subscribe: Posts | Comments | Email

Describing an Exponential Organizational and Supply Chain Capability

0 comments

In February, this supply chain industry analyst attended the Oracle Modern Supply Chain Experience Conference held in San Jose California.  Through Supply Chain Matters, I have shared several prior observations and takeaways from this conference. We noted the extraordinary attendance, upwards of 2800 attendees at a supply chain management information technology focused conference. We further highlighted the momentum of Cloud-based technology deployments in the many different business process areas that today come under the umbrella of supply chain management along with the building interest levels surrounding Internet of Things (IoT) technology being applied to future supply chain management processes.

There was one keynote that I initially did not share in prior conference highlights, principally because I needed time to absorb the many compelling messages that were delivered. The title was Exponential Organizations and the presenter was Yuri van Geest, Co-Founder of Singularity University. Yuri Exponential Organizations sized 207x300 Describing an Exponential Organizational and Supply Chain Capabilityhas a background in organizational design and is noted as a keen observer of exponential technologies and trends.  He is a co-author of the book- Exponential Organizations- Why new organizations are ten times better, faster, and cheaper than yours (and what to do about it).

The keynote opened with van Geest recounting the dizzying exponential developments that have occurred in artificial intelligence, alternative energy, biotechnology and medicine, robotics, additive manufacturing, sensors, and drones. His primary message was that most of these exponential technology developments will eventually impact supply chains and the organizations and people that makeup this community. His takeaway message was that the best vision of the future is happening at the peripherals of such technology development.

My initial presumption was that many of the conference attendees would have a difficult time absorbing the stark nature of the messages or would dismiss this talk as that of a technology genius speaking far above an ability to absorb the real implications.  Frankly, the conference organizers should have allowed additional time to accommodate all the content as well as to allow for further audience interaction.

Since the conference, I have had the opportunity to read the book and revisit my notes from the keynote. My goal in this blog is help distill what I perceive to be some other key takeaway messages related to future supply chain management organizational purpose, design, and work activities, at least from my perspective after having time to really absorb the content.

Geest did a suberb job of translating today’s far more exponential technology trends to what he viewed as direct impacts on industry supply chains. As an example, he stated that over the next ten years, the exponential developments in 3D printing capabilities will foster the ability to print nearly everything in materials including molecular assembly. The implication is the ability for products to be produced within primary areas of consumption, with the model of contract manufacturing being one of virtual capabilities to receive electronic design information and print on-demand products. A further implication is a more localized supply chain or regional network.

The notions of machine learning or cognitive acquired deep learning technology capabilities will at some point in the future lead to autonomous supply chain planning and customer fulfillment, where algorithms and physical sensing manage supply chain needs. While on the subject of planning, the book declares traditional five-year planning as obsolete, and that in exponential organizations, there should never be more than a one-year planning cycle supplemented by continuous just-in-time learning and events.

Regarding the physical, Geest further spoke to the compelling impacts that IoT focused developments would have on supply chains.  In the book, there is a passage that is worth sharing:

In the same way that today we can no longer handle the complexities of air traffic control or supply chain management without algorithms, almost all the business insights and decisions of tomorrow will be data-driven.”

Obviously, the messages are profound and perhaps threatening to many. None the less, van Geest’s message is that we cannot ignore compelling events and individually, people need to be trained and prepared with new individual and team-based skills.

To better understand the implications, I turned back to book to ascertain what were described as the key competencies of the future Chief Operating Officer, Chief Human Resources Officer and either Chief Data or Chief Innovation Officers.

Here are just a few excerpts to ponder:

  • Digital based production and the unbundling of production steps will free the company to focus on its core competencies (customer relationships, R&D, design, and marketing)
  • The notion of a recycled materials supply chain where production materials recycled and reused multiple times.
  • Internet of Things sensors used to monitor the entire supply chain.
  • The need for long-distance transport to drop over time due to the rise of localized production and a closed-loop material supply chain.
  • Universal Cloud access to social technologies, data, and services, independent of physical location.
  • Data management systems that use methodologies, processes, architectures, and technologies to transform raw data into meaningful and useful business information, available to all teams.
  • The need for Big Data security practices.
  • The hiring of employees based on overall potential, not just past record of accomplishment, and on the premise of who can ask the right questions.
  • New notions of peer-based and continuous learning.
  • Reputation measured by contributions in communities and work teams.

