Background and Introduction

On an annual basis, and since our inception in 2008, The Ferrari Consulting and Research Group and our associated Supply Chain Matters blog publishes a series of supply chain management focused annual predictions which are monitored and scored for actual occurrence at the conclusion of the year.

Such predictions are provided to clients, technology providers and blog readers in the spirit of advising senior and line-of-business executives, multi-industry cross-functional supply chain management and supporting information technology teams a sensing of what to expect in the coming year, Our goal is to depict how likely global, regional, economic, business and industry trends will impact and likely influence required supply chain management actions in the coming year.  Predictions

The context of these predictions include a broad cross-functional umbrella of what is today considered supply chain management, and includes areas of leadership and strategy, product management, strategic sourcing and procurement, supply chain planning and customer fulfillment, manufacturing, logistics, transportation and customer service management.

During the remainder of December, we will publish for our Supply Chain Matters blog readers, added detail concerning each our 2020 predictions.  In early January, our research arm will publish the full detailed predictions research report which will be available for complimentary downloading shortly thereafter and during the upcoming year.

 

Summation of 2020 Predictions for Industry and Global Supply Chains

Predictions for the coming year umbrella an overall business climate reflecting lot of economic and business uncertainties to be evident in the year 2020. Many of our themes of 2018/2019 carry over to the new year but in even more problematic dimensions.

Our year 2020 predictions factor and include:

  • Indications of a cautious global economic outlook in 2020, with specific concerns about prominent downside geo-political and financial risks, and the ultimate future of global-wide trade over the coming 2-3 years testing the overall agility and resiliency of multi-industry customer demand and supply networks.

 

  • Continued unparalleled levels of global supply network management challenges, especially centered on components and products produced in China, that will continue to lead to ongoing structural sourcing shifts during 2020-2021, and eventually result in more near shored geographically centered multi-industry supply networks.

 

  • Talent management and recruitment strategies turning more towards retention, training and reskilling as headcount budgets likely begin to tighten and businesses prepare for an eventual economic recession.

 

  • Proactive cyberattack defenses and information security safeguarding across supplier, contractor, and customer demand networks remaining a mandatory requirement in 2020 and increasingly including and factoring the contracting of existing information security measures of any technology provider’s Cloud network platform.

 

  • Supply Chain Digital Transformation strategies, while continuing to have strategic connotation and directed efforts for lines-of-business and cross-functional supply chain management teams, will likely have to focus more on near-term objectives and meaningful interim benefits. That will include needs related to improving productivity, clearly defined opportunities for transforming existing business processes to save costs or improving customer fulfillment streams among key customers.

 

  • With 2020 providing higher levels of business uncertainties, we anticipate that advanced technology buying, and adoption strategies will turn more conservative and far more focused in 2020. Emphasis will shift toward addressing near-term compelling business priorities and more Cloud-based applications and IT Likely areas of such priorities would:

 

      • Obvious cost-savings opportunities enabled by technology including process automation, added productivity of assets and people.
      • Product item-level track and trace processes needed to satisfy either business, regulatory or industry prioritization needs.
      • Near-term new business revenue generation opportunities such as automated equipment services and maintenance.
      • Cloud based technology investments that address both applications and avoidance of IT infrastructure, allowing more near-term expense or cash savings.

 

 

  • The technology-enabled disruption of global transportation contracting and services processes, specifically transportation brokerage, general, shipper, online retailer or third-party logistics will reach broader dimensions of technology-enabled disruption in 2020, including more visible signs of overall industry shakeout and consolidation.

 

  • The multi-year transition toward Digitally Enabled Response Networks similarly will become more business process specific, weighted either by near-term line-of-business, customer demand fulfillment or supply network process response needs. End to end extended supply chain visibility and coordinated decision making will remain as the predominant objective.

 

  • The positioning for global online retail platform dominance is scaled back toward more geographic or regionally focused online fulfillment and federated logistics and last-mile delivery capabilities. The battlegrounds will continue to center on the most lucrative growth markets for online retail such as India and certain other Far and Middle East markets.

 

As in prior years, for the year 2020, we will include specific industry sectors that we anticipate will undergo specific supply chain management related challenges in strategy, business process, talent or advanced technology dimensions. Such industries will be:

Global Automotive and Truck Industry’s continuing complex multi-year transition toward producing and benefiting from market needs for more electrically or hybrid powered vehicles, including autonomous driving capabilities, and the likely ongoing impacts on customer fulfillment and supply networks.

Commercial Aircraft Industry and the ongoing challenges of shifting airline market demand among aircraft categories, and the likely consequences of Boeing’s 737 MAX likely ongoing aircraft grounding crisis on industry product design, monthly production and supply network strategies.

Consumer and Packaged Goods Industry in continuing to meet the challenge of permanent changes in consumer requirements in food products, a continued move toward more direct-to-consumer or retailer distribution, and how product and process related sustainability strategies continue to be more strategic toward long-term growth.

High-Tech and Consumer Electronics Industry now caught in the apex of a likely more entrenched trade war involving China and the United States in areas of intellectual property protection, key technology dominance in strategic components including semiconductors, and the implications of a plateauing smartphone market.

Global Retail Industry continuing to meet, and in some cases blunt,  the ongoing challenges related to annual double-digit increases in online sales and services retail sales. pitting online retailers against traditional brick and mortal retailers, or combinations of both.

 

Summary Takeaways

As we predicted one year ago, the year 2019 was very challenging for respective industry and global supply chains. The year 2020 will be just as or more challenging, presenting different needs as individual businesses anticipate a year of continued escalated global trade tensions and increased industry, market and economic uncertainties.

C-Suite and respective senior supply chain executives will likely be recommending and influencing business strategies to prepare for a notable economic downturn in either 2020 or 2021, which implies initiating near-term initiatives to reduce costs and inventory, cap headcount and increase overall productivity. At the same time, individual supply chains must be prepared to manage added agility and resiliency in decision-making and response capabilities to ensure business objectives and outcomes are achieved.

 

We once again encourage clients and readers to take the time to review what to anticipate in the coming year and how your organization can be best prepared.

As we highlight each of our predictions in added detail, please continue to provide your individual feedback along with what specific area that most concerns you in the coming year.

 

Bob Ferrari

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