Friday 20th Oct 2017 - Logistics & Supply Chain

Engineering a better supply chain

Engineering and manufacturing have seen big changes over recent years with the emergence of China and India as major players. But the changes ahead promise to be even bigger and will have a significant impact on how supply chains are structured.

Malory Davies FCILT, Editor.

Malory Davies FCILT, Editor.

A study by DHL, entitled “Engineering & manufacturing 2025+: building the world”, suggests that Nigeria will overtake Germany, the UK and France as a manufacturing centre by 2050. And countries such as Saudi Arabia and Egypt, which are not currently thought of a manufacturing centres, are also set to become much more important.

The growing importance of these countries as manufacturing centres will be mirrored by the continued movement towards re-shoring and near-shoring as major global manufacturers optimise their structures.

And the study highlights increasing complexity and customer-centricity inspired by developments in the business to consumer markets.

But extending supply chains even further, and moving to new manufacturing locations inevitably increases the level of supply chain risk.

The report says: “To deal with volatility and exogenous threats, future supply chains must be both resilient and compliant. Engineering and manufacturing companies will be forced to constantly re-examine the trade-off between efficiency and redundancy and contingency planning will become imperative. At the same time, supply chain managers will be increasingly challenged to understand new and ever-changing compliance specifications, adapt processes accordingly, and make sure all requests are met.”

And it suggests that speed to market and the ability to react promptly to changes in customer demand will require a global network of more regionalised supply chains closer to markets and customers.

This will have a significant impact on the major trade route network and the development of logistics infrastructure globally.

But it also has implications for how organisations manage supply chain risk, and how lean a supply chain can be made.

Keeping up with these changes will take agility. But I suspect that winners will be organisations that are able to build strong collaborative relationships that give them a head start in these developing markets.

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