2019: The Year of Supply Chains Living Dangerously

“Uncertainty” has been the operative word for the past few years, yet that’s no longer the case. The new American foreign and domestic policies have become much more clear, and many supply chain managers need to change their “wait and see” approach to take action. Failure to take action this year could leave you in danger of being left behind, and reduced uncertainty is a far cry from increased prosperity.

The next two years at least—and I’m betting the next decade—will solidify a new fragmented world order and the realization that our business practices need substantial reinvention in the face of new technology. Here are some observations.

1.) Supply Chains Will Fragment

The EU is falling apart and it seems clear that the member countries will never convince their citizens to form a truly united union. China is a growing regional power, yet doesn’t have the resources to deliver on promises even in its own region. Russia faces economic and demographic challenges that will occupy almost all of its resources. We are entering an era when old institutions like the United Nations and World Trade Organization will reinvent themselves, yet until they do, they will struggle to make decisions, and struggle even more to take action. Established supply chains will more strongly influenced by regional powers and actors. This fragmentation means that supply chain managers should invest in talent with expertise in regional and local knowledge as well as professional networks to get things done in other countries. This will be the only way to develop and implement successful supply chain strategies.

2.) Business Processes Will Modernize

There’s a lot of chatter about the rise of various technologies and the Fourth Industrial Revolution—yet the realization is just dawning that business processes should make up the backbone of any industrial revolution. Companies that implement new technology most often fail to receive any benefit because they just lay new technology on top of old ways of doing things. Too many leaders rely on incremental innovations, despite evidence that some technology is advancing more quickly than most companies can adapt. Really innovative supply chain managers will have to regularly—perhaps every other year—start with a blank whiteboard, and then re-map their entire business process from scratch in order to leverage most of the benefits of the next industrial revolution.

3.) Leaders Will Remember How to Lead

The core of all the technological advances in the Fourth Industrial Revolution is the power they provide for workers to make decisions adapted to the situation before them—yet very few companies train and empower workers to make decisions and do what’s right. Even fewer train workers to work together, as much with other workers as with customers and suppliers. Too many supply chain leaders have become disengaged as the result of over-reliance on metrics and performance indices, and they’ve lost touch with daily operations. Leaders must be developed with training and mentoring, and the greatest innovations result from active daily engagement between leaders and subordinates, an approach that works just as well for business relationships.

These observations will have the biggest impact on supply chain leaders starting in 2019 and for several years more. As a last thought, one big unresolved issue with many future technologies like blockchain and AI is the fact that they require coordination sometimes at the level of an industry or even an economy, and how to share those risks and rewards. Large shipping companies and 3PL’s may be positioned well to take a leadership role, or supply chain leaders may consider engaging in public-private partnerships.