Just as scientists and public health officials are boldly suggesting the Covid pandemic may be coming to an end, China has announced draconian new lockdown measures and trade disruptions are likely to continue for some time. It is giving rise to new fears.
Is China really on the brink of an Omicron outbreak that can see the engine room of the global economy stall? Or is China just doing the same thing as China? Probably the latter , time will tell.
Either way, this is a stark reminder that we live in uncertain times, with 100,000 Russian troops massing on Ukraine’s borders, things get even more uncertain. It is not.
Uncertainty is the only certainty in supply chains
Today, uncertainty seems to be the only certainty.Because supply chains are global in scope by their nature, executives are shockproofing their supply by reducing their exposure to risk. .
Multinationals are responding by shrinking their supply chains. Small chain, small risk. Samsung in the US, for example, is bringing its chip manufacturing back home, and Apple has followed suit, making its own ARM-based microprocessors.
And everywhere you look, supply chains are digitizing, increasing visibility and agility.
Where’s the next punch from? China? Ukraine? A new man-eating virus from outer space? Or will a container ship captain attempt a three-point turn in the Suez Canal?
Whatever the source of the next turmoil, there is no getting away from the fact that our world is shrinking and everything looks global. It can also mean shock. Ask your local Chief Supply Chain Officer.
Logistics, once on the periphery, is now a management priority
Edward Sweeney, professor of logistics and supply chain management at Heriot-Watt University in the UK, says globalization continues to bring down barriers to the cross-border movement of goods, services, capital, people and information. increase.
In his book, Sweeney explores the impact of globalization on logistics and supply chain management. Global Logistics: A New Direction in Supply Chain Management.
In it, he shows that logistics is now central to the long-term strategic planning of almost every business.
In an article in The Conversation, a source of news and research written by experts and academics, Sweeney argues that uncertainty in a shrinking world is “a feature of the international business environment in which supply chains currently operate. It is.”
He adds: This means identifying where any kind of risk exists in your network, assessing the potential impact of these risks and putting mitigation strategies in place.”
He said such strategies are extensive and cover all kinds of risks to both supply and demand. There are also general or horticultural risks such as supplier bankruptcy, in addition to environmental risks from socio-economic and socio-political factors.
With so many uncertainties and risks, it’s strange for a CSCO or COO to get out of bed in the morning in fear of being hit by a bus or a meteorite.
So what does 2022 have in store? Few are better suited to take on that challenge than Sweeney.
Sustainability ‘will be the next shock to the supply chain’
In addition to the developments in China, the possibility of new strains of the new coronavirus, and high international shipping costs, Sweeney feels that the global commitment to sustainability will bring about the biggest change.
“Freight transportation and supply chain processes will change as more environmentally sustainable strategies are adopted,” he says.
The biggest change he sees is the shift to fleet electric vehicles to minimize travel distances and the relocation of distribution centers. He also expects to see more collaboration as the industry embraces sustainable practices. To do.
A commitment to sustainability “will inevitably create near-term challenges as new practices are incorporated,” he writes.
He concludes:
This is another way of saying that the world is confused, cluttered and shaken. The supply chain team can only do it.
