Supply Chain Moments 2018
Paul Trudgian Ltd | Supply Chain & Logistics Consultancy No Comments

There was nothing boring about 2018 when it came to supply chain management. It was a year of flux and shockwaves, developments and interesting twists and turns. In this article, we take a look at the main ‘moments’ of 2018, from Top Trumps and Brexit Bumbling through to supply chain sustainability.

Top Trumps

Trump’s imposition of tariffs in March, notably on steel and aluminium, sparked threats of a trade war between the US, Canada and Mexico. However, with the United States-Mexico-Canada Agreement (USMCA) announced in September, to replace NAFTA, things calmed back down. Fundamentally, it is about protecting American supply chains, and increasing US input particularly regarding car and car part manufacturing in order to protect American jobs.

The game of top trumps didn’t stop there. The US and China also went through a dance of the US placing new tariffs on China and thus China retaliating. Currently, there’s a truce in place, but it’s certainly uneasy and we need to keep an eye on the horizon.

Brexit Bumbling

There was no escaping the B word in most headlines about supply chains involving the UK, but also internationally. Everything got a bit stormy for a while, with May’s no-confidence vote which side-swiped the vote on the Draft Brexit Withdrawal Agreement. The reality is that we still don’t know what’s happening, despite the deadline really being very much in sight now.

For supply chains, particularly involving the UK, we’re still in hugely uncertain territory with no sight of stability, or indeed outcomes, yet. A good example of how this isn’t just a Europe and UK-wide problem, but has international repercussions, is how freight destined for the US from Europe tends to converge of Felixstowe to become more efficiently loaded.

Amazon’s still setting the trends

It wouldn’t be a rundown of supply chains if we failed to mention Amazon. Much of the change was actually due to their 2017 acquisition of Whole Foods, which saw a growth in last mile grocery deliveries through 2018.

They are continuing to lead the supply chain trends in other areas too. Most notably, they have instigated more watertight schemes for proof of delivery, helping to protect their bottom line against both package theft, and fraudulent non-delivery claims.

Amazon continues to acquire patents for the tech of the future. Last year’s favourite is probably the one for robotic arms that will play catch with items for distribution throughout the fulfilment centre. Sounds fun, if a little crazy.

Uber’s also been one to watch

Uber’s been muscling in on supply chains as it seeks to gain traction with Uber Freight. Of particular interest in 2018 was the desktop app geared to increase transparency for shippers. They also created the ‘Take Me Home’ programme for enabling drivers to return home on other loads, and the trailer pooling programme.

Retailers step up their game

Retailers only have one option when Amazon has moved the goalposts: to rise to the challenge. Many retailers have responded to Amazon’s latest changes by bringing about their own changes too.

Walmart has acquired a patent for their ‘Fresh Online Experience’ to enable shoppers to see fresh items before their order is placed. Other retailers are bringing in same day delivery to match the Amazon Prime offering.

Pizza Hut, pairing with Toyota, is seeking to create a pizza cooking truck. So you order your pizza and it’s cooked en route to you. The idea is to cut delivery times massively.

The costs of labour

Looking at the US market, there were a few things that happened in 2018 that showed that costs were increasing, but for higher quality. For example, Walmart announced it was offering hefty referral bonuses to attract new drivers. However, 2018 saw the highest driver turnover rates as drivers were able to jump ship for better pay. The result is that pay across the industry has been pushed up. By the end of the year, driver shortages were less intense, but there’s no doubting that drivers are hugely needed in large and reliable numbers in the modern supply chain.

Sustainability

Sustainability continues to be an important buzz word in many businesses, particularly within supply chains. The drive is on to continually seek ways to make supply chains more sustainable. For example, back in January 2018, Budweiser began only using renewable energy for all their US brewing.

Mars despatched experts to Madagascar, the world’s leading exporter of vanilla, in order to support sustainability changes. Unilever set a course for change by becoming the first consumer goods firms to let everyone publically know about its palm oil use and suppliers.

Many 3PL businesses are considering ways to reduce emissions, particularly through the use of renewable fuel sources and electrical vehicles.

Natural disasters

Global supply chains have to operate within the arena of both the known and the unknown. A continual challenge for supply chains through the decades is our navigation of natural disasters. We cannot escape the fact that natural disasters will impact our supply chains, and often in ways we can’t predict.

Hurricane Florence, hitting North Carolina particularly hard, made headlines in September. It’s thought there has been over $40 billion in damages. However, also of note was freight activity which dropped over 60% over several weeks.

The World Risk Report, produced by the World Economic Forum, shows that there is an upward trend of such hard-hitting (in financial terms) natural disasters. There’s no escaping the fact that as climate change continues to impact the globe, it will impact supply chains, we need to adjust and manage risk in a heightened risk environment. We also need to drive supply chain changes which seek to minimise environmental impact.

What’s it looking like for 2019

Some things will stay the same for 2019 in terms of supply chains. We’ll still want to keep an eye on the likes of Amazon and technological advancements. We’ll want to get on board with corporate and social responsibility.

However, as we head in to 2019, there are a fair number of unknowns as far as supply chains are concerned. Most notably, Brexit. Until we know what’s happening there, we are still largely navigating in the dark.

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