It’s time for businesses to stop experimenting and transform their processes through GenAI adoption. This article presents a summarized roadmap for this adoption based on the key takeaways of McKinsey’s findings.
McKinsey’s survey reveals a stark contrast between employees’ and businesses’ use of generative AI technology:
This disparity highlights the need for a strategic shift. Organizations must move beyond isolated experiments and embrace a holistic transformation that leverages GenAI's full capabilities.
McKinsey proposes a three-pronged approach to navigate this transformation successfully:
Identify areas of your business where GenAI can have the most significant impact, such as product development, marketing, customer service, supply chain, and finance. Develop a comprehensive strategy to transform these domains by integrating GenAI into core processes and workflows.
Here are a few examples of GenAI’s potential impacts in three business domains:
McKinsey’s research finds that early adopters and leaders in GenAI adoption and implementation clearly understand their talent gap. They actively invest in upskilling and reskilling their workforce to adapt to the changing demands of the AI-powered workplace.
This includes training employees to effectively use GenAI tools, interpret AI-generated insights, and collaborate with AI systems.
Businesses should develop new roles focused on AI strategy, implementation, and governance to support the transformation.
Establishing a robust governance framework to ensure the responsible and ethical use of GenAI is paramount. Over 90% of early adopters say their company has implemented some governance structure over GenAI. They also recognize the importance of role modeling, reinforcement of new mindsets and behaviors, and other tenets of the Influence Model to enable these changes.
Furthermore, businesses should create a dedicated Center of Excellence to oversee AI adoption, foster collaboration, and drive innovation. Companies must also cultivate a culture of experimentation, learning, and continuous improvement to maximize the benefits of GenAI.
The implications of McKinsey’s research are profound for supply chain and procurement professionals. GenAI is not merely a tool to automate tasks; it's a catalyst for reimagining how your entire domain operates.
Here are three steps to achieve this transformation:
GenAI has the potential to revolutionize supply chain management through automation, insights, and process optimization in the following specific domains:
As Generative AI reshapes the supply chain landscape, supply chain professionals must adapt to new roles focusing on AI strategy, implementation, and governance. These roles demand a blend of technical expertise and business acumen.
Consider creating new positions or reskilling existing employees to fill these roles.
Procurement professionals should establish a dedicated Center of Excellence (CoE) to oversee the adoption of Generative AI technologies within their supply chain. This CoE should be responsible for:
McKinsey's research underscores the urgency for organizations to embrace GenAI strategically. As the initial fears wane, companies that proactively transform their processes, structures, and talent strategies will reap the benefits of increased productivity and innovation and gain a competitive advantage.
GenAI is here to stay, and it's up to us to harness its power to create a more efficient, agile, and customer-centric supply chain. Babelus can be your partner in this transformation.
Contact us to learn more about how Babelus can help implement GenAI in your supply chain, or schedule a quick one-on-one to set up a free pilot for your company.
As industry leaders in supply chain management, we recognize the critical need for transparency and informed decision-making during periods of disruption. One recent disruption to supply chains was the collapse of the Francis Key Bridge, which halted operations in one of America’s most important East Coast ports, the Port of Baltimore. This article explores the Francis Key Bridge reconstruction, providing the latest information on timelines, costs, and the ongoing impact on the Baltimore region and global supply chains.
On March 26, 2024, at 1 am, the Francis Key Bridge collapsed after the container ship M/V Dali rammed into one of its support pylons.
The incident resulted in the tragic loss of six road workers. It also triggered a cascade of disruptions, culminating in the blockage of the Chesapeake Bay and the complete shutdown of the Port of Baltimore.
But that was almost four months ago. What has happened since?
The mission has been to remove the debris and open the port as soon as possible. Let’s see how progress stands today.
What is the situation in the Port of Baltimore today?
Authorities have carried out extensive operations to remove the debris from the river and the colossal container ship from the wreckage. However, the process has been slow.
Here’s a brief timeline of the most important milestones:
Preliminary estimates suggest that the cleanup and recovery operations alone have already surpassed $100 million and still need to be done.
But beyond that, the collapse has profoundly affected the local economy. The 2023 Economic Impact Study by the MDOT estimated that a port closure would directly impact 51,365 jobs, $16.2 billion in personal income, and $63 billion in business revenues.
This has so far resulted in an estimated daily loss of $15 million to the local economy during port closure, adding up to almost roughly $1.2 billion during the 11 weeks it took to reopen the port.
