Companies around the globe are accelerating their efforts to diversify and localize their supply networks, as the topics of risk and resilience still dominate the supply chain agenda four years on from the start of the pandemic, according to a report from consulting firm McKinsey & Co.
Under those pressures, supply chains are seeing a profound revolution, with a dramatic increase in the adoption of advanced techniques for planning, execution, and risk management, McKinsey said in its “2023 Supply Chain Pulse Survey.” Data for this year’s survey were collected from 101 respondents, who represented a range of industry sectors on six continents. Collected from the middle of April to the middle of May 2023, the survey included questions on four major areas of supply chain management: network design, planning, digitization, and risk management.
The problems those organizations are trying to solve are clear: almost every supply chain manager in the survey said they had experienced significant issues over the previous 12 months. Some 44% reported major challenges arising from their supply chain footprint that required them to make changes during the year. And almost half (49%) said that supply chain disruptions had caused major planning challenges.
Two approaches have quickly emerged as the most common solutions in the past two years. Companies say they have improved resilience through physical changes to their supply chains by increasing their inventory buffers (78%) and by pursuing dual-sourcing strategies for critical raw materials (78%).
But this year’s adds a third option, with twice as many companies reporting using “nearshoring” strategies as last year, McKinsey found. In all, two-thirds of respondents said they were obtaining more inputs from suppliers located closer to their production sites over the past 12 months (led by the automotive and consumer goods industries). Likewise, almost two-thirds (64%) of respondents said they are transitioning from global to regional supply chains, up from 44% last year. Regionalization takes time, however. Once an organization commits to a new footprint strategy, it can be two years or longer before changes happen on the ground, especially if the strategy requires implementation of new manufacturing sites.
Looking into 2024, one major question will be what happens to the world’s bulging buffer stocks. Companies originally began to ramp up their inventories in response to pandemic-era supply chain disruptions, leading some observers to declare a transition from just-in-time supply chains to a just-in-case model. But that future is unclear, with survey results showing that inventories still remain high, and respondents are divided about their future direction. Roughly equal numbers of respondents believe that stocks will continue to rise, remain at today’s levels, or fall back to precrisis levels.
Answers to those questions could come from the digital-planning revolution that has been brewing in the supply chain field since well before 2020. The pandemic dramatically accelerated the adoption of those new technologies, including three main ingredients: end-to-end visibility, high-quality master data, and effective scenario planning. Companies are also continuing to use cross-functional integrated business planning (IBP) processes, and increasing their use of advanced planning and scheduling (APS) systems that match supply and demand in complex networks.
However, one hurdle that could slow supply chain technology adoption is the long-standing barrier of access to talent. Repeating the results of last year’s survey, only 8% of respondents say they have enough in-house talent to support their digitization ambitions. And yet to fill the gap, companies are backing away from running internal reskilling programs in the supply chain function and turning increasingly to external hiring instead.
All that turmoil has gotten the attention of executives in the board room. McKinsey said. After the large-scale disruptions of recent years, supply chain risk has moved from being a niche topic to a top three item on the senior-management agenda. With the ongoing war in Europe and heightened geopolitical tensions around the world, supply chain risks remain real in many industries. Yet structural and organizational issues may be hampering companies’ ability to make effective decisions based on their growing understanding of supply chain risks. Responsibility for risk management remains fragmented, with many companies operating multiple risk teams within the supply chain function or bundling risk management into the portfolios of teams that are already busy with other topics.
Facing all those challenges, a key task in the coming year for supply chain leaders will be maintaining their hard-won seat at the top table and continually educating the board on the importance of risk and resilience. That’s because in the absence of an immediate supply chain crisis, top-management focus tends to shift onto other issues. Yet supply chains remain vulnerable to a wide range of disruptions, from geopolitical tensions to natural disasters and climate change.
Autonomous forklift maker Cyngn is deploying its DriveMod Tugger model at COATS Company, the largest full-line wheel service equipment manufacturer in North America, the companies said today.
By delivering the self-driving tuggers to COATS’ 150,000+ square foot manufacturing facility in La Vergne, Tennessee, Cyngn said it would enable COATS to enhance efficiency by automating the delivery of wheel service components from its production lines.
