EDITOR’S NOTE: Today’s post aims to identify the patterns or similarities of three significant economic policy events. These events should challenge us to better understand and prepare for the inevitable impact on our collective supply chains both today and in the future. The big question is will they finally enable us to implement the three most important supply chain practices?
The Silent Slope and the Bullwhip Effect are closely related phenomena. Both are driven by distorted or delayed demand signals and poor communication within the supply chain.
The Silent Slope sets the stage for misalignment by failing to react to declining demand.
This misalignment can trigger the Bullwhip Effect as upstream players overcorrect their production or inventory levels, leading to amplified disruptions.
Companies can mitigate the risks associated with the Silent Slope and the Bullwhip Effect by improving data transparency, real-time communication, and forecasting accuracy.
IMPACT COMPARISON
The 1930 Smoot-Hawley Tariff Act, the 2009 Buy American policy, and the 2024 U.S. Tariff plan all share elements of trade intervention that impact supply chains. These policies can exacerbate the Bullwhip Effect, a supply chain phenomenon in which small changes in demand result in amplified fluctuations upstream.
Below is a comparison of their impacts on the Bullwhip Effect:
Comparative Analysis
Factor
1930 Smoot-Hawley Tariff Act
2009 Buy American Policy
2024 U.S. Tariff Plan
Trigger
Protectionist tariffs on imported goods.
Policy to stimulate domestic sourcing.
Increased tariffs targeting imports.
Initial Reaction
Stockpiling and short-term demand surges.
Sudden demand spikes for U.S. materials.
Pre-tariff stockpiling and overordering.
Long-Term Impact
Severe demand collapse, overcorrection.
Inventory overhang, capacity strains.
Sourcing shifts, supply chain delays.
Global Trade Impact
Retaliatory tariffs reduced global trade.
Limited to federally funded projects.
Shifts global sourcing and trade flows.
Amplification of Demand
High due to global misalignment.
Moderate due to sourcing constraints.
High due to targeted, critical sectors.
Conclusion
All three policies amplified the Bullwhip Effect by introducing demand shocks, uncertainty, and misaligned supply signals:
1930 Smoot-Hawley: The most severe impact due to global retaliation, trade collapse, and poor visibility.
2009 Buy American: Caused domestic demand spikes and overproduction but was localized to federally funded projects.
2024 U.S. Tariff Plan: Likely to exacerbate the Bullwhip Effect in critical industries like steel, EVs, and clean energy due to pre-tariff stockpiling, sourcing realignment, and capacity constraints.
The scale of the Bullwhip Effect depends on visibility, supply chain agility, and how quickly organizations adapt to demand changes. The 2024 tariff strategy, much like its predecessors, highlights the challenges of balancing protectionist trade policies with supply chain stability.
WHEN SILENCE IS NOT GOLDEN
The Silent Slope describes a gradual, unnoticed decline in demand that leads to delayed responses in supply chains. This often results in overproduction, inventory buildup, and inefficiencies. Comparing the 1930 Smoot-Hawley Tariff Act, the 2009 Buy American policy and the 2024 U.S. Tariff plan provides a historical perspective on how trade policies can trigger or amplify Silent Slopes in supply chains.
Comparison Table
Factor
1930 Smoot-Hawley Tariff Act
2009 Buy American Policy
2024 U.S. Tariff Plan
Trigger
High tariffs on imports and global retaliation.
Policy shift toward domestic sourcing.
Tariffs targeting imports (EVs, steel).
Impact on Demand Signals
Global demand decline hidden by slow data.
Gradual decline for foreign suppliers.
Temporary surge, then gradual decline.
Supply Chain Response
Slow reaction and overproduction upstream.
Slow adjustments, foreign decline.
Overcapacity risks for domestic sectors.
Visibility of Demand Decline
Poor visibility, worsened by slow systems.
Moderate; better visibility domestically.
Better, but sector-specific lags exist.
Amplification of Silent Slope
High, severe in export-driven sectors.
Localized impact on foreign suppliers.
Moderate to high, particularly in targeted industries.
Conclusion
1930 Smoot-Hawley Tariff Act: Created the most severe Silent Slope due to global trade collapse and extremely slow responses by suppliers, compounded by poor visibility and communication systems.
2009 Buy American Policy: Caused localized Silent Slopes, primarily for foreign suppliers. The impact was gradual but less severe due to more modern communication systems and domestic boosts.
2024 U.S. Tariff Plan: Likely to create sector-specific Silent Slopes, particularly in industries like steel, EVs, and clean energy, where stockpiling, overcapacity, and slow responses will amplify demand misalignment.
