Supply chain

Question 1

What is impacting the supply chain and give some real life examples?

Answer 1

-Shifting geopolitical trade patterns
-Supply shortages
-Sustainability challenges
-Technology

For example, their is an increase in demand of lithium, nickel, rare earth metal and etc. which are mostly dominated by China market.

Question 2

What do many business do at the moment when it comes to their supply chain?

Answer 2

They tend to have lean manufacturing (low waste, high productivity) and outsource their production.

Question 3

What is the problem of many multinational companies who have suppliers who also have suppliers etc?

Answer 3

This phenomena is called deep-tiering which involves a main company having several suppliers who may also have several suppliers and so on. This causes limited visibility and transparency of the supply chain. This mean that if their is child labor at the bottom of the chain the main company will never know.

Question 4

How can one increase supply chain resilience (making supply chain stronger)?

Answer 4

-By diversifying sourcing and reducing exposure to geopolitical risks.
-ensuring supply continuity -> robotics and automation, SKUs (bar code which provide info on size, color, batch etc.), distribution networks.

Question 5

What is regionalization, nearshoring and reshoring?

Answer 5

Regionalization = creating multiple factories around the world which would provide with products for that region/area. So if one factory does not product only a certain region/area is affected.

Nearshoring = Moving manufacturing to countries close to distribution center. For example, United Benetton (Italian company) is now moving its manufacturing companies to Egypt, Croatia, Turkey etc

Reshoring = similar to nearshoring but here the manufacturing company is moved to place of origin. So for instance for United Benetton it would be Italy.

However the last two may require a lot of money and small companies cannot afford it. A company needs to understand if costs of moving manufacturing are worth it or if cost delay are more worth.

Question 6

What are the main 4 structural forces affecting the supply chain? and give examples.

Answer 6

1. Geopolitical
   Attacks to transporting ships
2. Climate change
   Restricted capacity in Panama canal
3. Technological acceleration
4. Demographics