Supply Chain Industry Forecast for 2016
Every year brings new opportunities and risks to the supply chain industry. As always, the desire to lower operating costs will be front and center. Currently low oil prices may cause some shippers to move from rail back to trucking, but as the climate change debate continues, the push to reduce greenhouse gases may soon result in new emissions standards. The increasing frequency of large, damaging storms that interfere with the supply chain is also concerning.
The political climate is just as important and no more predictable. Last year was a tough one for the growth of global trade. This year we’re seeing a renewed interest in global sourcing due to the ever-present desire for lower cost labor and supplies now that China is no longer the favored destination. The pending ratification of the Trans Pacific Partnership also has many companies looking forward to accessing new markets in the Pacific Asia region.
As Kaitlyn McAvoy reports in Spend Matters, “Heiko Schwarz, riskmethods founder and managing director, pointed to increased external risks, globalization and regulation compliance as the main issues procurement and supply chain managers will have to tackle in the new year.”
The Syrian refugee crisis and concerns about terrorism will have an impact. Expect tighter restrictions and new regulations regarding the crossing of international borders.
A lot will also depend on the climate in the boardroom as the winds of change sweep through corporate America. Many companies are losing experienced personnel.
Gene Tyndall, the executive vice president of Solutions and Business development told Supply Chain Digest, “We see several companies struggling with senior level expertise, as so many baby boomers have retired or are in the final stages of their careers.”
This is, indeed a problem and not just in management. Ask any 25-year plus, hourly employee at Walmart about the recently announced pay raises and you’ll hear something that didn’t make the news. Their previously grandfathered time and a half and double time pay will end under the newly announced pay scale, effective in April. Even with a 2% raise across the board, many of these longer term employees are taking pay cuts because of this change. Feeling unappreciated for long-term service, many could decide to take their 401K’s and go home.
Meanwhile, the online competition continues to gain ground as large brick and mortar loses it.
In the previously referenced Supply Chain Digest story, Mark Wulfraat, the president of MWPVL International Inc., “notes that Amazon quietly rolled out no less than 43 smaller urban distribution facilities (Prime Now hubs and Fresh Delivery stations) in the US last year, with the goal to enable delivery to a customer’s doorstep in 60 minutes or less.”
We’ll see some new trends on the tech front too, in IoT and robotics. More companies will likely implement new technologies for better analytics. Having the ability to use big data to make predictions and better manage inventory will provide an edge in a competitive, global marketplace. Using robotics for loading and unloading containers and doing repetitive, time-consuming jobs will boost efficiency, save money and require new skill sets in the workplace.
Expect an interesting year of changes and opportunities in supply chain management worldwide.