Each policy highlights how to trade interventions if poorly managed or anticipated, can distort demand signals, trigger delayed supplier responses and intensify the Silent Slope phenomenon.
SUPPLY CHAIN IMPACT
What impact did the 1930 and 2009 policies have on domestic supply chains?
The Smoot-Hawley Tariff Act inadvertently disrupted domestic supply chains by raising costs, reducing access to critical imports, and shrinking export markets due to retaliatory tariffs. While intended to protect domestic industries, it led to inefficiencies, reduced competitiveness, and greater economic hardship during the Great Depression. These outcomes serve as a cautionary tale about the unintended consequences of protectionist policies on supply chains.
The 2009 Buy American policy had mixed effects on domestic supply chains. While it provided a much-needed boost to U.S. manufacturing and localized supply chains, it also led to higher costs, project delays, and trade tensions. The policy served as both a stimulus during the financial crisis and a lesson in balancing protectionism with the realities of modern, globalized supply chains.
When we look back on the U.S. 2024 Tariff Plan’s impact on our domestic supply chains what will be the likely assessment and lingering impact?
TODAY’S TAKEAWAY
What can we learn from these three events spanning close to 100 years to better prepare for future similar events?
It is worth noting that the same three practices would have significantly mitigated the impact of these economic policies on our supply chains. What are they and why have we struggled to implement them?
Procurement Insights 
The Relationship Between The Bullwhip Effect And The Silent Slope (1930, 2009 and 2024)
Posted on December 17, 2024
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EDITOR’S NOTE: Today’s post aims to identify the patterns or similarities of three significant economic policy events. These events should challenge us to better understand and prepare for the inevitable impact on our collective supply chains both today and in the future. The big question is will they finally enable us to implement the three most important supply chain practices?
The Silent Slope and the Bullwhip Effect are closely related phenomena. Both are driven by distorted or delayed demand signals and poor communication within the supply chain.
Companies can mitigate the risks associated with the Silent Slope and the Bullwhip Effect by improving data transparency, real-time communication, and forecasting accuracy.
IMPACT COMPARISON
The 1930 Smoot-Hawley Tariff Act, the 2009 Buy American policy, and the 2024 U.S. Tariff plan all share elements of trade intervention that impact supply chains. These policies can exacerbate the Bullwhip Effect, a supply chain phenomenon in which small changes in demand result in amplified fluctuations upstream.
Below is a comparison of their impacts on the Bullwhip Effect:
Comparative Analysis
Conclusion
All three policies amplified the Bullwhip Effect by introducing demand shocks, uncertainty, and misaligned supply signals:
The scale of the Bullwhip Effect depends on visibility, supply chain agility, and how quickly organizations adapt to demand changes. The 2024 tariff strategy, much like its predecessors, highlights the challenges of balancing protectionist trade policies with supply chain stability.
WHEN SILENCE IS NOT GOLDEN
The Silent Slope describes a gradual, unnoticed decline in demand that leads to delayed responses in supply chains. This often results in overproduction, inventory buildup, and inefficiencies. Comparing the 1930 Smoot-Hawley Tariff Act, the 2009 Buy American policy and the 2024 U.S. Tariff plan provides a historical perspective on how trade policies can trigger or amplify Silent Slopes in supply chains.
Comparison Table
Conclusion
Each policy highlights how to trade interventions if poorly managed or anticipated, can distort demand signals, trigger delayed supplier responses and intensify the Silent Slope phenomenon.
SUPPLY CHAIN IMPACT
What impact did the 1930 and 2009 policies have on domestic supply chains?
The Smoot-Hawley Tariff Act inadvertently disrupted domestic supply chains by raising costs, reducing access to critical imports, and shrinking export markets due to retaliatory tariffs. While intended to protect domestic industries, it led to inefficiencies, reduced competitiveness, and greater economic hardship during the Great Depression. These outcomes serve as a cautionary tale about the unintended consequences of protectionist policies on supply chains.
The 2009 Buy American policy had mixed effects on domestic supply chains. While it provided a much-needed boost to U.S. manufacturing and localized supply chains, it also led to higher costs, project delays, and trade tensions. The policy served as both a stimulus during the financial crisis and a lesson in balancing protectionism with the realities of modern, globalized supply chains.
When we look back on the U.S. 2024 Tariff Plan’s impact on our domestic supply chains what will be the likely assessment and lingering impact?
TODAY’S TAKEAWAY
What can we learn from these three events spanning close to 100 years to better prepare for future similar events?
It is worth noting that the same three practices would have significantly mitigated the impact of these economic policies on our supply chains. What are they and why have we struggled to implement them?
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