In response to the crisis, Maryland State unveiled ambitious plans to rebuild the Francis Key Bridge, adopting a cable-stayed steel truss design. This design is similar to the new Sunshine Skyway Bridge built in Tampa Bay after it collapsed in 1980 when a shipping vessel crashed into one of its pylons.
The image above shows schematics of what the reconstruction of the new Francis Key Bridge could look like. It showcases two towers with massive steel cables holding the bridge together. The roadway would rest on a structure of interconnected steel triangles known as steel trusses, ergo, a cable-stayed steel truss bridge.
The plan is to implement additional protective measures, such as dolphins and other safeguards, similar to those on the Sunshine Skyway Bridge. It’s sad to know that these simple add-on safeguards would have been enough to protect the Francis Key bridge from collapsing.
A consortium of renowned engineering and construction firms was entrusted with reconstructing the Francis Key Bridge, estimated to take four years.
While the new bridge is expected to enhance the Port of Baltimore's operational efficiency, the road to recovery remains long and arduous, especially considering the price tag.
The Francis Key Bridge reconstruction is projected to cost a staggering $1.7 to $1.9 billion. For context, this is almost 3x the cost of the Sunshine Skyway bridge ($780 million in today’s dollars). Fortunately, a combination of federal funding and insurance payouts will alleviate some of this immense financial strain.
The Francis Scott Key Bridge collapse stands as a stark reminder of the critical importance of robust infrastructure maintenance and risk mitigation. While the reconstruction efforts offer a glimmer of hope, the enduring economic consequences of this avoidable tragedy underscore the fragility of global supply chains and the imperative for proactive risk management strategies within the procurement and supply chain domains.
If you want to learn how Babelus can help strengthen and diversify your supply chain to protect it against events like these, send us a message or schedule a meeting to set up a free pilot for your company.
Our last article covered the Biden administration's announcement of new tariffs on various Chinese imports. We discussed the reasoning behind these tariffs, which are rooted in China's unfair trade practices, and the potential implications for procurement professionals, but we didn't address the full list of new tariffs.
In this post, we'll delve deeper into the specifics of the announcement, examining the existing tariffs and the newly added items. We’ll also examine a series of exclusions to the tariffs from the Trump Administration, which are about to expire and could cause a sudden, unexpected price hike for importers of Chinese goods.
We must look at how we got here to understand the current situation.
The trade dispute between the U.S. and China has been ongoing since 2018. The U.S. government imposed tariffs on Chinese goods under Section 301 of the Trade Act of 1974 in response to China's acts, policies, and practices related to technology transfer, intellectual property, and innovation deemed unfair for U.S. commerce.
Here’s a timeline of the dispute:
The tariffs imposed between 2018 and 2019, known as Lists 1, 2, 3, and 4, targeted a wide range of Chinese products.
| List and Notice Date | Number of Impacted Products | Value of imported goods | Imposed Tariff Rate |
| List 1 (June 20, 2018) | 818 | $34 billion | 25% |
| List 2 (August 16, 2018) | 279 | $16 billion | 25% |
| List 3 (September 21, 2018) | 5,745 | $200 billion | 25%(Initially 10%) |
| List 4A (August 20, 2019) | 3,243 | $300 billion | 7.5%(Initially 10%, then 15%) |
| List 4B (August 20, 2019) | 555 | Suspended | Suspended |
These lists covered almost all import categories of products coming from China. They also included exclusions for certain products, allowing them to be imported without facing additional tariffs. Most of these exclusions expired in 2019 and 2020 but were later reinstated. Additional exclusions were issued in 2020 because of COVID-19.
On May 14, 2024, following a four-year review of the Section 301 tariffs and the observation that China hadn’t effectively reduced its unfair trade practices, the USTR announced modifications to the existing tariffs and the imposition of a list of new tariffs.
