Deconstructing Global Supply Chains - Inbound Logistics
Deconstructing Global Supply Chains - Inbound Logistics
Global Economy, Logistics, Supply ChainDespite a shift toward regionalization, the era of complex supply chain ecosystems is far from over.More to the Story:About The AuthorIn recent decades, the story of globalization has been one of ever-increasing complexity for global supply chains. Producers have shifted manufacturing from one low-cost location to the next—resulting in complex global supply chain ecosystems.More recent trends toward regional supply chains reflect accelerating preferences for nearshoring and onshoring, plus the need to improve visibility and velocity in order to drive competitive advantage.But despite this shift toward regionalization, heightened consumer expectations mean that while supply chains may be getting shorter, their complexity is here to stay. Trade Growth Lags GDP GrowthWe have known for some time that the historic 2:1 ratio of trade growth relative to economic growth ground to a halt following the 2009 Global Financial Crisis (GFC).For almost two decades prior, between 1990 and 2008, world trade consistently grew at twice the rate of GDP (Gross Domestic Product), which averaged 3.2-percent annual growth. More recently, the trade-to-GDP correlation has become closer to 1:1.However, it seems that in the current climate of anemic GDP growth across the developed world, even a 1:1 ratio will be challenging to achieve.Among the many complex factors behind the latest slowdown is the lingering GFC hangover effect—throughout the developed markets—of reduced demand for consumer goods, many of which are imported via complex global supply chains.Ironically, these complex global supply chains were themselves created by the globalization frenzy of the past three decades, when outsourcing, offshoring, and unbundling initiatives fueled the dramatic growth of manufacturing in Asia, with China notably becoming positioned as the "Factory of the World."The endless pursuit of low-cost country sourcing (LCCS) initiatives chased the lowest cost locations for labor-intensive manufacturing activities. This led to the large-scale unbundling of production in terms of both location and process—which, in turn, drove the widespread globalization of supply chains, consequently becoming today's complex global ecosystems, encompassing profound inter-dependencies.This globalization resulted in a sustained period of continuous and rapid growth in worldwide cargo movements, now recognized as a massive "one-off gain" for international trade, albeit with massive benefits for international freight forwarders.However, just about anything and everything that could be outsourced and offshored to Asia has been. Hence, in recent years, we have seen only incremental growth in trade volumes.In addition, governments across the developing world have focused on domestic infrastructure investments to drive economic growth, while across all markets there are increased elements of protectionism, which is a drag on global trade.Large proportions of developed world populations have come to feel "left behind by globalization," resulting in the dramatic rise of populist protectionist sentiment that has truly polarized two of the world's largest economies, first with Brexit in the United Kingdom, closely followed by President Trump in the United States.The consequences include a substantial increase in the use of trade-restrictive measures such as tariffs, while bilateral trade agreements based on national interests are taking precedence over multilateralism.More than 1,196 new discriminatory trade measures were introduced worldwide during 2018, according to Global Trade Alert, more than three times the number of liberalizing trade measures at just 348.As WTO Director General Roberto Azevêdo articulated to world leaders at the 2017 World Economic Forum in Davos: "The net positive effect of trade means nothing if you've lost your job, so we need better domestic policies to support people and get them back to work."Supply Chain Ecosystem ModelCompanies are seeking to rebalance their supply chain complexity by adopting a more regional approach, moving some production activities "closer-to-home."Supply Chain Velocity Drives Competitive AdvantageSupply chain velocity is an additional factor influencing the re-thinking of goods flows beyond global to regional. With ever-shortening product lifecycles and speed-to-market a key differentiator, supply chain velocity is becoming another key component of competitive advantage.Companies are seeking to rebalance supply chain complexity by adopting a more regional approach, with the movement of some production activities—but not all—that can migrate closer to home. This reconfiguration of the manufacturing landscape will result in regional supply chains such as "Made in North America for America" or "Made in Eastern Europe for Europe."However, by no means does this result in a mass exodus of manufacturing from Asia.The well-entrenched global supply chain ecosystems that service developed markets in America and Europe from low-cost sources in Asia are very well established, finely tuned and highly efficient; they cannot be replaced easily. Plus, they need to expand to serve the rapidly growing local markets across the developing economies.Let's not forget the critical question: Where are the next 100 million middle-class consumers?Global companies must not ignore or underestimate the importance of domestic consumer markets in the emerging economies across Asia, whose potential is enormous. Indeed, "Made in Asia for Asia" will gradually become a leading model for regional supply chains that serve these growth markets in the Far East.However, to increase velocity in serving their global markets, more companies are exploring how they can shorten their supply chains.Regional Supply Chains Will be Shorter, But Will They Become Simpler?While supply chains greatly increased in length and complexity during the globalization era, looking forward, many business leaders expect to see fewer links in their supply chains, according to a study by The Economist Intelligence Unit.Nearly half of respondents (49 percent) say they expect their supply chains to shorten and become simpler during the next five years, while one-third of respondents say they expect supply chains to lengthen and become more complex. Participants include businesses large and small, with almost half of this group having annual revenues of less than USD $500 million.Study participants cite operational improvements and innovation as key factors in helping businesses reduce the length and complexity of their supply chains.By geographic region, almost six in 10 respondents in Asia Pacific (59 percent) say they expect to see shorter supply chains, compared to 46 percent in Europe and 45 percent in North America.Reflecting the ever-increasing need for better compliance and governance, more than one-third of respondents (36 percent) say they agree with the statement that "a rising regulatory burden will add cost and complexity to managing their supply chains."Supply chain visibility is confirmed as a key priority, with 54 percent of respondents saying that achieving complete transparency about where and how their products are made is an important or very important goal.While regional supply chains will be shorter, they are not necessarily simpler. Being closer to market enables more rapid product innovation and customization, empowering companies to address consumer preferences for products tailored to their needs.Despite the complex challenges involved, such increased responsiveness and agility will prove to be a durable source of differentiation and competitive advantage.Supply Chains are Expected to ShrinkSource: The Economist Intelligence Unit surveyA New Era for Supply ChainsAfter three decades of globalization, many companies expect their supply chains to shorten in the years ahead.While some manufacturing processes will migrate closer to home, speeding the shift toward regionalization, numerous well-established and finely tuned global supply chains will remain in place, adapting to serve expanding local markets.For businesses, supply chains may be shrinking, but the massive complexity embedded within today's supply chain ecosystems is still far from being over.
Dear customer, Good day, Welcome to VIPU, please describe the cargo information and demand in advance if urgent case please contact Email:email@example.com/Mobile phone :+8613424475220/Skype:narrynisha
Hello, please leave your name and email here before chat online so that we won't miss your message and contact you smoothly.