Macro trends in Supply chains - how to counter inter-regional uncertainties with a digital approach?

Supply chains are becoming more complex, with regional interconnectivity growing by the day. International trade also continues to grow and becomes faster, at a global, regional and local level. These developments not only affect the speed of operations but also add complexity to supply chains. To counter these uncertainties, companies need to adopt a digital approach to their supply chain management. Macro trends such as digital transformation, the Fourth Industrial Revolution, Industry 4.0, and the Internet of Things are disrupting the supply chain landscape in every region of the world. In this blog post, we highlight some of the key macro trends that need to be considered to unlock the potential of your supply chain in the upcoming years.

Importance of digital supply chain management

With the increasing number of regional trade agreements, uncertainty and risk is rising in many parts of the world. This puts a premium on supply chain management that’s more advanced than ever before — one that not only integrates logistics information but also makes that data easily accessible across the organization. That’s why digital supply chain management is so important And choosing the right Supply Chain platform that enables companies to better manage all their complex supply chain activities in real-time, across their entire value chain is extremely critical.

It also helps them identify where they can make improvements to their processes to drive efficiencies and reduce overall costs. With a digital approach, companies can integrate their entire supply chain to see how orders are moving through their network, identify and address gaps in both their physical and supply chain finance, and adjust as necessary.

They can also use advanced technologies to monitor their supply chain partners in real-time and ensure that they meet the company’s standards for service level, quality, and safety. Digital transformation allows for greater control and visibility, better decision-making, end-to-end visibility, faster response times, and a reduction in overall costs.

Region-based uncertainty

Regional trade agreements have been at the forefront of news as of late thanks to the Trump administration’s decision to withdraw from the Trans-Pacific Partnership. However, regional trade uncertainty can complicate the matter. Unforeseen trade conflicts or disruptions can make it difficult to source from a specific region or destination. For example, deteriorating relations between the U.S. and China could make it more challenging to source products from this country. This type of uncertainty can be addressed by diversifying the sourcing of products, as well as the modes of transportation used to move them. Companies can also use risk management approaches to manage the challenge, for example, adopting a “Just-in-case” approach rather than “Just-in-time” when it comes to inventory management. In many parts of the world, populist sentiments are growing. In the Asia Pacific region, populism has led to an increase in region-based uncertainty. Some countries in the region are pushing for more protectionism and increased regulation, causing companies to rethink their supply chain strategies and move towards localisation of production facilities . In the Americas, uncertainty continues to grow between the United States and Mexico. Meanwhile, uncertainty is also rising in Europe, where populist movements are becoming more common. In the Middle East, uncertainty is growing as countries like Iran remain hostile to the United States, and the Trump administration’s decision to pull out of the Iran nuclear deal has created a fair amount of tension between the two countries.

Inter Regional Conflicts

Conflict in certain regions can also affect trade. As an example, the conflict between India and Pakistan resulted in a 10% decline in trade between the two countries. This has a significant impact on trade routes that connect these regions. Similarly, the economic impact of Brexit could also disrupt trade flows between Europe and the U.S. For example, U.S.-based companies currently shipping goods to Europe could see their operational cost rise because of custom shifts post-Brexit. Again, these uncertainties can be managed by increasing diversification of sourcing and transportation modes. Also, companies can use risk management approaches to anticipate the impact and take corrective actions.

Regional trade agreements and the uncertainty they bring

Growing economic ties between countries often lead to enhanced trade. However, this also makes trade more complex. This is because any two countries will have different trade policies and priorities. For example, the U.S. and China are currently embroiled in a trade war. This type of uncertainty can be addressed by making sure that procurement and sales teams are well-informed about relevant trade policies. It’s also advisable to work with suppliers that have the necessary experience working in different markets and navigating their customs and trade regulations.

Transportation uncertainty

In addition to managing procurement and supply chain challenges between countries, businesses also must deal with transportation uncertainty. This is driven by shifting trade patterns, improvements in transportation technologies, and the volatility of fuel prices. For example, changes in trade patterns, such as the shift towards East-West trade, can create bottlenecks in certain transportation corridors. Similarly, technological improvements such as the development of autonomous vehicles, smart ships, or drones, could change the way goods are transported. This type of uncertainty can be managed by staying up to date about developments within the transportation industry and the potential impact on supply chains.

Business Collaboration and Networking

One of the most important ways to deal with uncertainty is to form partnerships — not just with other companies, but also with governments, logistics providers, and other stakeholders in the supply chain. Companies already regularly engage in business collaborations, but the importance of these partnerships will only increase as uncertainty grows. For collaborations to be effective, companies need a way to track their progress and make adjustments along the way — which is where technology can help. To manage uncertainty, companies need to actively network with their peers and potential partners. They should be attending industry conferences, hosting webinars, and participating in online forums. Companies should also consider adopting digital solutions such as Supply Chain Platforms, to help navigate uncertainties through the use of data and address the needs of a wider supplier network to improve supply chain resiliency. All of these activities help them stay up to date on the latest trends in their sector and identify potential partners who can help them navigate uncertainty.

AI-based Supply Chain Management

As supply chains become more complex, there is an increasing need for automation. This is true for both the front-end and the back end of operations. Front-end automation is used for demand planning and supply chain optimization, whereas back-end automation is used for inventory management and logistics. At the same time, emerging technologies such as the Internet of Things (IoT), artificial intelligence (AI), and machine learning (ML) are making automation more accessible and scalable. Supply chain platforms are looking to help bring these capabilities together to make it easier for companies to implement an AI-based supply chain management approach.

Conclusion

The global trade landscape has long been characterized by uncertainty. And, as the world evolves, this uncertainty continues to grow. With it, the need for a more agile supply chain to react to these challenges. Businesses can make this happen by adopting a digital approach to supply chain management. It allows them to reimagine the entire value chain, end-to-end, from the moment an order is placed until its final delivery. It’s an essential step towards preparing for the future of trade. Companies should consider investing into Supply Chain platforms that not only aim to improve their operational efficiency through the visibility of data but also have the ability to holistically address their supply chain’s liquidity needs by facilitating the connection between buyers, suppliers, and funding sources.