From a Study, more than half of global manufacturers would make changes to their supply chain due to economic nationalism. Companies should analyze supply chains now to mitigate against future disruptions. Trade wars, global politics and national policies will influence the future of supply chain structures.
Investment in technology and considerations on sustainability in the supply chain will be key. As companies seek to strengthen operations and business resilience, the importance of supply chain resilience and risk management is more apparent than ever.
Economic nationalism is recognized as one of the most severe challenges facing manufacturing supply chains, the survey finds. When asked to choose their biggest global concerns, respondents place economic nationalism (46 percent) second only to taxes and duties (50 percent).
While many businesses have been nimble and ready to adapt to change, companies that have not already done so should prioritize analyzing their supply chains now, to understand where they might need to make changes or take action to mitigate against future disruptions. Considerations should include reviewing contractual obligations, assessing force majeure clauses, tax and employment implications of changes, relocation costs, entry and visa issues for staff, exit possibilities, as well as the option of swiftly reversing changes if the situation stabilizes or if new developments require the supply chain to adapt quickly.
The global supply chain had begun responding to US-China tensions and we can expect the disruption caused by COVID-19 to accelerate the pace of this response. Trade analytics show China lost global export market share at an accelerated pace in 2019, as companies moved to other countries. We have seen low-cost production moving mainly to Mexico and Vietnam. Together, the two countries have grown their market across the consumer goods and technology, media, and telecoms (TMT) sectors to 12% and 9% by 2019, largely at the expense of China. Vietnam’s clothing and smartphone exports, as well as Mexico’s automobile parts and computer exports, all gained as well.
As supply chains are reviewed, developments in technology and sustainability should also be considered. The COVID-19 pandemic has shown the many different ways business can continue to effectively communicate and manage within a remote working environment, which many companies are likely to leverage going forward. Indeed, those operations with stronger digital infrastructure have fared better in the COVID-19 pandemic than those without.
Meanwhile, advances in artificial intelligence and new technologies, such as blockchain, may present opportunities for further supply chain innovation. Furthermore, as supply chains are arguably a mechanism by which businesses can create positive impact in the world, those looking to change their supply chains should consider how to integrate elements and practices around human rights including labor rights, environmental protection, product sustainability, inclusive economic growth and ethical business practices.
Source: logisticsviewpoints.com, supplychaindive.com, weforum.org, inboundlogistics.com