The Future of Global Supply Chain: Specialisation vs Automation

Photo credit: Mongkol Chuewong / Getty images

Living through the #COVID-19 pandemic, has so far revealed many flaws in the way we are conducting businesses in general. As economies around the world fold due to government lockdowns, various companies are struggling to keep their business afloat. The global supply chain (a system that encapsulates the production and distribution of the things we buy as businesses and consumers), has been tremendously affected.

In China, at the beginning of the pandemic, transportation systems were frozen, while factories could not get any of their production lines up and running as workers could not get back to those industrial units. This caused panic among a number of businesses around the world, as most of their supply chains are from China. As the pandemic started to spread around the world and more governments adopted lockdown measures, the demand basically froze. Meanwhile China came out of lockdown and was ready to manufacture.

The very principle of connectivity has been disrupted because, either the front-end or back-end of the supply chain is not functioning.

A typical supply chain will go from the raw materials, processors, sub-manufacturers, manufacturers, logistics stations, to the point of sales. If at any given time, one of these goes offline, the whole chain cannot operate. Each company specializing in specific parts of the final product will have to be halted in their process. Although specialization is essential and comes with obvious benefits, in the case of this pandemic, not being able to diversify activities could leave companies stranded.

Specialization was always perceived as a strong element to possess within a supply chain. Different companies would specialize in different production aspects within the chain. But contingent upon this pandemic, we have seen that specialization could possibly be a problematic factor for many companies. Let's take for instance a company which specializes in manufacturing computer chips and outsources raw materials from another company located in a different country. Due to lockdown measures, the second company cannot send raw materials to the first. If the first company cannot produce the good it specializes in, there is a need for a transition to produce something else. That is where automation comes in. The company needs to be able to transition their systems quickly with an automated system, not only because of the pandemic but also because of the rapid changes in consumer demands.

Although it might be a huge challenge, digitizing the global supply chain could be the best solution for its future. The ideal and best supply chain would be the one where we are able, through digitization, to analyze different kinds of data signals from the market and develop algorithms to predict consumer demand shifts. Automating at all levels, especially at the manufacturing level, allows the factories to be more productive; improving product quality and quantity. As we get more technology involved and workers learn more about digital tools and become well equipped to operate the machines, we could notice an overall economic upgrade.

Also with new deals that will be made, the involvement of #Blockchain technology could be beneficial for trust-building and traceability of various products within the supply chain.

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