“Cyngn’s self-driving tugger was the perfect solution to support our strategy of advancing automation and incorporating scalable technology seamlessly into our operations,” Steve Bergmeyer, Continuous Improvement and Quality Manager at COATS, said in a release. “With its high load capacity, we can concentrate on increasing our ability to manage heavier components and bulk orders, driving greater efficiency, reducing costs, and accelerating delivery timelines.”
Terms of the deal were not disclosed, but it follows another deployment of DriveMod Tuggers with electric automaker Rivian earlier this year.
Manufacturing and logistics workers are raising a red flag over workplace quality issues according to industry research released this week.
A comparative study of more than 4,000 workers from the United States, the United Kingdom, and Australia found that manufacturing and logistics workers say they have seen colleagues reduce the quality of their work and not follow processes in the workplace over the past year, with rates exceeding the overall average by 11% and 8%, respectively.
The study—the Resilience Nation report—was commissioned by UK-based regulatory and compliance software company Ideagen, and it polled workers in industries such as energy, aviation, healthcare, and financial services. The results “explore the major threats and macroeconomic factors affecting people today, providing perspectives on resilience across global landscapes,” according to the authors.
According to the study, 41% of manufacturing and logistics workers said they’d witnessed their peers hiding mistakes, and 45% said they’ve observed coworkers cutting corners due to apathy—9% above the average. The results also showed that workers are seeing colleagues take safety risks: More than a third of respondents said they’ve seen people putting themselves in physical danger at work.
The authors said growing pressure inside and outside of the workplace are to blame for the lack of diligence and resiliency on the job. Internally, workers say they are under pressure to deliver more despite reduced capacity. Among the external pressures, respondents cited the rising cost of living as the biggest problem (39%), closely followed by inflation rates, supply chain challenges, and energy prices.
“People are being asked to deliver more at work when their resilience is being challenged by economic and political headwinds,” Ideagen’s CEO Ben Dorks said in a statement announcing the findings. “Ultimately, this is having a determinantal impact on business productivity, workplace health and safety, and the quality of work produced, as well as further reducing the resilience of the nation at large.”
Respondents said they believe technology will eventually alleviate some of the stress occurring in manufacturing and logistics, however.
“People are optimistic that emerging tech and AI will ultimately lighten the load, but they’re not yet feeling the benefits,” Dorks added. “It’s a gap that now, more than ever, business leaders must look to close and support their workforce to ensure their staff remain safe and compliance needs are met across the business.”
The “2024 Year in Review” report lists the various transportation delays, freight volume restrictions, and infrastructure repair costs of a long string of events. Those disruptions include labor strikes at Canadian ports and postal sites, the U.S. East and Gulf coast port strike; hurricanes Helene, Francine, and Milton; the Francis Scott key Bridge collapse in Baltimore Harbor; the CrowdStrike cyber attack; and Red Sea missile attacks on passing cargo ships.
“While 2024 was characterized by frequent and overlapping disruptions that exposed many supply chain vulnerabilities, it was also a year of resilience,” the Project44 report said. “From labor strikes and natural disasters to geopolitical tensions, each event served as a critical learning opportunity, underscoring the necessity for robust contingency planning, effective labor relations, and durable infrastructure. As supply chains continue to evolve, the lessons learned this past year highlight the increased importance of proactive measures and collaborative efforts. These strategies are essential to fostering stability and adaptability in a world where unpredictability is becoming the norm.”
In addition to tallying the supply chain impact of those events, the report also made four broad predictions for trends in 2025 that may affect logistics operations. In Project44’s analysis, they include:
More technology and automation will be introduced into supply chains, particularly ports. This will help make operations more efficient but also increase the risk of cybersecurity attacks and service interruptions due to glitches and bugs. This could also add tensions among the labor pool and unions, who do not want jobs to be replaced with automation.
The new administration in the United States introduces a lot of uncertainty, with talks of major tariffs for numerous countries as well as talks of US freight getting preferential treatment through the Panama Canal. If these things do come to fruition, expect to see shifts in global trade patterns and sourcing.
