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With the extensive, interconnected supply chains that businesses are using today, the likelihood of disruption is higher than ever. In fact, according to a 2018 study, disruption within the supply chain continue to grow at an alarming rate, and is at its highest since records began in 2010. This could be down to a number of factors, and picking them apart - to find out what-is-causing-what - can be a tricky task. However, for those in the supply chain arena, staying informed about the factors influencing disruption, and acting pre-emptively is hugely important. Here, we lay out what we believe could be the biggest supply chain disruptors in 2019.
Supply chain disruptors: Political change
Political instability poses an enormous threat to supply chain stability. Events such as regime change, political upheaval, and uncertainty over government policy all have the potential to cause turmoil. The escalating US-China trade war is one of the largest factors in this regard, with the increasing use of tariffs pushing many China-based manufacturers and their US clients into rethinking the complex supply chains that bind the economies together. Furthermore, the complete uncertainty around Brexit, with barely a month until the UK leaves, and so many questions unanswered, is bound to cause large scale disruption. UK and EU supply chains were previously relatively straightforward, with complex intra-EU supply chains managed through easily accessible innovations, no tariffs, low costs in moving goods across borders, and limited border delays. After the UK leaves the EU however, this may no longer apply, causing mass disruption.
Skills shortages across both white and blue collar sectors will inevitably cause disruption. Skills sets within logistics and warehousing staff are already in short supply –and while robotics and automation will be able to offset this to a degree – technology can only do so much. The human skill set is still crucial for many roles, especially those which require traits such as emotional intelligence and critical thinking. This skills shortage will therefore have a wide-ranging impact on supply chains- take the recent example of Yodel, a company that collapsed under seasonal pressures in 2014 due to staff shortages, leaving Amazon with a back log of 200,000 shipments. With a recent survey of supply chain professionals showing that 70% of respondents believed that negative perceptions of the profession were harming employers’ ability to find talent, organisations will certainly need to prepare for disruption.
Digitalisation could also be a huge supply chain disruptor. For instance, big data and analytics will give companies and customers the tools to collect, analyse and use data to previously unprecedented levels. In addition to this, the Internet of Things (IOT) will continue to grow, with the cost of ‘smart’ devices rapidly decreasing, leading to them being incorporated into far more products and potentially complicating supply chains. Finally, technology such as drones and self-driving vehicles are rapidly innovating, with unmanned cargo ships, autonomous trucks, and self-learning stock-picking robots all set to become commonplace. This has already happened with self-driving vehicles, which are becoming a regular fixture inside production plants, with automated guided vehicles (AGVs) or laser-guided vehicles (LGVs) being used to move goods.
Supply Chain Sustainability
The rapid rise in global consuming class will make the need for sustainable supply chains greater than ever. There is growing demand for environmentally sound supply chains from the general public, and many organisations will have to embrace disruption in order to create sustainability. This will come in the most part from implementing large scale collaboration. For instance, this could mean the interlinking of production plants, where by-products of one plant can be used as the starting materials for another. Other examples include the sharing of distribution to reduce waste, such as ensuring that half-empty vehicles do not get sent out, and that deliveries to the same address are on the same truck. This could become extremely disruptive as it requires companies to collaborate with a number of external partners to ensure success. Furthermore, pressure from social media, which will provide far more information than ever to users about supply chains, will mean companies ignoring sustainability could face disruption from online backlash.
Ultimately, the factors listed above are in no way a definitive list of the supply chain disruptors of 2019. We have no way to predict the future, and there may be many potential disruptors on the horizon that we could never have expected. However, what we do know is that organisations can be sure to expect disruption in many different forms. The bottom line is that companies looking to succeed will need agile teams that can respond to change not only as it happens but far in advance. The only way to achieve this is by building highly skilled workforces, which makes finding the right people essential.
Have you got the right people in place to handle future supply chain disruptors? Take a look at how we’ve assisted organisations in building first class procurement and supply chain functions. Or, if you’re in need of a new challenge, visit our jobs page.