Supply chains are running at full steam as the economy is booming in parts of the world, while others are taking a hit from the obstacles hindering better open commerce and trade. Protectionist trade policies are leading to shifts in country sourcing practices and investments in automation and technology to help keep goods moving and visible. And there is no reason to believe that in the coming twelve months we will see a waning of geo-political posturing along the trade front. The issues of labor and transportation costs, along with capacity, will beleaguer everyone from the supply chain manager to the CFO. Through it all, the consumer will be the proverbial tail wagging the dog.
This is the state of our trade world and where we are called to continue to do business. As we move into 2019, there are six major areas of concern for anyone playing a part in global trade. They include:
#1 – Trade Policies Continue to Vacillate
Almost every major economy is building a “trade wall” along its borders – the US, EU, UK, and China. Concerns about the appropriate balance of trading between nations, consumer safety, protecting against terrorism, and of course generating revenue, are the root of the volumes of legal documentation and corps of agents at the borders enforcing them. It is critical to be tuned into the geo-political topics that are impacting the direction of global trade and the implementation of punitive and retaliatory tariffs. Companies should consider how to react to these developments and brace for more changes that might come down the road.
#2 – Sourcing Shifts or Not
With the upheaval of trade policies around the globe, companies are trying to keep pace by shifting their sourcing strategies to avoid being a trade war victim and to take advantage of new opportunities as they arise. As companies continue to look to foreign markets as a means to grow top line revenues and avoid increased duties, the number of borders crossed is increasing. Companies that get out in front of these changes can start by looking at the technologies and systems that will level-up their profits and efficiencies, all while innovating and keeping up with demand and lowering liability exposure.
#3 – The Consumer Rules the Supply Chain
Consumer demand is determining business practices and guiding supply chain movements more than ever before. No matter how fast a product moves from concept to consumer, if the cost is too high, the quality is lacking, or if it’s not truly innovative, the bottom line will suffer. To truly increase speed without compromising on other equally-important factors, a company must become both more efficient and more agile. While there are a few different methods to accomplish this, digitization is the only answer worth exploring. Digital technology will create a significant improvement in business outcomes, as long as businesses reinvent their supply chain strategies while concurrently reimagining their supply chains in the digital sphere.
#4 – Technology Investments to Make
Technology is advancing at an exponential rate, but the supply chain industry is often derided as slow to adopt and adapt. C-level executives realize that leveraging technology to improve supply chain operations is no longer a matter of “biting the bullet”, rather, it is an imperative to stay ahead of the competition and the fast-moving trade environment. So, they are spending, but wisely.
Today’s supply chain technology stack comprises of a varied range of systems and processes. Supply chain managers and their supportive CIOs need to focus on several key supply chain technology implementations or considerations which will impact cost, risk and agility – a recurring theme. There is no doubt the most important feature of any smooth-running supply chain is visibility; meaning full visibility with the capability to control the supply chain from your vantage point.
#5 – Transportation Woes
The wild upswing of online shopping has led to some positive modifications related to the economy, but the “cost to serve” and ability to meet customers’ demanding timeline is taking a hit. A strong economy, higher fuel rates, and ongoing driver shortage are keeping capacity tight for ocean, rail and truck shipments.
The ocean shipping industry might finally be righting itself, but shippers are still aggravated with issues. Following the carrier consolidation predicament that rattled the industry, the ebb and flow of demand is leading to capacity issues for some trade lanes. Once those goods make it out of the port, the rising transportation costs only continue. The US has been plagued by a truck driver shortage, recently made worse with new federal trucking regulations and higher fuel costs. Diesel sits at a 3-year high while trucking companies increase their prices, shrinking margins across all industries. Freight industry executives are cautioning their customers to expect even more price increases for shipping this year.
#6 – Labor issues All Around
Growing consumer spending has led to an increase in manufacturing in many parts of the world. It is hitting especially hard in the US where demand for transportation and warehouse workers has reached high points. E-Commerce is at the root of the hiring surge. In the US, thousands of jobs are unfilled in the transportation, retail, and business-services sectors as workers become scarce in the fast-growing economy. The labor shortage doesn’t show signs of abating any time soon, so supply chain strategies for 2019 must consider ways to address this issue. Companies should be prepared for impacts up and down the supply chain, from warehousing to ports, from transportation to retail.
Managing global supply chains in an unpredictable trade environment is not easy, if it ever has been. But thanks to new digital supply chain tools, the job is getting easier – and smarter. For the first time, firms have access to a single, collective, non-siloed trade management solution that captures every kind of supply chain/trade data available, provides robust analytics capabilities that enable management to make better, faster decisions, enable collaboration on a scale not possible before, and automate tasks that previously consumed hours of valuable labor resources.
It’s all about doing a more intelligent job of managing risk, anticipating what’s likely to come at your supply chain from any source or direction, and having the ability to make better decisions on the fly. Most importantly, though, it’s not about just controlling or cutting costs. The whole point is to preserve and, better yet, build profitability.
To learn more, watch Amber Road’s on demand webinar where an esteemed panel of experts discuss The Top 6 Global Supply Chain Expectations for 2019.
Gary Barraco, Director of Global Product Marketing, is responsible for developing strategic product marketing direction and presenting the Amber Road brand and solutions worldwide. As the platform evangelist, Gary develops and launches customer insights, go-to-market plans, product messaging and content, and field marketing tactics which establish Amber Road’s solutions as a standard in the Global Trade Management space. Previously, Gary was VP, Industry Development for ecVision for 9 years prior to its acquisition by Amber Road. He has 20 years of active military service where his primary specialty was providing marketing support to Army National Guard recruiting and retention operations in New Jersey. Gary received a BS from the State University of New York and is currently pursuing a Master’s degree at Moravian College.