These new tariffs will impact 387 products (365 in 2024, 16 in 2025, and 6 in 2026) in the following categories:
| Import Category | Rollout year | Old Tariff | New Tariff (as of May 14) |
| Steel and Aluminum | 2024 | 0-7.5% | 25% |
| Electric Vehicles | 2024 | 25% | 100% |
| Lithium-ion EV batteries | 2024 | 7.5% | 25% |
| Battery parts (Non-lithium-ion Batteries) | 2024 | 7.5% | 25% |
| Certain critical minerals (Metal ores and oxides, tritium, radioisotopes like uranium, and others) | 2024 | 0% | 25% |
| Solar cells (assembled and not assembled) | 2024 | 25% | 50% |
| Ship-to-shore cranes | 2024 | 0% | 25% |
| Syringes and needles | 2024 | 0% | 50% |
| Specific PPE (respirators, face masks) | 2024 | 0-7.5% | 25% |
| Semiconductors (16 types) | 2025 | 25% | 50% |
| Lithium-ion non-EV batteries | 2026 | 7.5% | 25% |
| Natural graphite | 2026 | 0 | 25% |
| Permanent magnets | 2026 | 0 | 25% |
| Rubber medical/surgical gloves | 2026 | 7.5% | 25% |
You’ll find the detailed list of new tariffs here.
In addition to the new tariffs, procurement professionals must be aware that some exclusions from the first four tariff lists are set to expire on June 14, 2024, while others will expire on May 31, 2025.
All 429 exclusions were set to expire on May 31. Of those, 265 were extended for an additional 14 days until June 14, while the remaining 164 were extended for an entire year.
What does that mean?
This means that 265 everyday Chinese imports (listed here) excluded from the original tariffs issued by the Trump Administration in 2018–2019 could all become subject to a 25% tariff starting June 15.
Procurement professionals must monitor the USTR's updates regarding the status of these exclusions.
It’s important to note that you, as a procurement professional, have a say in all this. If there’s an item on the list that you think shouldn’t be there, you can request that it be excluded.
The USTR proposes to create a process for excluding 315 general machinery products and 19 types of solar manufacturing equipment from the tariffs.
Additionally, you can request the reinstatement of the previous exclusions that will expire. This can be a valuable strategy for mitigating the impact of tariffs on your supply chain.
You’ll find the detailed list of possible machinery exclusions here. Don’t miss it!
Please let us know if you'd like a detailed guide on requesting an exclusion. We'll be happy to provide a follow-up article with step-by-step instructions.
And if you haven’t done so already, sign up for our LinkedIn newsletter, AI Chain Insights, so you don’t miss a beat.
The Biden Administration has just dropped a bombshell: it will apply new tariffs of 25%, 50%, and even a staggering 100% to $18 billion worth of Chinese imports. The new tariffs could lead to an escalation of the U.S.-China trade war that started during the Trump administration. Let’s dive in to understand the specifics of the new tariffs on Chinese imports, assess their impact on supply chain management, and develop a mitigation strategy.
On May 14, 2024, President Biden announced a series of new tariffs on Chinese imports valued at $18 billion under Section 301 of the U.S. Trade Act of 1974. The announcement confirmed a leak from a government official from four days prior.
The new tariffs target key tech and renewable energy components and products like solar cells, electric vehicles (EVs), certain semiconductors, and various electronics. They will have a significant ripple effect throughout U.S. manufacturing supply chains.
Tariffs have been hiked to 25%, 50%, or 100+%, depending on the product category. They won’t all come into effect immediately; only some will be rolled out in 2024, while the U.S. will roll out the rest by 2025 and 2026.
Here are some of the product categories to keep an eye on:
| Import Category | New tariff | Rollout |
| EVs | 102.5% | 2024 |
| Solar cells | 50% | 2024 |
| Some medical products | 50% | 2024 |
| Steel and aluminum | 25% | 2024 |
| EV Li-ion batteries | 25% | 2024 |
| Computer semiconductors | 50% | 2025 |
| Non-EV Li-ion batteries | 25% | 2026 |
This announcement is part of a mandatory four-year review of the Section 301 tariffs, so it wasn’t unexpected.
The official reasons behind this move include:
According to the Biden administration, China may be attempting to address its economic slowdown and overcapacity by dumping excess goods into global markets. Several reports about abandoned EV graveyards in China have highlighted the severity of this excess in production.
The problem is that these EVs have an unfair price advantage over others because the Chinese government subsidizes them.
For example, the new BYD Seagull, a small 5-door hatchback EV, currently sells for just under $10,000 in China and would cost roughly $12,000–$14,000 in the U.S.
Equivalent EVs manufactured in the U.S. cost 2–4X as much, as this list of the five most affordable EVs in the U.S. clearly shows:
The same is true for the other items on the list of impacted imports.
Despite fears of increased prices, the current measure is expected to produce only 0.01–0.1% inflation. After all, the new measure only impacts less than 0.5% of the $4 trillion of goods that enter the U.S. market annually.