Natural disasters will continue to become more frequent and more severe, as exhibited by the wildfires in Los Angeles and the winter storms throughout the southern states in the U.S. As a result, expect companies to invest more heavily in sustainability to mitigate climate change.
The peace treaty announced on Wednesday between Isael and Hamas in the Middle East could support increased freight volumes returning to the Suez Canal as political crisis in the area are resolved.
The French transportation visibility provider Shippeo today said it has raised $30 million in financial backing, saying the money will support its accelerated expansion across North America and APAC, while driving enhancements to its “Real-Time Transportation Visibility Platform” product.
The funding round was led by Woven Capital, Toyota’s growth fund, with participation from existing investors: Battery Ventures, Partech, NGP Capital, Bpifrance Digital Venture, LFX Venture Partners, Shift4Good and Yamaha Motor Ventures. With this round, Shippeo’s total funding exceeds $140 million.
Shippeo says it offers real-time shipment tracking across all transport modes, helping companies create sustainable, resilient supply chains. Its platform enables users to reduce logistics-related carbon emissions by making informed trade-offs between modes and carriers based on carbon footprint data.
"Global supply chains are facing unprecedented complexity, and real-time transport visibility is essential for building resilience” Prashant Bothra, Principal at Woven Capital, who is joining the Shippeo board, said in a release. “Shippeo’s platform empowers businesses to proactively address disruptions by transforming fragmented operations into streamlined, data-driven processes across all transport modes, offering precise tracking and predictive ETAs at scale—capabilities that would be resource-intensive to develop in-house. We are excited to support Shippeo’s journey to accelerate digitization while enhancing cost efficiency, planning accuracy, and customer experience across the supply chain.”
Donald Trump has been clear that he plans to hit the ground running after his inauguration on January 20, launching ambitious plans that could have significant repercussions for global supply chains.
As Mark Baxa, CSCMP president and CEO, says in the executive forward to the white paper, the incoming Trump Administration and a majority Republican congress are “poised to reshape trade policies, regulatory frameworks, and the very fabric of how we approach global commerce.”
The paper is written by import/export expert Thomas Cook, managing director for Blue Tiger International, a U.S.-based supply chain management consulting company that focuses on international trade. Cook is the former CEO of American River International in New York and Apex Global Logistics Supply Chain Operation in Los Angeles and has written 19 books on global trade.
In the paper, Cook, of course, takes a close look at tariff implications and new trade deals, emphasizing that Trump will seek revisions that will favor U.S. businesses and encourage manufacturing to return to the U.S. The paper, however, also looks beyond global trade to addresses topics such as Trump’s tougher stance on immigration and the possibility of mass deportations, greater support of Israel in the Middle East, proposals for increased energy production and mining, and intent to end the war in the Ukraine.
In general, Cook believes that many of the administration’s new policies will be beneficial to the overall economy. He does warn, however, that some policies will be disruptive and add risk and cost to global supply chains.
In light of those risks and possible disruptions, Cook’s paper offers 14 recommendations. Some of which include:
Create a team responsible for studying the changes Trump will introduce when he takes office;
Attend trade shows and make connections with vendors, suppliers, and service providers who can help you navigate those changes;
Consider becoming C-TPAT (Customs-Trade Partnership Against Terrorism) certified to help mitigate potential import/export issues;
Adopt a risk management mindset and shift from focusing on lowest cost to best value for your spend;
Increase collaboration with internal and external partners;
Expect warehousing costs to rise in the short term as companies look to bring in foreign-made goods ahead of tariffs;
Expect greater scrutiny from U.S. Customs and Border Patrol of origin statements for imports in recognition of attempts by some Chinese manufacturers to evade U.S. import policies;
Reduce dependency on China for sourcing; and
Consider manufacturing and/or sourcing in the United States.
Cook advises readers to expect a loosening up of regulations and a reduction in government under Trump. He warns that while some world leaders will look to work with Trump, others will take more of a defiant stance. As a result, companies should expect to see retaliatory tariffs and duties on exports.
Cook concludes by offering advice to the incoming administration, including being sensitive to the effect retaliatory tariffs can have on American exports, working on federal debt reduction, and considering promoting free trade zones. He also proposes an ambitious water works program through the Army Corps of Engineers.