The Ferrari Consulting and Research Group alerts clients and subscribed and general Supply Chain Matters blog readers, that our Q3-2019 Quarterly Newsletter published on Thursday of this week. Registered blog subscribers and existing clients will find notification and links to the Q3 newsletter in respective email inboxes. The Ferrari Consulting and Research Group

The past quarter remained incredibly busy, challenging and stressful for multi-industry supply chain management teams, with global trade and tariff developments along with industry and company specific supply and customer demand network disruption occupying much of the attention.

 

Global Supply Chain Activity Levels

Throughout this past quarter, this blog continuously alerted readers and clients to ongoing quantitative data indicating a discernable slowdown in global-wide supply chain activity levels. With the bulk of Q3 global supply chain activity being reported, coupled with the World Trade Organization’s (WTO) latest global trade forecasts,  Wall Street and respective businesses have now woken-up to the real threat or even existence of a manufacturing recession either underway or intensifying in the coming year.

Separately the WTO indicated in early October that world trade volumes are now forecasted to grow at the weakest pace since the global financial crisis. The agency expects material export flows to grow a mere 1.2 percent in 2019, down from the 3 percent level that occurred in 2018. That level amounts to a 60 percent decrease.

While the escalating trade war among China and the United States has been a contributing factor, the current turmoil involving a possible hard Brexit, and the ongoing trade dispute embroiling Japan and South Korea are each contributing to the decline.

 

Dominant Themes in Q3

Dominant industry and global supply chain management themes in the third quarter centered on four dominant developments, two of which were streaming in the prior quarter. They included:

  • Ongoing U.S. and China Trade War and the overall implications across multiple industry supply and customer demand networks.
  • Ongoing Boeing 737 MAX grounding crisis, with each passing week providing further developments and implications both for commercial aircraft industry supply networks and for product design and management consequences. By far, this development remains the most serious corporate crisis ever for Boeing, with far reaching consequences in financial, aircraft design and leadership perspectives.
  • The General Motors work stoppage, GM’s longest disruption in over 50 years, that consequently impacted 30 factories and crippled North American based auto supply networks. The impact of the disruption had reportedly cost the automaker upwards of $3 billion in lost earnings with a $1 billion direct impact on profits.
  • The Amazon Effect’s new direct impact on parcel transportation, with the rollout of enhanced one-day or same day delivery commitments to Prime customers, with the impact on existing carriers becoming far more evident.
  • A steady stream of technology developments and announcements, with the most far reaching being the unexpected resignation of SAP’s Chief Executive Officer.

 

Other Q3 Newsletter Items Include:

  • Highlighting the term synchronized stagnation and the implications for global supply chain management teams in the coming year. A period of synchronized contraction is an indicator of high uncertainty with slowing customer product demand and supply network activity continuing a downward trend. That invariably motivates Chief Financial Officers (CFO’s) to rein in costs and spending while limiting only the most essential longer-term investments. It further places a different emphasis on supply chain strategies for planning and execution resource needs.
  • Again highlighting the building evidence that global structural supply and product demand network change strategies are underway among various industry sectors.
  • Citing additional added recognition received for the Supply Chain Matters

 

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Thanks again for your continued readership.

Bob Ferrari

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