Supply Chain 2019 - Part 1
Paul Trudgian Ltd | Supply Chain & Logistics Consultancy No Comments

As we begin to gain momentum in to 2019, we’re seeing an emergence of new trends and a continuation of those already underway. There’s no doubting that the word ‘uncertainty’ is hanging over us from 2018, and has no chance of abating just yet. Supply chains are used to flexing and bending like a young sapling. However, this climate of uncertainty is at the more extreme end of our experience.

This two-part series on supply chains in 2019 looks at what is coming ahead on the horizon. We look at how technology continues to develop and, indeed, drive change. We look at the political landscape and how this combines with predicted global economic situations. Using our experience over the last year and the conversations we’re having, we’ll look at the trends which are going to dominate our headlines.

This first part of ‘Supply Chains in 2019: Looking Ahead’ covers the global political environment and its impact on global tariffs and trade. We also examine the labour shortages and how these two are affected by the wider political landscape. We then move on to where the effects of this are being felt most keenly.

In our second article in the series, we’ll look at technology and the continued importance and development of digitisation within the warehouse and wider supply chain. Within this framework we’ll look at the increased push for ethics and sustainability, as well as personalisation of product and service.

The Global Tariffs and Trade Landscape

Let’s take the bull by the horns and start with the frankly enormous elephant in the room: global tariffs and trade, most notably within the context of Brexit.

We cannot pretend that we have remarkably found certainty here. We haven’t. However, it is this very uncertainty which is going to dominate the arena of global tariffs, trade, and indeed free trade agreements throughout 2019. Even with an agreed Brexit Deal, there will be immense uncertainty at least for the next 6 months, and beyond.

Global tariffs and trade also need to be considered within an even broader context than Brexit alone. 2018 shook the world for fragile trade agreements. But it went back further than this, with the likes of the Trans-Pacific Partnership which died a death.

Last year we saw the global angst regarding tariff tug-o-war between the US and China which gradually eased into renegotiating NAFTA into the USMCA. Global tariffs are certainly not on a firm footing just yet.

Indeed, despite the fun and games of Brexit, it’s the US-China situation which really impacts supply chains. Together, Brexit and US-China could have ramifications we are, as yet, unable to truly appreciate. However, for the moment we can certainly predict that supply chains are going to encounter border control problems and slow-downs at a level which is unfamiliar to us over the last few decades.

However, this is where we begin to uncover a real problem for supply chains in 2019. You’re still navigating largely in the dark. Whilst ramifications are obviously going to happen, we still don’t know the precise nature of them. It’s still conjecture, made worse by political meanderings. Knowing what to do to prepare and pilot your business through 2019 isn’t coming with a route map.

Generally, we’re discovering that companies are falling into one of two main camps: the wait-and-see approach and the attempt to circumnavigate. Both approaches are understandable, but both are accompanied by obvious problems.

Logistics Labour Shortages

Whilst talking about borders, it’s perhaps sensible to move on to the building problem we’ve been watching develop over the last few years in supply chains: the labour shortage. Before we move on to the reason for, and the management of, the labour shortage, let’s quickly explain why this is made worse by the uncertainty over borders.

When labour shortages exist, borders pose problems. To the businesses who are struggling to fill their roles with adequately skilled and experienced staff, they want to be able to recruit from the widest pool possible. Therefore, they need to have minimal immigration restrictions so that they can recruit based on talent and aptitude alone.

Whilst this is particularly obvious at the skilled and qualified level, it’s also applicable in lower levels too. Traditionally low-skilled workers for roles, such as logistics and warehousing, have come from Europe. These staff are no longer ‘on tap’ due to a combination of the uncertainty and the potential restrictions which may be put in place.

So, whatever the reasons for the labour shortage in supply chains in 2019, the political environment is going to make handling it harder.

As we know, labour shortages aren’t restricted to the UK because of Brexit, however. For example, in the US we are seeing extreme shortages of drivers due to the boom in e-commerce.

We’re also simultaneously developing a skills gap. The skills needed in the modern supply chain are radically different from those needed a few decades ago. The industry needs to attract talent which can be nurtured and shaped, focusing on technology.

Nonetheless, the labour shortage is also met with an interesting technological environment. In theory, the technology available should be helping to reduce the labour shortage, and indeed the problems it is posing. Driverless trucks and warehouse automation are two areas which are being driven precisely because of the looming labour problem.

The Ground Level Situation

However, we cannot escape the fact that the real impact of labour shortages, and even the political environment, is like a tornado which touches down in one point. In this instance, it is touching down at the logistics and warehousing end of the supply chain. No matter what the plans and strategies imposed at higher levels, it’s these on-the-ground levels which are struggling and will need help in 2019.

For this reason, we do expect to see a great deal more automation and robotics take-up and development in logistics and warehousing over the next year.

In part 2 of this series on Supply Chains in 2019, we will look further at the trends and development in technology, automation and robotics.

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