Supply Chains in 2030: Imagining the Future
Some of the turbulence and headwinds on the horizon could be potentially more devastating to global supply chains than what occurred during the coronavirus pandemic.
In fact, said Nick Vyas, Ph.D., associate professor of clinical data sciences and operations at the University of Southern California (USC), by 2030, COVID-19 likely will “be summarized as a small blip on our radar screen.”
Speaking during the 12th annual Global Supply Chain Excellence Summit, hosted last week by the Randall R. Kendrick Global Supply Chain Institute at USC’s Marshall School of Business, Vyas said there are three major forces that will drive supply management in the future: geopolitics, digital transformation and human capital.
Building a 2030 Outlook
Devising scenarios that account for the three forces can give organizations an idea of what impacts they might feel in 2030.
Geopolitical tensions. The Red Sea shipping crisis seemingly pales in comparison to what a South China Sea crisis could mean to the flow of goods, said Vyas, founding director of the Randall R. Kendrick Global Supply Chain Institute. Imagine what the implication of not being able to use that trade route, he said.
“History teaches us one thing: The greatest civilization fell not because it was completely demolished, but because its supply chain routes were disrupted,” he said. “One thing that keeps me awake at night is how (geopolitics) can actually evolve into a crisis and the magnitude that can supersede it.”
Vyas recommends that that supply management professionals and leaders analyze whether their organizations are prepared: “Are you thinking through this? Are you creating what if scenarios? What does this mean for your business?” Also, options like onshoring and nearshoring are potential alternatives for mitigating geopolitical impacts, he said.
Digital transformation. How will the digitalization be shaped in the future by such technologies as artificial intelligence and machine learning?
In global companies, traceability is key to any transformation, Vyas said. “There is no sustainability if we don’t have the traceability, if we don't hold the stakeholders accountable for it, both positively and punitively.”
He continued: How will narratives be shaped when organizations talk about visibility and ensuring “the value system in global trade is honest? That if something says, ‘Made in Mexico,’ that it is manufactured in Mexico and not assembled there.” Trade agreements will begin to address such visibility and accountability, he said.
Human capital. As the profession evolves, so must its people. “Part of our ecosystem that we're going to have to adapt, learn and live,” Vyas said. That means staying current, even ahead, of trends and processes.
It means embracing AI, other technologies and innovation — and ensuring humans are part of the equation, he said. It means focusing on such issues as reducing carbon footprints and building, agile, resilient and sustainable supply chains.
The Future of Banking
One area that’s changing is banking. The future will see the marriage of physical and financial supply chains, said keynote speaker, Geoff Brady, head of global trade and supply chain finance in Global Transaction Services (GTS) at Bank of America. Banks are transforming their business financial offerings to provide capital where needed.
In the past, a bank’s mission was to ensure the profitability of its supply chain loans. “We had to … figure out what the receivable flows were, where were they going, how likely they were to be repaid,” Brady said. New banking solutions will change supply chain finance, making it more efficient and streamlined.
One is embedded finance, he said. “Embedded finance very simply means financing options in places where they don’t normally exist,” he said. Essentially, it entails integrating financing services as part of a non-financial platform.
“It's a way for us to come to you … where you already are,” Brady said.
(Image credit: Getty Images/Metamorworks)