 

The book addresses the obvious question regarding the impact on future jobs. The premise is that the democratization of technology will allow individuals and teams to follow their passions and create new economic opportunities and businesses, far different than work being performed today.

These are heady messages, and will cause some pause or skeptics. We applaud Oracle’s supply chain management  conference organizers for hosting such a thought-provoking presentation.

From our lens, there is no denying that the exponential changes occurring in technology and business will eventually impact how supply chains are manifested and managed. The question is in what time frames.

The other obvious question, will teams and individuals be prepared?

We encourage readers to share further thoughts and comments.

Bob Ferrari

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.


Apple Declares a Long-Term Commitment Toward a Closed-Loop Materials Supply Chain

0 comments

In its 2017 Environmental Responsibility Report released this week, global consumer electronics provider Apple has declared a goal towards implementing a closed-loop supply chain. This report includes a pledge to end the company’s reliance on mined materials from the earth, and to one day, make its products, including the iPhone, totally from renewable or recycled materials.  Apple Logo Apple Declares a Long Term Commitment Toward a Closed Loop Materials Supply Chain

The section titled Finite Resources includes the following statement:

Traditional supply chains are linear. Materials are mined, manufactured as products, and often end up in landfills after use. Then the process starts over and more materials are extracted from the earth for new products. We believe our goal should be a closed-loop supply chain, where products are built using only renewable resources or recycled material.

Apple is also realistic in acknowledging that a closed supply chain is indeed an ambitious goal for a high-tech and consumer electronics manufacturer. The company’s Vice President of Environmental Affairs, Lisa Jackson, told business network CNBC that while Apple does not currently know how the full objective will be achieved, it will require many years of collaboration across multiple internal teams, component suppliers, and specialty recyclers- but work efforts are already under way. She further indicated that the company is embarking on something it rarely does, establishing a goal before all the elements are completely figured out.

Current efforts include the encouraging customers to return end-of-life products through the Apple Renew recycling program. This program is piloting innovative new recycling techniques that include a line of disassembly robots that helps to reclaim materials from used smartphones and other electronics products. The company has further prioritized which materials to tackle first by creating Material Risk Profiles for 44 elements within products. These profiles identify global environmental, social, and supply risk factors spanning the life of each material.

Describing the need for high quality aluminum material free from defects found in mass level recycling programs Apple has begun a pilot proof-of-concept program using reclaimed aluminum from recycled phones to build new devices. The aluminum enclosures recovered from iPhone are melted and reused to create Mac mini computer enclosures.

What forward thinking companies are continuing to demonstrate is that supply chain sustainability efforts are good for business and they are equally good for the supply chain.  Increasingly customers based their buying decisions on a company’s commitment and demonstrated efforts in sustainability. In our current year predictions for industry supply chains, we have re-iterated that there is literally too-much momentum and positive business benefits to motivate senior executives to derail such efforts. Apple has been one of other early adopters of a supply chain sustainability commitment and this latest declaration of a closed-loop supply chain is indeed, an added manifestation of a sustainable business model, one that assures a continuous supply of product value-chain components at a more controlled cost with assured availability. We also like the emphasis on leveraging new technologies to address such needs.

Supply Chain Matters commends Apple for its declaration and commitment toward manifesting a closed-loop supply chain.

Well done and keep up this good work.

Bob Ferrari

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.


2017 Predictions- The 3M Perspective on the Need for Bimodal Supply Chain Capabilities

Comments Off on 2017 Predictions- The 3M Perspective on the Need for Bimodal Supply Chain Capabilities

In preparing our overall 2017 Predictions for Industry and Global Supply Chains, and specifically our prior posting, Prediction One- What to Expect in Global Economic Activity, we had the opportunity to speak with both industry, supply chain and technology executives to gain current perspectives of what supply chains should anticipate in the coming months and how to be prepared.

