasting what you think your sales are going to be there’s a lot of data out there and it just depends on how your outlook is on, you know, what type of action you take place. You know, I think what we’re seeing and what we’ve heard is that warehousing are warehouses are filling up and that some of the numbers in the US specifically have been slowing in terms of imports and we’ve seen evidence of that with ships, some canceling their sails from Asia or seeing some of that demand lack. But what we’re also continuing to see is the overall numbers continue to be continue to improve in terms of GDP as it, it looks to growth. I think we know over the past two quarters we’ve seen some contraction there, but Sure. What we think is happening now is that we’re seeing evidence of improvement overall across the trade sector. And so if you’re a brand owner, it’s what are the numbers you’re looking at in order to make a decision in terms of how you move forward. And Dan, I think that’s the question that you know people wanna know. Is that what, which numbers do you look at to try to get an outlook of where to go?

Dan:
I mean, are you, are you looking like, what do you mean by like output there for numbers? You’re talking internally or are you talking about those crunch is a merchant companies or countries in that sense? You

Will:
Know, if, maybe the question is is that if I’m a brand mm-hmm, how do I know if I should have an eco, like if I should have a positive economic outlook, if I’m saying the, you know, I should add more capacity or I should look to produce more numbers or should I be listening to my retailer only and basically my numbers based off where I’m selling, Like how am I making that decision in terms of what to look at when I’m producing my goods?

Dan:
Yeah, I think like one thing I think it, it also varies on like the, the market opportunity that you’re trying to get into as well. I think one thing Apple’s doing is they’re shift, they’re shifting their iPhone 14 manufacturing, which most of it is China with Foxcon two to India which has been developing some iPhones back for the probably like past five years. But they’re moving it to India as one way to possibly enter that market as well. More so they’re viewing it not only as a manufacturing shift but also as a shift to can, can these consumers in India start buying their product. So that’s a market play as well, which leads to that whole globalization theme. Now, not everyone’s gonna be doing that cuz some May a are not as big as Apple or have or even in international countries today. But the same thing could be said moving to the US Now we’ve read some reports where near shoring has not really spiked as much. I think it depends on the industry, but that’s one way to boost your customer sentiment in the States if depending on what you’re selling is let’s target the US more. Cause a lot of people only wanna buy made in the US products in certain, certain industries. So that’s one way to look at as well is how can I appeal to the brand or appeal to the masses. And that’s one thing that Apple’s looking at and we know plenty of brands who do that here with the me and the US tag on the lab items.

Will:
Yeah, and I think also too, some of the numbers are very focused on the short term piece of like what has happened versus what is going to happen. And so we know from a customer perspective, we see, you know, certain suppliers they are moving or they are adding production. You know, they may be in China, they’re now looking to add production in Malaysia, or we know, you know, Intel is building you know, a pretty big facility and outside of Columbus, Ohio, and that’s gonna be in like the next 3, 4, 5 years in terms of like making chips from that perspective. And so we know there’s sentiment that is moving towards production near where you are selling your goods. So it makes sense for Apple being in India makes sense if you’re in the US and looking to buy from that perspective. But I think also Dan, we’re seeing the dollar, right? Is that Yeah. One of the strongest points it’s been and does it, you know, you have buying power, you have some purchasing power.

Dan:
Yeah. Was the the, the Euro, now this is as of September 26th was pushing 96 cents one Euro to US dollar, which man, I can’t recall the last time it’s been even close to,
I mean that’s parody but even close to even below a dollar there. Same thing with the pound. Even the pound’s getting closer at a, I think it’s a dollar oh eight this morning. So there is some buying power to go into the UK year markets, but as we’ve talked before, energy prices are gonna source. So is that most likely in the winter? What does that mean for manufacturing? Glass a mean industry that produces over there in Italy and France. So you may have great parody on the dollar there for your economics, but manufacturing costs could rise just because of the energy output. So you gotta weigh those factors as well. If you’re thinking about that globalization of your supply chain,

Will:
I think it is ultimately important if you’re a brand is the constant valuation of what you’re producing and who you’re producing it with versus what is available out there. And it is not me. This does not mean that you have to make a switch or you have to change what you’re doing. That that’s not what I’m saying. But what I do think it means is that understanding what is available then allows you to have more intelligent conversations with your supplier and say, Hey, what’s the best point in time with our business? What can we be doing here? What can we be doing more of, less of? And it’s important for you to have these conversations at least once a quarter. You need to have quarterly check-ins. If you’re not checking in quarterly with the people who can make decisions, start doing it now. And if you’re doing a lot of business with them and a lot of volume with them, there is no there’s really no issue with even just having a quick monthly check in saying, Hey, things going well here, great things aren’t going well here. Let’s course correct.

Dan:
And, and you’ll be surprised that us by the fact that some of your manufacturing partners may have facilities in other countries that you just didn’t know about that that that’s very common now. It’s a whole conversation around auditing those facilities and then on top of that, what their outputs are and can they produce your goods. But it’s very common for a lot of facilities to have redundancies or partners in, in other countries as well. So look into that as well if your volumes keep increasing and if, and or if the current countries you’re in and you’re just backlogs or there’s other policies that come into place that prohibit you from the receive your goods in a timely fashion keep, keep that in mind. But as always, we love to hear from you guys on what are you seeing your supply chain? Are you nearshoring, are you refocused on other countries as you’ve enter this close, this 2023 season? Feel free to reach out to us at hello@anvyl.com and we’re more than happy to talk through what you have planned or how you should surface this in your supply chain.

Will:
Yeah, and remember in the Anvyl software there’s a quick, easy way for you to track your shipments specifically with your purchase order by uploading it and then tracking it on your shipment page. And so another good way to take a look about how globalization is affecting you, Dan, I think this was a good one. I hope so. Let’s look. Yeah, I think so. And yeah, let’s look forward to the next episode. Yeah,

Dan:
Talk to you soon.