Six Trends Affecting Global Supply Chains

By Chip White and Alan Erera

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Barbara Christopher
Industrial and Systems Engineering
404.385.3102

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Summaries

Summary Sentence:

Global supply chains and organizations that provide service to them must be able to adapt to change and freight transport infrastructure change is one of the many ways to do so.

Full Summary:

Global supply chains and organizations that provide service to them must be able to adapt to change.  The bill that cleared the way for the harbor in Savannah to deepen and expand is an example, necessitated by an infrastructure investment thousands of miles away in Panama.  Freight transport infrastructure change is one of six major global trends identified by Georgia Tech Stewart School of Industrial & Systems Engineering at Georgia Tech Professors Chip White, the Schneider National Chair in Transportation and Logistics, and Alan Erera, Coca-Cola Professor.

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  • Alan Erera Alan Erera
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Global supply chains and organizations that provide service to them must be able to adapt to change.  The bill that cleared the way for the harbor in Savannah to deepen and expand is an example, necessitated by an infrastructure investment thousands of miles away in Panama.  Freight transport infrastructure change is one of six major global trends identified by Georgia Tech Stewart School of Industrial & Systems Engineering at Georgia Tech Professors Chip White, the Schneider National Chair in Transportation and Logistics, and Alan Erera, Coca-Cola Professor.

 1.    Changes in freight transport infrastructure.  The Panama Canal is currently being modified to allow much larger vessels the ability to transit.  The new canal, with a new set of locks, will have significant impact on the flow of goods into U.S. East Coast ports (e.g., Savannah) and beyond.  Changes in port, rail, and road infrastructure worldwide will impact on global trade.  Changes in port infrastructure include the Singapore container port relocation and the new Shanghai Yangshan terminal location.

 2.    Real-time supply chain control, based on real-time data.  More data are becoming available in real-time or near real-time, making it possible to exert real-time control of supply chains.  This Big Data phenomenon is particularly challenging since many of the data sources and systems needing these data for control, e.g., tractor-trailers delivering to assembly plants, are constantly on the move.  Synchronizing the supply chain with real-time data and predictive analytics in order to better enable same-day or next-day delivery driven by e-commerce is rapidly becoming a reality.

 3.    New manufacturing process innovations.  The impact of additive manufacturing (e.g., 3-D printing) on supply chain design and operations may have dramatic impact on the design of supply chains.  If additive manufacturing feedstock can be used for multiple products, then a risk pooling opportunity exists that may reduce transport demand for work-in-progress and finished goods.  New packaging that results in weight and cube reduction per unit of product shipped may further reduce the growth in tonnage transported.

 4.    Reverse globalization and re-shoring.  Supplier footprints for the U.S. market are moving closer to the U.S. This is due to changing wage structures in China and in Mexico and in the improved resilience provided by shorter supply chains (“Mexico is the new China”).  Future changes in the cost of energy (which may go down, indicating the possible advantage of longer supply chains) and interest rates (which may go up, increasing inventory holding costs, indicating the possible advantage of faster supply chains) may affect this trend. 

 5.    Demographic changes and the growth of urban logistics.  Over 50% of the world’s population now lives in urban areas.  The growth of mega-cities in the world is occurring mostly in Asia (e.g., Tokyo, Guangzhou, Shanghai, Jakarta, Seoul, and Delhi). The impact of congestion on moving goods in urban areas and the increasing value of real-time congestion information for improving freight transport efficiency are continuing opportunities and challenges.  The impact of new e-commerce based business strategies on moving goods in urban areas is further heightening the importance of urban logistics.

 6.    Concurrent product and supply chain design.  Products are being designed in order to reduce total supply chain cost, assuming the supply chain is sufficiently well informed and adaptive (capable of real-time control, based on real-time data) so that product differentiation can occur late in the supply chain (`postponement’) and be based on real-time or near real-time demand.  Product architectures that are modular tend to enable product differentiation late in the supply chain.  ‘Push’ supply chains (for mass production) are being replaced by ‘pull’ supply chains (for mass customization, build-to-order). 

 

 

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H. Milton Stewart School of Industrial and Systems Engineering (ISYE)

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isye, scl
Status
  • Created By: Lizzie Millman
  • Workflow Status: Published
  • Created On: Jun 11, 2014 - 6:27am
  • Last Updated: Oct 7, 2016 - 11:16pm