One opportunity was a discussion with Paul Keel, Senior Vice President, Supply Chain for diversified manufacturer 3M Company. In my role as a supply chain industry analyst, my perspectives of 3M extend nearly 15 years, when I first interacted with members of the 3M supply chain leadership team. A lot has occurred since that time, and that came to be the context of the discussion with Keel.

The 3M of today is a $30 billion diversified manufacturer whose supply chains support 5 different business sectors that span both B2B and B2C focused market segments. Industry products are quite diversified spanning industries such as automotive, commercial aerospace, communications, healthcare, high tech electronics and transportation. The consumer segment is the wide variety of 3M branded products that many of us are familiar with including the iconic branded Post-It note pads. Today’s 3M has deeper roots as multi-industry supplier. The company has always been anchored in core manufacturing and today that includes upwards of 220 worldwide manufacturing plants. It all amounts to a considerable scope for 3M’s supply chain teams.

In our interview, Keel referenced Q4 of 2008 as an important milestone checkpoint for 3M, one that created acute awareness to the potential of heightened volatility of industry and global markets brought about by the global financial crisis. He described that point as “opening the aperture” of the 3M of 30 years ago, as a $3B manufacturer, and the aspirations of what 3M has become today in ten-fold revenue growth.  The described anchor has been that of a complete product innovation and continuous improvement mindset across the company. It was also a wake-up call that supply chain capabilities do matter, and that 3M had to excel in all aspects of supply chain competencies.

Regarding 2017 predictions relative to heightened industry competition, continued market uncertainties and potential volatility, Keel remains of the belief that the supply chain will play an increasingly differentiating role for high-performing organizations. He states:

In the hyper-competitive world of global business, we’re finding new ways that supply chain must lead. While historically organizations looked to their supply chains primarily for productivity and cost reduction, today high-performing companies count on us for much more – developing new products, protecting our environment, serving our customers, and driving meaningful value creation across the enterprise.  Fully leveraging the power of supply chain begins with the proper mindset.  ‘Make and deliver’ is no longer enough.  To win in 2017, we’ll need to ‘amaze and delight.’”

Keel further described the notions of a bimodal supply chain perspective:

There was a time when supply chains could settle for trade-offs…cost or speed, service or quality, flexibility or reliability.   Those days are long gone.  The equation has shifted from an imbalanced ‘or’ to an equilibrium centered on ‘and.’  Information and technology are central to achieving this synchronization.  The leaders of tomorrow will be the organizations that can effectively manage a bimodal supply chain.”

We also discussed technology as the enabler of bimodal capabilities. Keel described 3M’s perspective as: “Asset-light and Information-heavy.” In the bimodal lens, it translates to enabling greater levels of efficiency in overall productivity levers, in an end-to-end supply chain risk mitigation approach to manage volatility, and general in moving forward with overall global optimization. The other technology lens is that of the business growth enablement lever, manifested by enabling continued end-to-end supply chain segmentation capabilities along with digitization of supply chain processes and decision-making needs.

Keel further pointed to corporate sustainability and social responsibility initiatives as an essential mindset going forward and a further component of bimodal. For 3M, this equates to declared responsibilities to communities, to employees and to the environment.

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.

 


Supply Chain Matters Unveils Ten 2017 Predictions for Industry and Global Supply Chains

Comments Off on Supply Chain Matters Unveils Ten 2017 Predictions for Industry and Global Supply Chains

At the start of the New Year, our parent, the Ferrari Consulting and Research Group along with our Supply Chain Matters blog as a broadcast medium, traditionally provide a series of predictions for the coming year. These predictions are provided in the spirit of assisting industry specific and global supply chain cross-functional teams in helping to set management objectives for the year ahead. Our further goal is helping our readers and clients to prepare supply chain management and line-of-business teams in establishing impactful programs, initiatives, and educational agendas.

