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Compare the Global Supply Chain of Yesteryear to the Logistics Future

by Wendy Buxton | Feb 06, 2017

2016 was a year of many milestones in the supply chain arena with globalization an ongoing focus for supply chain development professionals. The trend continues as decision-makers in countries around the world link the procurement, manufacturing, and distribution networks that make up the global supply web. Let’s look back at 2016 supply chain landmarks and look forward to what the global supply chain could look like this year.

 

2016 milestones

Last year was a mixed bag of supply chain milestones and events. The global trade volume slowdown overshadowed many developments; however, industry leaders have been shifting to respond to accelerated manufacturing and delivery needs as a result of this drop in volume. Here is what that looked like in 2016:

 

  • Panama Canal — The Panama Canal expansion, which started allowing movement of bigger ships through its expanded locks and channels in the summer of 2016, is expected to have a big impact on the global supply chain. In fact, according to an article from The Boston Consulting Group, “… as much as 10% of container traffic between East Asia and the U.S. could shift from West Coast ports to East Coast ports by the year 2020.”

     

  • Brexit — The United Kingdom vote to withdraw from the European Union shook the world in 2016. However, impacts on the U.K. and the global supply chain are still just predictions and forecasts. Only time will reveal how this major shift will affect the industry. According to a SupplyChainBrain article, “Of course, the answers aren’t likely to be immediately evident. They depend in large part on the actions of governments, especially those of the U.K. and its EU counterparts. But companies can at least make a start on figuring out the impact of Brexit, by assessing the nature of their own supply bases.”

     

  • Internet of Things (IoT) — IoT, or Internet-connected everyday devices that send and receive data, was more than just a 2016 buzzword. Poised to transform the supply chain, successful company leaders are taking note of the possibilities and impacts this developing area will offer in the short and long term.

  • Amazon consumers buying direct from China — Through Amazon China, Chinese manufacturers have been able to produce and sell on demand directly to consumers. This setup has taken the global supply chain by storm. According to a Forbes article, “For China alone, sales volume increased 207% between 2013 and 2014, then increased another 230% on top of that from 2014 to 2015.”

 

Supply chain shifts are becoming standard

These 2016 milestones highlight supply chain developments that are likely to become standard practice in the 2017 global supply chain. Fueled by the need for faster product life cycles and customers’ instant delivery expectations, supply chain business as usual is clearly shifting.

  • Visibility and real-time data through technology — According to the World Economic Forum, “Technology is making supply chains more dynamic. Information technology, the internet of things, big data and the cloud enable new management processes that allow for longer and more complex supply chains.” This visibility and real-time information, in turn, enables more agile decision-making, decentralized yet connected production, and shorter supply chains.

     

  • Faster delivery through a greater number of shorter supply chains —Infrastructures like Amazon China, which enables factory-to-consumer delivery, are changing the way savvy decision-makers operate their supply chains. With available real-time data and technology, company leaders are better able to determine where to build manufacturing and distribution centers to shorten their supply chains, which means quicker deliveries to customers. This idea of “nearshoring” or “nextshoring” increases agility and decreases costs related to inventory, delivery, and more. According to an article in McKinsey Quarterly, “In the world we’re entering, the question won’t be whether to produce in one market for another but how to tailor product strategies for each and how to match local needs with the latest veins of manufacturing know-how and digital expertise.”

Today’s global supply chain

Major shifts are taking place to make the global supply chain ready for the 2017 economy, politics, and market expectations. With “the need to evolve” as catalyst and “technology” as the means, the supply chain continues to shift to a more global, accelerated web. If 2016 landmark events are any indication, 2017 holds the promise of great supply chain developments. 

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