But individual industries will feel the pinch:
However, the direct impacts on the tech industry won’t be felt until next year or the year after.
Looking ahead, it’s likely we’ll see:
BYD is already setting up manufacturing plants in Mexico to supply the Mexican and American markets while avoiding tariffs.
It's crucial to start planning for these long-term scenarios today.
If your industry is among the most impacted, diversifying your supplier base is crucial.
Other risk mitigation strategies include:
In these turbulent times, you need a partner who understands your challenges. BabelusAI's AI-driven tools can help you quickly identify and vet alternative suppliers and make data-driven decisions to keep your operations humming.
Contact us today to learn more about how BabelusAI can help you diversify your supplier base, or schedule a call to set up a free pilot for your business.
Stay tuned for our next article, where you’ll discover a detailed list of the products impacted by the new tariffs on Chinese imports. Also, subscribe to our LinkedIn newsletter, AI Chain Insights, so you don’t miss a beat.
As the world braces for the 2024 U.S. presidential election, the possible ripple effects on global trade and supply chains keep procurement professionals on edge. Let’s see if we can draw upon recent historical data to forecast potential outcomes of the upcoming election on supply chain management.
Presidential elections have historically been a harbinger of change, often bringing about policy shifts that can fortify or destabilize global trade networks. The last two presidential campaigns brought forth a slew of related predictions, ranging from the renegotiation of trade agreements to the imposition of tariffs.
However, the actual outcomes were sometimes less dramatic than anticipated, while at other times, they were overshadowed by unforeseen global events, such as the COVID-19 pandemic.
The first Trump administration was characterized by bold policies that left an indelible mark on global supply chains.
Let's explore the most important ones:
The Trump administration took an aggressive stance on trade, mainly through the Section 301 tariff war with China, which imposed a 10% and later 25% import tax on hundreds of billions of dollars worth of Chinese imports to revive American manufacturing, reduce the trade deficit, and get China to agree to a new trade deal.
The actual impact was multifaceted, leading to a complex web of trade realignments.
One study showed that Trump’s trade policies with China resulted in American companies shifting their supply from China to other Asian countries like Bangladesh, Hong Kong, India, and Taiwan, which increased the costs in their supply chains.
The Trump administration also designed a series of deregulation policies in the energy and financial sectors to reduce operational costs and foster economic growth. These changes impacted supply chain managers within the renewable energy sector as they navigated a new landscape where traditional energy sources were gaining prominence again.
The COVID-19 pandemic presented an unprecedented challenge to supply chains worldwide. The Trump administration’s response, which included a mix of travel restrictions and economic stimulus measures, had a varied impact. Some initiatives provided much-needed relief to disrupted supply chains, while others may have inadvertently intensified the strain on these critical networks.
The Biden administration’s policies have continued to shape the global supply chain landscape.
The U.S. CHIPS and Science Act, highlighted by Gartner, represents a significant pivot towards bolstering domestic semiconductor production. This legislation has not only shifted semiconductor supply chains from Asia to the U.S. Still, it has also positioned Mexico as a burgeoning manufacturing hub for various goods destined for the American market.
President Biden’s commitment to climate action has had a tangible impact on the oil and gas industries in the U.S. while simultaneously catalyzing the growth of renewable energy sectors and electric vehicles. These policies have redefined the energy supply chain in the U.S., with long-term implications for sustainability and economic viability.
Many supply chain managers expected the Biden administration to eliminate the tariffs on Chinese imports imposed by President Trump in 2018-2019. For American businesses, restoring business as usual with the Asian giant would have meant reconnecting with cheaper Chinese suppliers. However, this never happened, despite some analysts considering President Biden’s stance on China’s economic growth as weak.
As President Biden gears up for the 2024 U.S. presidential election, his administration’s proposals could significantly influence global supply chains, particularly concerning China.
These are President Biden's main proposals:
Biden’s approach to China involves strengthening alliances and partnerships to present a united front against China’s economic practices deemed unfair. This strategy could lead to more coordinated international efforts to balance China’s growing influence and could impact global supply chains by creating new trade blocs and agreements.
During his campaign, President Biden has repeatedly stressed the need to diversify supply chains away from China. This could mean increased investment in other regions, including, but not limited to, Mexico.
It’s no secret that China invests heavily in industrial espionage. One survey from the Center for Strategic and & International Studies (CSIS) found that 54% of Chinese espionage incidents since 2000 sought to steal commercial technologies, while 29% targeted military technology.