The context for these predictions includes a broad cross-functional umbrella of supply chain strategy, planning, execution, product lifecycle management, procurement, manufacturing, transportation, logistics and customer service management. Crystal Ball 300x252 Supply Chain Matters Unveils Ten 2017 Predictions for Industry and Global Supply Chains

We are admittedly and purposefully late in our usual unveiling of these 2017 predictions. We made a conscious decision in mid-November to delay after the sudden and widely unexpected results of the 2016 U.S. Presidential election coupled with the similarly unanticipated results of the Brexit referendum across the United Kingdom.

To reiterate once again, our predictions process includes a re-look at all that occurred in the current year, a reflection of future implications, and soliciting input from clients and other various industry supply chain participants and observers. Unlike others, we incorporate a lot of thought and perspective into our annual predictions and take the time to scorecard our annual predictions at the end of the year.

Readers are welcomed to review our scorecard series of our 2016 predictions that occurred in November. We are further planning to make available the scoring evaluation of all of our prior 2016 predictions in a report to be made available in our Research Center later this month.

In this initial blog, we will unveil our complete listing of our ten predictions for the coming year along with some introductory takeaways. In subsequent postings spanning the month of January we will dive further into each of our predictions.

In late- January or early February, we anticipate publishing the complete Ferrari Consulting and Research Group research report, 2017 Predictions for Industry and Global Supply Chains that will incorporate all our predictions along with even more details and supporting data related to each prediction. This report will be made available to all our consulting clients and blog sponsors and will additionally be made available for no-cost complimentary downloading in the Research Center of Supply Chain Matters, also in February.

Let’s therefore begin the process with the unveiling of our ten 2017 predictions.

Drum-roll please……

 

2017 Prediction One- A Subdued World Economic Outlook and Heightened Political Uncertainty Will Test Industry Supply Chain Agility

 There is little doubt that the year 2017 will present even more uncertainty and increased volatility for many industry supply chains. Organizations will once again need to be prepared.

 

2017 Prediction Two- A Challenging Year in Procurement with Renewed Emphasis on Strategic and Technical Skill Needs

Unlike 2016, what is becoming near certain is that in 2017, multi-industry supply chains will be managing a period of rising inbound component and service costs. The role of the CPO will further have to evolve in 2017 to one of strategic business advisor along with a continuing agenda of tactical procurement challenges, most notable a potential global volatile global sourcing environment peppered by continuous anti global trade forces. One of the most significant challenges in the coming year will be in skills development and filling-in skills and talent gaps.

 

2017 Prediction Three- A Supply Chain Talent Perfect Storm

 For all functions that make up the umbrella of today’s supply chain management capabilities, we predict a supply chain talent perfect storm, one that is sure to occupy more of the management attention of supply chain and business senior leadership. The perfect storm is increased skills demand meeting limited available skilled talent supply. As Bloomberg BusinessWeek declared in late December 2016: “Right now the problem isn’t too many workers who can’t find jobs. It’s too many jobs that can’t find workers.” The coming year may well provide a period where lack of skills and talent will take on a discernable and visible impact on required competences.

 

2017 Prediction Four- Increased Anti-Trade Geopolitical Forces Will Provide Added Sourcing Challenges for Industry Supply Chains

Major developments surrounding global trade policies will occupy the attention of many industry supply chain organizations during the year, but now from an opposite perspective. With heightened global tensions now turning toward more anti-trade and possibly more protectionist rhetoric among developed nations, industry supply chains must now be prepared to deal with potential near and longer term implications that such policies will bring about.  We anticipate that industry supply chain network models will undergo continuous analysis and scrutiny in the coming year as individual supply chain teams assess various changing landed cost factors among product management models. Global trade issues will once again percolate in the coming year and they will likely be complex and confusing to sort out in terms of which will ultimately come to fruition.

 

2017 Prediction Five- Continued Global Transportation Industry Turbulence

For the past three years, we have predicted industry turbulence among global and certain domestic transportation networks.  Our predictions turned out to be fairly accurate but then again, the industry signs were obvious. In 2017, firms should plan for further industry turbulence and change occurring on many modal fronts. As the Washington Post, has recently observed: “industry change is indeed sweeping from all directions.”

