We would like to alert our Ferrari Consulting and Research Group clients and our Supply Chain Matters readership that our Q3 2016 Newsletter published yesterday and should be in the email inboxes of those who have subscribed.
Our latest newsletter again reinforces important trends brought forward by developments this past quarter.
Global manufacturing and supply chain activity as recorded by the JP Morgan Global Manufacturing PMI index reflected some bounce back but otherwise the long-term trend of low growth prevails.
Among Developed Regions, there were mixed signals with Japan and Taiwan experiencing stronger demand conditions but the United States experiencing some setbacks. GDP in the United States was reported to be a disappointing 1.2 percent in the second quarter.
Emerging Regions reflected slower growth momentum in Q3. Manufacturing and supply chain activities continue to improve in India, but there was some moderation reflecting on the prior growth levels within Mexico, Vietnam and Indonesia. Activity across China moved to expansion level however, the rate of expansion is characterized as marginal.
Among other Newsletter articles for Q3:
- Significant Industry and Supply Chain Developments in Q3- the quarter was dominated by significant and highly visible supply chain related news and developments. That included the emerging financial fallout from Volkswagen’s cheating on emissions levels over a year ago. Samsung’s unprecedented sales and production suspension of the Galaxy Note 7 smartphone after continuing reports of fire and explosions with this device dominated media channels, as were the emerging implications and learning. In global transportation, The Hanjin Shipping bankruptcy events cascaded among multi-industry supply chains and provided the wake-up call to the extent of industry overcapacity and more pending consolidation. Wal-Mart’s revised strategic emphasis on online shopping, and fulfillment capabilities coupled with additional retailers announcing permanent closings of physical stores motivated us to declare that the retail industry has entered a new phase of online and omni-channel fulfillment.
- China Investing in Broad Industry Value-Chain Capabilities- we highlight a recent report from The Wall Street Journal reporting on the trend of more of China’s manufacturers turning to domestic sourcing of key components, with a government strategy emphasizing more value-chain sourcing within that country. More and more product value-chain component suppliers in-turn are developing world-class manufacturing capabilities at lower inbound costs for China’s end-item manufacturers. All of this has implications for broader global supply chain activities and global trade.
- Vietnam- Asia’s Next Manufacturing and Supply Chain Tiger– we highlight a report by The Economist for why the country is increasingly becoming a new end item manufacturing and component sourcing destination for many industries which include strategic cost advantages in areas such as workforce, geography, policies and global trade.
- Record High Global Supply Chain Risk– we also highlight the latest report of the CIPS Risk Index which reportedly rose to its highest level in nearly two decades. The existing rise in global supply chain risk is attributed to heightened geopolitical risks, to include the unknow effects of Brexit and the U.S. Presidential Election, the extent of the growth slowdown and protectionist trends within China, emerging markets financial vulnerabilities and increased terrorism impacts on global cross-border movements. CIPS recommends that supply chain teams gain clear visibility of the supply chain, and with continued exchange rate downside risks, that teams consider paying suppliers ahead of contracted payment.
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Thanks again for your continued readership.
Bob Ferrari, Founder and Executive Editor