Professionals in supply chain jobs, including supply chain interims, will see rising trade tensions and economic nationalism impacting both the physical supply chain and its digital representations in the near future, an expert is predicting.
Dr Madhav Durbha, an expert in artificial intelligence (AI) and machine learning (ML) solutions for supply chain management, said:
“Decades old strategic decisions are being re-evaluated considering the changing global economy. For 2020, regionalization efforts will continue in the physical supply chain and will cascade into the digital form as the splinternet trend will gain momentum.”
Regionalisation efforts are being driven by growing awareness among practitioners in C-Level procurement jobs of escalating geopolitical risks, prompting many companies to review their global sourcing decisions.
Durbha cites the example of firms with exposure to China, around half of which have started exploring alternative sources of supply and manufacturing due to climbing wage rates there driven by the onset of trade wars.
Supply chain pros are actively working on onshoring or nearshoring the materials and goods that their firms require, enabling them to respond more swiftly to fast-shifting customer needs because their supply chains are considerably shorter.
Beneficially, shorter supply chains mean smaller inventory and reduced working capital requirements, savings that can be reinvested in local infrastructure to help build the requisite new capacities and manufacturing capabilities when existing overseas capacities are exited.
Durbha also referred to the EU’s GDPR legislation on data and privacy, an intervention that has had global reach.
He believes that this is by no means an isolated event: other governing bodies will be issuing similar global-impact policies as the ownership of data becomes far more pivotally important in a digital world.
Finally, he notes another effect of the collision between global initiatives such as GDPR and national initiatives such as China’s ‘Great Firewall’: the result has been the growth of what Durbha calls the “Splinternet of Things” – the fragmentation of the internet caused by rising nationalism, political rivalries and regional data legislations.