 

2017 Prediction Six- A Renewed Renaissance in Business and Technology Investment

As industry supply chains enter 2017, there are distinct signs of a renewed renaissance in business and technology investment that will surely include the need for supporting augmented supply chain related business process and decision-making needs. An initial pro-business environment fostered by the election of Donald Trump and a Republican Party dominated U.S. Congress looks to lead to lower corporation business taxes and repatriation of overseas profits. There are now signs that after multiple years of plowing excess cash into stock buybacks or increased stockholder dividends, businesses may be ready to shore-up needed investments in critical areas such as increased productivity, manufacturing, and broader supply chain automation along with needs for more informed, analytical-driven decision making anchored in predictive decision-making methods. At the same time, a renaissance in multi-industry business process and technology investment activity will surely lead to further merger and acquisition activity involving either the enterprise software, supply chain, IoT, and management decision support technology vendor community.

 

2017 Prediction Seven- Enhanced Decision Support Capabilities Among B2B Network and Managed Services Providers Will Pay Added Dividends for Customers

 There will exist increased industry specific needs for deeper and wider levels of customer, product, physical object, and supply network focused information visibility, capture and analysis.  This need is coupled to building multi-industry supply chain requirements for more predictive, analytics data-driven decision making competencies that involve outside-in insights. The objective is a literal 360-degree view of supply chain wide data and information, horizontally spanning the end-to-end supply and vertically coupling high level enterprise to shop-floor decision-support needs.  A means to achieve such a capability are analytics and business intelligence engines that are now being embedded across supply chain focused B2B network platforms, edge systems and production shop floor transactional and information transfer flows. B2B business networks and edge platforms are today the prime opportunity for digitizing the horizontal and vertical flow of information and analytics across end-to-end supply chains.

 

2017 Prediction Eight- Amazon and Alibaba Position for Global Online Platform Dominance

Similar to 2016, Amazon and Alibaba will continue to position for being the dominant global online retail platform.  This competition has been civil with each respecting the other entities capabilities and strengths. Each has certain weaknesses or vulnerabilities. The head-to-head competitive battle ground in 2017 will likely be India, the next big online retail market opportunity that will test both provider’s capabilities to adapt to local requirements.

 

2017 Prediction Nine- Business Self-Interest Will Fuel Continued Efforts in Supply Chain Sustainability Actions and Initiatives

Despite the declarations by U.S. President Donald Trump that climate change is a hoax, business and supply chain self-interest needs, requirements and benefits to date will fuel continued sustainability initiatives and momentum. The goal is beyond supply chain sustainability, and remains sustainability of the business itself.

 

2017 Prediction Ten- Unique Industry-Specific Supply Chain Challenges in 2017

Each year we call out industry-specific supply chain challenges that are unique and dominant challenges. In 2017, we are including the following industry sectors for mention:

Automotive Supply Chains Existing Across North America

B2C and Online Retail

Commercial Aerospace

Consumer Packaged Food and Beverage

Global Based Pharmaceutical Supply Chains

 

Keep your browser pointed to Supply Chain Matters as we dive into each of the above 2016 predictions in more detail. Our next Predictions posting will provide added detail for our first two predictions. Subsequent posting will dive into the remaining eight predictions.

Our series will also feature some invited guest commentaries reflecting more on the topic area.

If readers or clients require further clarity, or wish to contribute additional thoughts related to what to anticipate in the coming year, you can contact us via email: feedback <at> supply-chain-matters <dot> com. Our final blog commentary of the series will include a summation of additional contributed thoughts for what to expect.

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.  Content appearing on Supply Chain Matters® may not be used by any third party without written permission of the author and our parent, The Ferrari Consulting and Research Group.

 


The Donald Trump Presidency- Our Supply Chain, Product, Procurement and Technology Management Focused Perspective

Comments Off on The Donald Trump Presidency- Our Supply Chain, Product, Procurement and Technology Management Focused Perspective

It has taken this analyst over a day to recover from the shock and outcome of the recently completed U.S. Presidential election. Front page newspaper and online media headlines across the globe reflect such unprecedented shock and surprise. Today’s primary headline from The Wall Street Journal declared: A New Political Order.

