Top Conglomerates Enter A New Era Of Supply Chain Disruption

Supply chain volatility is a difficult nut to crack, due to a host of risks that can be (or at least appear to be) out of a company’s control. Natural disasters and sudden corporate collapses, for example, can cause disruptive (and destructive) ripple effects down the supply chain.

Global markets today are in an era of immense geopolitical volatility that has heightened anxieties about how companies will manage their supply chains, with even the largest global conglomerates feeling the heat. While corporates can’t always control what factors affect their supply chains, they can control how they react to them.

Brexit

Information Age noted a recent report from Vuealta, which highlighted the size of geopolitical impacts on supply chains. The report found that U.K. businesses have said Brexit has been a huge disruptor to their supply chains in the last five years, with half of companies surveyed pointing to the U.K.’s exit from the European Union as a top supply chain concern — more than cyberattacks, natural disasters, supplier failures and demand surpassing capacity.

“U.K. businesses want to grow, yet they’re at risk of seeing critical supply chains and logistics disrupted by events outside of their control,” said Vuealta CEO Ian Stone said in a statement. “They know they can’t control the weather, for example, or what may or may not happen over Brexit, so it’s clear they need to focus on what they can manage. That means planning for all eventualities, and being able to respond in real time. This requires a connected supply chain ecosystem, with transparency and collaboration between partners.”

Apple’s Trade War Shifts

In the U.S., ongoing trade disputes between the U.S. and China have companies readjusting their global supply chains that often weave to and from China. Analysts at S&P Global Market Intelligence trade data unit Panjiva have predicted long-lasting impacts on supply chains as a result of those trade disputes, with major retailers — including IKEA, Home Depot and Target — warning about import declines and adjustments due to supply chain changes at LG Electronics and Samsung Electronics.

Previous analysis from Harvard Business School Professor Willy Shih in a February report in Forbes described this scenario as the “new normal.”

“This is driving a major rethink of global chains,” he said at the time.

Apple is the latest multinational conglomerate to take major steps in switching up its supply chain strategy. Earlier this month, the Nikkei Asian Review released a report that revealed Apple is asking its suppliers to shift as much as 30 percent of capacity outside of China.

Unnamed sources told The Wall Street Journal that no decision has been made, warning that it could take years for vendors to implement those drastic changes. Susquehanna International Group’s Senior Equity Research Analyst Mehdi Hosseini told the publication that, while there is “some flexibility” for certain Apple products, the company’s demand for skilled labor and inventory hubs means “it would take time” for suppliers to complete the change.

Walmart Transforms With Tech

Brexit, trade wars and other geopolitical events that are disrupting supply chains are leading to a heightened focus on risk mitigation and cost reduction, too. In this context, new reports from Digital Trends last week noted that Walmart is planning to introduce transformative supply chain changes through the adoption of automated and autonomous technology, an investment that could ultimately save the retail giant billions of dollars.

The effort would see Walmart investing in self-driving trucks and vans for logistics and delivery. As part of the initiative, the company is reportedly sourcing from Gatik, though details on their partnership remain scarce.

Walmart’s interest in autonomous vehicles to slash costs reveals how supply chain disruptions from geopolitical events occur at a time of digitization, automation and innovation — with technology introducing new opportunities for organizations to mitigate more complex risks ahead.