Supply chains are never returning to ‘normal’

Supply chains are never returning to ‘normal’
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The common belief at this point is that, with the exception of China, the world has moved on from the epidemic, and supply chains will return to “normal.” This is unfortunately not the case. The world has changed forever, and supply chains will continue to encounter issues for decades to come. Among the difficulties are:

  • For the next decade, supply networks will be under continual threat of disruption.
  • When the globe is calm and stable, supply networks work best.
  • A well-functioning supply chain necessitates “buffer stock,” which is difficult to come by in the face of diminishing population demographics.
  • Environmental, social, and governance (ESG) goals clash with supply chains that are geared for cost and speed. We will have to deal with supply chain concerns if we emphasize ESG.
  • As firms continue to invest in technologies that may help them manage supply chain issues, supply chain technology will emerge as the main venture capital category winner.

During times of peace, supply networks benefit:

Anyone who has worked in the supply chain sector will relate to the reality that supply networks have always been disrupted. Natural catastrophes, terrorism, economic cycles, and capacity shortages have all posed problems since commerce began.

In supply chains, labor is crucial:

There has been a tremendous arbitrage between wealthy and poor nations. The cost of producing things in nations with cheap labor, inadequate environmental and labor rules, and a lack of concern for sustainable natural resources has allowed the globe to experience unparalleled wealth and peace.

Supply chain stability is harmed by ESG requirements:

ESG criteria have been implemented by businesses, requiring disclosure and monitoring of how and where products are obtained. Because of this pressure, commodities manufactured in factories that do not meet Western environmental and human rights standards may be unavailable to Western buyers. Because the manufacturers that do make things that meet Western standards are frequently more expensive, the system will have less buffer stock.

The main winner will be supply chain technology:

For product procurement, companies will seek closer to home. They’ll put greater emphasis on producing in nations that are significantly more stable and friendly to the US. Supply chain experts will emphasize production and sourcing in the Americas as a result of the Freedom Trade movement.

Latin America will profit significantly from having direct land transit networks with North America and seas that are adequately secured by the United States Navy.

Manufacturing and production will also accelerate in the United States’ South and Midwest, as they can provide dependable and resilient sourcing without the geopolitical concerns of foreign suppliers or the labor unions of the Rust Belt.

Robotics and automation will become increasingly significant. Nearshoring companies will use robots and other automated manufacturing technologies to offset higher production costs.

Supply chain market intelligence systems, a type of data that tracks supply and demand trends, will be essential for supply chain workers navigating more complicated and opaque marketplaces. Because materials and product supplies are no longer assured, organizations will need to rely on continually updated data models to track the supply and demand balance.

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