Biden proposes cracking down on industrial espionage and enhancing data security measures. This could lead to tighter regulations and controls on technology transfers, impacting companies with supply chains intertwined with Chinese tech industries.
Former President Trump’s potential return to office brings forth proposals that could drastically alter the landscape of international trade and supply chains:
In his campaign for the 2024 U.S. presidential election, Trump has proposed increasing tariffs on all Chinese imports to 60%. Such a significant hike could escalate trade tensions and prompt companies to seek alternative sourcing options.
Trump also proposes a 10% blanket tariff on all other imports. This policy could increase production costs and cause companies to reevaluate their global sourcing strategies.
Withdrawing from the Paris Accord and reversing climate actions taken by the Biden administration could have profound implications for industries related to renewable energy and sustainability, affecting supply chains focused on these sectors while bolstering supply chains for oil and gas.
The 2024 U.S. presidential elections present a pivotal moment for global supply chains, with China at the forefront of the discourse. Supply chain managers must prepare for various scenarios that may unfold post-election.
Tools like BabelusAI can assist procurement professionals in discovering new suppliers, fostering more resilient and diversified supply chains that can withstand the uncertainties of political shifts.
Write us a message and learn how we can shield your supply chain from uncertainty, or book a call now to set up a custom pilot for your company at no cost.
Iran recently attacked Israel in response to an Israeli airstrike on an Iranian consulate in Syria. In a time when the Middle East is on edge because of the Israel-Hamas conflict, this attack has procurement professionals facing a rising concern: what would be the impacts of an Israel-Iran conflict on an already strained global supply chain?
In today’s post, we’ll explore these potential consequences by assuming a neutral stance on geopolitics and focusing on the logistical and economic impacts on global supply chains.
Tensions between Israel and Iran have been building for over 40 years. However, the recent conflict between Israel and Hamas and other events have brought things to a head.
Last April 13, the world held its breath and watched in awe as Iran launched 170 drones, 120 surface-to-surface ballistic missiles, and 30 cruise missiles on Israel.
It was Iran's response to a deadly Israeli airstrike that destroyed the Iranian consulate in Damascus, Syria, two weeks earlier, on April 1.
Beyond the potential risks to the region’s stability, the immediate impacts of an Israel-Iran conflict would be felt the world over.
The key to those effects relies on the Middle East’s strategic importance to global supply chains.
Numerous cities in the Middle East were crucial stops on the famous Incense Route and the Silk Road. These vast, interconnected trade routes allowed goods like silk, spices, frankincense, and myrrh resins from the Arabian Peninsula, China, and India to reach Europe.
Both Iran and Israel are essential parts of the Middle East region, which has played a pivotal role as a trade hub throughout history. Its strategic location at the crossroads of Europe, Asia, and Africa made it a natural bridge for trade between these continents. It is this bridge that is now under threat.
The Middle East is even more critical in today’s global supply chain than in the past. It holds some of the world’s most important maritime trade routes:
In summary, the Middle East is a critical artery for international trade. A confrontation between Israel and Iran could clog that artery, sending shockwaves throughout the global economy.
The impacts of an Israel-Iran conflict on energy markets go beyond shipping chokepoints. Iran produces 4 million barrels of oil per day (bpd), or about 4% of the total world production, making it the 9th largest producer on Earth.
Iran is also a considerable oil exporter, with exports reaching 1.6–1.8 million bpd.
Several countries, including Japan, Korea, India, and China, rely heavily on Iranian oil. Any conflict involving Iran could disrupt its production and exports, significantly impacting global oil prices.
Conflict can also lead to heightened concerns about maritime security. We’ve already seen how Somali piracy is reemerging in vulnerable, unpatrolled areas, with attackers targeting ships for ransom.
Insurance costs for vessels operating in the region are now threatening to skyrocket. Rerouting around conflict zones also adds significant distance and time to journeys, further straining already stressed supply chains and making them more costly.
The above shows that the ramifications of an Iran-Israel conflict would extend far beyond the movement of oil. A complex web of interconnected industries would feel the pinch, including:
Many more industries would suffer if a new war in the Middle East broke the bridge between Europe and Asia. Knowing what could happen is half the battle; supply chain professionals must hope for the best but prepare for the worst… that’s where BabelusAI can help.
If you’re looking for insights to help bolster your supply chain's resilience, subscribe to our LinkedIn newsletter. We publish content like this every week, including actionable advice to help you navigate global disruptions.
English 
Español