July 3, 2019

Study: Firms sharpen their focus on global supply chains

Mid-year update calls for heightened focus on global supply chain strategies, trade issues, and data analytics among transportation and manufacturing firms, company says.

By DC Velocity Staff

More companies will home in on their global supply chains in the second half of 2019 as they apply new technologies and develop a sharper focus on data analytics, according to a recently released study from transportation management software provider Kuebix.

Kuebix' June study, 2019 Transportation & Supply Chain Half-Year Review—Where are We Now? updates supply chain predictions the company made at the end of 2018 for transportation and manufacturing firms. Developing a more holistic approach to global supply chains, a more intense focus on data analytics, and keeping a sharper eye on China's changing economic role are among the top ongoing issues, the study found. 

Here are the five trends Kuebix says will shape the supply chain in the second half of 2019:

Expect big changes to global supply chain strategies. Kuebix says big changes are coming to global supply chain strategies, especially the need to develop a more holistic, organization-wide approach. This trend "continues to be true for many companies, especially those in the manufacturing industry. Companies are placing even more emphasis on their global supply chains to meaningfully impact their companies' bottom lines. Ongoing tariff wars and the associated uncertainty/repercussions have meant that top-level executives are balancing their financials more carefully and managing risk from volatile markets. American companies importing raw materials, parts, or finished goods from China will face their newest hurdle on July 6, 2019, when a 25 percent tariff goes into effect on $34 billion of Chinese goods," the researchers said.

Expect a more intense focus on data analytics. Data analytics continues to play an important role in examining, analyzing, and interpreting data related to supplier risk, tariff risk, logistics costs, and manufacturing costs, the study shows. "Being able to accurately analyze data and efficiently leverage the findings is an important investment for any growing business," the study authors said. "More companies are implementing advanced technology in their supply chains such as transportation management systems (TMS), warehouse management systems (WMS), and enterprise resource planning systems (ERP) to help manage an increase in data."

Pay closer attention to China's global reach and economic power. The study authors point to China's One Belt One Road (OBOR) investments in the Middle East and Africa and infrastructure investments in modes including rail lines, roads, ports, bridges and even schools as issues that are helping the country outpace other countries' economic expansion as they build long-term economic ties and trading partners. "In the International Monetary Fund's (IMF) latest forecast it expects that China's economy will grow by 6.3 percent in 2019, up 0.1 percent over its last prediction," the study authors said. "Though this number is impressive, it was announced in May that this is the lowest China's growth has been in 17 years. Contributing to this slow-down are the continuing trade wars and ongoing concerns about intellectual property rights violations. China has remained unsuccessful in the intensifying negotiations to repeal the ban on Huawei, the world's largest telecom supplier and second largest phone manufacturer. With a lifting of these bans in the United States, China would be able to gain market presence in an important industry they have dominated in other countries around the world."

E-commerce will continue to shape supply chain strategies. This trend has been "all over the headlines" in the first half of 2019, and it isn't going away, according to Kuebix. "The most important [development] came in April with Amazon's announcement that they will be transitioning from a 2-day shipping guarantee for their Prime members to a 1-day shipping guarantee," the authors said. "This is a lofty goal, but one most consumers will willingly benefit from, steadily driving shoppers away from Amazon's competition. In a bid to keep pace with Amazon's exceptional service, Wal-Mart has announced that they will begin an unlimited grocery delivery program that will have couriers physically entering customers' homes to deliver their groceries. Both Wal-Mart and Target have made moves to bolster their same-day and 1-day delivery programs."

Expect intensified technological disruption and innovation. The study notes that transportation companies are becoming more accustomed to new technologies as 2019 unfolds, pointing to the federal mandate that all trucks be equipped with electronic logging devices (ELDs). "Some carriers and companies with private fleets are even beginning to leverage technologies like virtual reality to ease the cost and time expenditures associated with training drivers to get their CDLs [commercial driver's license]. Other companies are installing RFID tags and other tracking software on pallets or even individual goods to improve their supply chain visibility," the authors said, adding that many delivery companies have also begun trial runs with autonomous trucks and still others have started investing in electric vehicles and drone technology. "Artificial Intelligence (AI), Machine Learning (ML), the Internet of Things (IoT) and the sharing economy continue to make headlines for the supply chain industry and we don't expect this trend to slow down any time soon."

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