Through the looking glass. South African supply chains in 2019

Posted by Barloworld Logistics on 17 Jan 2019 2:00:00 PM

Supply chains trends 2019

2019 promises, to once again be a year of opportunity and turbulence in equal measure. On the local front, South Africa will continue to emerge from the last decade of turmoil, with increasing hope for international investment, growth and stability. 2019 is also an election year, so our economy is likely to feel the impact of political shenanigans in the run-up to voting day. Internationally, economic changes continue unabated with the USA/China trade war and Brexit, to name a few, likely to create ripples throughout the global economy. Supply chains operate at the heart of most industry, and as such, are impacted by a plethora of trends. Here are a few we are keeping our eye on.

1.    Micro business, alternative solutions and bottom of the tier servicing. As a combination of technological advancements and economic freedom become a reality in most economies, alternative business models and micro vendors are gaining market share away from traditional organisations. Furthermore, locally the so-called “bottom of the tier” market is becoming more and more sophisticated in consumptions patterns, requiring multiple products, in much the same way as traditional retail. These shifting demand patterns are likely to fundamentally challenge the distribution channels available locally, requiring supply chains to swiftly adapt to smaller loads, more frequent drops and sharply fluctuating demand. Alternative and micro solutions are adding diversity to the market, but at the same time, are eroding centralised demand meaning that the future of mega distribution centres and full truckload transport may be under question.

2.    Social responsibility and corporate citizenry. The so-called “woke” generation of millennial and generation X’s demand no less than exemplary behaviour from brands, in a way that is far more impactful than any consumers before.  From a supply chain perspective, this means that organisations need to take responsibility for more than their own manufacturing, holding up and downstream partners to higher standards of social and environmental responsibility. The carbon footprint of products, product integrity and the provenance of a product are becoming more and more critical when establishing competitive advantage. Responsible transport and logistics, providing traceability from origin to destination, allow organisations transparency for consumers seeking responsible products.

3.    Digitisation. As with most industry, the adoption of technology into the supply chain is no longer necessarily a competitive advantage, but an expectation from customers. Regardless of the extent of technology adoption, the expected experience and outcomes from a consumer perspective are becoming more advanced every day. Business to business customers are expecting the same experience as when purchasing consumer goods, end consumers are expecting instant and accurate information at their fingertips – on every device, at every hour of the day. The amount and type of technology adopted are dependent on business model requirements, but there is no longer any doubt digitisation and technologically driven processes can deliver the level of customer satisfaction and cost saving required to remain relevant in a modern economy. AI is fast becoming the new source of advantage, allowing supply chains to intuitively react to demand, to respond to customers without human intervention and to source and deliver as and when needed smoothly.

4.    Data protectionism. From a rising consumer consciousness regarding personal data, too nationalistic data fencing, the ownership and access to data will start becoming both a burden and privilege for organisations. The security measures required to ensure the safety of records are indeed a necessary evil, and while their presence is mandatory and necessary, it may hamper collaboration and analysis. In May 2018, the European Union’s General Data Privacy Regulation came into effect, with similar legislation being enacted worldwide. Consumer data is undoubtedly the competitive edge in most modern businesses; however the purchasing of such data is fast becoming a no-no. Not only does it enter a grey area regarding data protection, it also is becoming near impossible to purchase accurate data. Any supply chain worth its salt is in actual fact an active and accurate data collection vehicle, and once organisations begin to utilise this data to match, understand and predict consumer behaviour effectively, they will discover a powerful weapon in their competitive arsenal.

There is an interesting dichotomy developing within the economy – business is being driven in equal parts by leapfrogging technology and a return to traditional values. Multinationals are more and more coming into competition with good, old-fashioned mom and pop shops competing on equal playing fields. The more supply chains strive ahead, the more they are expected to be responsible. The more tech-savvy the consumer experience gets, the more personalisation is required. Industry will continue to evolve at unprecedented rates, but consumers will also continue to seek sustainable solutions, presented in a personalised manner, and supply chains are well advised to retain the good while keeping up with the augmented types of demand to remain competitive in 2019.

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