Aug 23, 2019
Global Supply Chains are undoubtedly going through some of the most radical changes in decades. What once used to be the heart of globalization – the process by which raw materials, parts and components are moved across multiple national boundaries by land or by sea, before being made into finished goods – is facing an uncertain future! But first of all, the success story.
From 1990 to 2010 global trade boomed on the back of tariff cuts, cheaper communications and lower transport costs. The Organization for Economic Co-operation and Development (OECD) reckons that 70% of global trade is now tied up with increasingly complex global value chains. Retailers in Europe and North America built up networks of inexpensive suppliers, especially in China. Multinational corporations extended their supply chains in the search for cheap labor and globalized economies of scale. Lean inventory management and just-in-time deliveries were just two of the key concepts implemented to enhance efficiency and improve cost management. But there are now signs that the seemingly unstoppable pace of globalization is slowing down – or worse. According to OECD estimates, global trade growth has slowed from 5.5% in 2017 to 2.1% this year. Cross-border investment fell by a fifth in 2018. Global regulatory harmonization is giving way to national or regional approaches. And, China is no longer the cheap manufacturing country it once was, as wages have risen significantly and stricter environmental laws are biting.
Besides the political conflicts typified by President Trump’s tariff war with China or Brexit, the rise of e-commerce giants such as Amazon and Alibaba has radically changed consumers’ view of the market place and their buying habits. But the biggest revolution is undoubtedly on the technology front. Artificial intelligence (AI), Predictive Data Analysis and Robotics are already transforming manufacturing industry and its distribution and delivery chain. In the future, 3D-Printing, Blockchain technologies and Autonomous vehicles could have a similar far-reaching impact. Last but far from least, cyber-attacks from either private or state-sponsored hackers may well pose a serious threat to supply-chain security.
Digitalization (or Digitization) is expected to have just as serious an impact on supply chains as the first and second industrial revolutions did on manufacturing. Although a relative latecomer to global supply chains, and particularly the seaborne ones, digitalization will make supply chains smarter by increasing their predictability, transparency and speed of delivery. Cognitive Analytics and AI are just two of the factors that will no doubt make supply chains more predictable.
In the surprisingly opaque world of seaborne supply chains, sensors and big data capabilities will enable increasingly sophisticated track & trace services so that multinational shippers actually know exactly where their goods are at any point in time. IBM and Maersk, for example, are using blockchain technology to digitalize shipping processes and make them more transparent.
In today’s riskier world of global supply-chain management, companies desperately need to become more data security-conscious and guard against cyber-risks. The mindset of “we’re safe today because we never had any data problems in the past” can open the door to an existential threat to a company’s business. But waiting for the current storms in global supply chains to pass is definitely not a sound strategy. The key to successful supply chain management now and in the future is a realistic assessment of existing strengths and weaknesses. Without a doubt, Data Transparency and Data Security are two areas where nearly every global supply-chain player can improve its performance.
At Ocean Insights, we consolidate and evaluate data from multiple sources to help logistics teams all around the globe to stay on top of things, whether for day-to-day operations or for strategic decisions. Our primary aim is to help our customers to succeed by enabling full inventory visibility through outstanding software and service.
To know more about our solutions, get in touch with us, today.