Supply Chain Matters has become a well-recognized blog providing insights and observations directed at the broad umbrella of what has become supply chain management today. Our perspective is global in nature, not just the United States. Thus, it is probably no secret that this week’s stunning election result has global as well as domestic supply chain management implications for many months to come.

President Elect Trump won the election echoing populist views that favored building frustrations of the everyday workers who remain fearful of the growing tide of globalization. They are perhaps the workers employed, or previously employed in your manufacturing or supply chain operations areas that have had their economic livelihood impacted by various cost-cutting or other business moves.

Populist sentiments fueled Great Brittan’s referendum results to favor exiting the European Union, which was the prior shock heard around the world. There again, populist sentiment was in protection of jobs, a rising tide of immigration and in the burdens of government taxation.  Already there is speculation that the populist movement will perhaps impact pending important elections across Europe that are scheduled to occur througout 2017.

However each of us voted, the United States will plan for a peaceful and successful transfer of power. Similarly, U.K. political leaders and institutions will plan for a formal two year exit plan from the European Union.

In this initial viewpoint commentary, we can only touch the surface since so many uncertainties come to mind and a Trump administration is yet to govern and lead the United States. Thus, our first of surely many commentaries to come will focus on helping our readers and clients to begin to think about and context such implications.  At this point, supply chain leaders can only assess the potential scenarios and remain prepared to brief the C-Suite on how the overall supply chain is prepared to deal with such implications.

Let’s therefore dwell upon some important areas.

 

Upcoming Holiday Fulfillment Surge

The most immediate impact is potentially the upcoming holiday fulfillment period. Most retail industry demand for the past two years has been fueled by a positive consumer sentiment. The open question is whether the shock and fear resulting from the U.S. election and other global political concerns spills over to holiday buying sentiments, particularly discretionary type goods such as clothing, jewelry or high fashion. Early product demand sensing will perhaps be a key determinant of any impact.

 

Trade Policy

President Elect Trump was rather vocal and direct regarding current U.S. trade policies involving North America and other global countries. He called for re-negotiation of the North America Free Trade Agreement (NAFTA) and the refusal to ratify the proposed Trans Pacific Partnership (TPP) agreement. There was open admonishment of currency and trade policy related to China with a threat to pose significant tariffs on Chinese manufacturing goods being shipped to the United States.

When the political realities set-in, the campaign rhetoric will likely focus on actions related to both China and NAFTA, but to what degree remains to be seen and assessed. The President Elect was not shy in calling out specific manufacturers such as Ford and Apple on their manufacturing investment strategies and lost U.S. jobs going to China and Mexico. Similarly, online buying and commerce has generally been allowed a free and open access to global markets. Global trade shocks could well spillover to online providers such as Amazon’s access to sell in certain overseas global markets.

For most multi-industry supply chains, it is likely a wait and see perspective at this point. For supply chains that currently have a high-profile sourcing dependency within China itself, there should be consideration for business impact. However, for those that have a stronger sourcing presence in Vietnam and other Asian countries, failure of the United States to support TPP has from our lens, trade and intellectual property protection implications. Like it or not, China today has garnered enormous power to influence basic commodity pricing which is another reality that must be balanced with sudden policy moves.

The obvious industry impacted by a harder currency and trade line with China is high tech and consumer electronics. A further industry is apparel and footwear. The high-tech supply chain with considerable China exposure is that of Apple. However, Apple is not alone from an overall high-tech perspective since the bulk of the industry’s component and final assembly value-chain originates in China. Clothing and sporting goods manufacturers have already moved some sourcing to other low-wage countries but high-margin and high-fashion goods remain likely sourced within China.

The commercial aerospace industry has a potential impact from a product demand perspective because so many of current booked orders involve China’s air carriers, reflecting explosive long-term demand for increased air travel across China. Retaliation to increased U.S. or even European tariffs could result in a demand focused backlash. Also from a demand perspective, a harder U.S. line on currency and trade policy has an obvious impact on global transportation carriers, and ocean container shipping lines that are already struggling with lower demand and significant excess capacity.

