The Compass Blog
by Jenna Hoover
From toilet paper to semiconductors, the United States has experienced shortages on many different fronts. The damage that the global pandemic (COVID-19) has caused to the global supply chain will have long-term effects, but not all of the effects are detrimental. Supply chain opportunities following the pandemic include:
Supply chain resiliency is becoming increasingly important as supply chain risks continue to rise. Short-term delays are expected, according to experts, due to issues with cargo ships, workforce shortages, and supply and demand imbalances. According to a survey conducted by the Wall Street Journal, roughly 45 percent of economists anticipate that improvement of bottlenecks will not occur until the second half of 2022. Companies will need to rebalance on-shore, near-shore, and off-shore manufacturing operations to boost resiliency across all global supply chains. They'll have to maintain and further develop alternate sourcing tactics to reduce reliance on specific suppliers in low-cost locations, as they have for the past two years.
Inventory optimization tactics will continue to be important, assisting decision-makers in identifying vital materials, intermediates, and products, as well as determining how much and where they should be stored across the supply chain. Suppliers, logistics service providers, contract manufacturers, and other essential trading partners will also require improved coordination and visibility.
Machine learning and artificial intelligence (AI) will employ amounts of the Internet - of - things and social media data from people, devices, assets, products, and vehicles across the supply chain to automate decision-making in Industry 4.0, which is projected to ramp up in 2022. Predictive analytics, on the other hand, will enable employees to make better educated, critical decisions while also developing new business models.
Industry 4.0 has a lot to offer enterprises that have invested in these technologies, from industrial automation with 5G, improved connectivity, and enhanced AI technologies to intelligent sensors and assets across the supply chain. The focus on enterprises implementing Industry 4.0 within their factories, across the supply chain of smart assets, and into the hands of the customer base will intensify in the coming year.
Specific to the U.S.:
Some U.S. companies are considering relocating manufacturing back to the United States or relocating (near-shoring) manufacturing to northern Mexico. There have been years of dependence on Asian factories, in which the freight rates have exponentially increased, as well as back-ups at ports, and the most current problem - not being able to obtain shipping capacity at all. So, companies are strongly considering moving the production closer to their customers:
- General Motors; planning a $4 billion plan to produce batteries for electric vehicles, in Michigan.
- Toyota; considering a $1.3 billion battery plant in North Carolina.
- Samsung; Considering a $17 billion semiconductor plant in Texas.
These are just a few of the considerations.
Learn more about the Global Supply Chain 2022 and Beyond at the 36th Michigan World Trade Week Business Conference in Grand Rapids, Michigan on May 4th! Keynote presenter, Mark Baxa - President & CEO, Council of Supply Chain Management Professionals (CSCMP) will discuss 'Succeeding in Today's Supply Chain Environment' during his keynote address. After lunch, join us for breakout sessions that will keep the discussion of the global supply chain going! Register today!
About the Author
Jenna Hoover is working as a student assistant for GVSU’s Van Andel Global Trade Center. She is a junior at GVSU currently studying Finance and Supply Chain Management within the Seidman College of Business. You can find her visiting local coffee shops as she studies for classes or checks in on her Roth IRA. In her free time, she enjoys walking her dog, Gertrude, and hanging out with friends along the beautiful beaches of West Michigan.