A hard line on shipping jobs to Mexico and the threat to build a wall on the U.S. border with Mexico has a potential impact on automotive manufacturers who have made significant strategic production sourcing bets for Mexico to serve as a major manufacturing hub for smaller and mid-sized vehicles serving North American and other geographical consumption markets. The President Elect threatened a 35 percent tariff on cars imported from the country and a backlash on borders could spill over to free movement of goods.

Overall, we might foresee a resurgence towards more accelerated near-shoring sourcing strategies to serve domestic product demand.

 

Environmental Policy and Climate Change

A Trump Administration is not likely to actively support global climate change initiatives and there is already speculation that U.S. policies related to clean and alternative energy buying and development incentives or electric car purchases will be quickly rolled-back. Campaign rhetoric shunned scientific climate change evidence and included the cancelling of large payments to United Nations sponsored climate change initiatives. Further speculation points to lifting existing restrictions related to oil pipeline construction from the Bakken region, adding a further long-term demand blow to North American railroads. However, to appease coal country voters, the lifting restrictions on coal use would be a commodity movement offset for railroads.

We tend to agree with others including Kevin O’Mara of SCM World that it may be just a matter of time before a Trump administration withdraws support for the Paris climate change initiatives which will serve as a big disappointment to current signors, and could result in added backlashes directed at U.S. produced goods.

This author has already openly stated that a sustainably focused supply chain strategy should serve as the component of a broader overall sustainable business strategy. Current sustainably focused initiatives could well be sidelined by ongoing political events.

 

Global Economic and Consequent Supply Chain Strategy Trends

The entire Trump Presidential campaign was predicated on shock and bold statements related to the United States being far more aggressive in world markets.  Hopefully, such statements will moderate with the realities that U.S. based businesses need to continue to benefit from access to such global markets. Already, corporate CEO’s from Boeing, General Electric, Procter and Gamble and United Technologies who each have a major stake in sustaining global business expansion have reached out to the President Elect seeking to promote what was described as “healing and reconciliation.”

Mr. Trump promised a new tax policy that reduces overall corporate tax rates and will likely allow corporation to move accumulating overseas profits back to the U.S. or elsewhere without substantial tax consequences. The re-patriating of overseas profits triggers the potential risk of other nations seeking more of their fair share of taxation from overseas based corporations, as demonstrated by the European Union’s latest efforts to collect hundreds of millions in added taxes from Apple that were sheltered by Irish tax shelter laws. More local based taxation implies added supply chain movements for inventory and production declarations.

All of the above may well provide an incentive for more near-shoring or increased investments in U.S. and major geographical hub based supply chain capabilities.

However, the largest risk is additional shocks to the overall global economy which is already struggling to bounce back from the prior financial meltdown led global recession. With the threat of more populist sentiments, additional political shocks within other countries such as in Europe, or a complete loss of confidence in global financial structures and currency values, anything can happen.

 

Technology and IP Protection

A nationalist agenda within the U.S. can well trigger prohibited access to advanced technology across the globe or to local intellectual property provisions that require more sharing and less protections of trade secrets. Certain technologies could be banned, or certain products could be subject to added securitization by regulatory and domestic product safety agencies. This is likely an area of greatest strategic risk and businesses have already experienced such effects in China. A chilling or clash of trade policy among the U.S. and certain other large countries can trigger many ancillary effects.  Access to technical talent or IP residing in non U.S. countries could well be even more restricted or shutout all together. Likewise, access of U.S. citizens possessing critical technology skills could be banned from entering other countries without agreeing to waive intellectual property or trade secret disclosure.

We certainly trust that cooler discourse will ultimately prevail but for now, supply chain teams need to think about any of the above implications and their impacts on current supply chain sourcing and distribution strategy.

Indeed, we are all about to enter a new phase of uncharted global uncertainty with added shocks to come.

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.


« Previous Entries