Which Supply Chain Megatrends Should You Manage?
Feb 26, 2018
By Victoria Muerza
Managing change is an integral part of managing supply chains, but the pace of change is now so fast that it’s difficult to decide where to focus the company’s management resources. The NEXT-NET project aims to help companies pinpoint and prioritize the changes that will shape future supply chains.
NEXT-NET is co-funded by the European Commission under the Horizon 2020 Framework Programme. The Zaragoza Logistics Center (ZLC), Zaragoza, Spain is one of the research centers participating in the project. ZLC is looking at specific challenges that future supply chains might face, and how certain trends could interact to create such challenges.
To ascertain which changes are the most relevant for supply chains, it is necessary to define what constitutes a potentially game-changing development. For the purposes of the NEXT-NET project, there are four levels of change that pertain to supply chains. These are depicted in Figure 1: Impact and time horizon of megatrends (Source: Pictet Asset Management).
As can be seen in Figure 1, each category of change varies according to its level of impact and time horizon. A Craze or Fad is relatively short-lived, and its impact is modest. The other three categories, Microtrends, Trends and Megatrends, increase in both impact and duration.
To distinguish between these types of change it is helpful to consider a specific example. A single hurricane is not a trend but an event. However, an increasing number of hurricanes in, say, the US can be classed as a trend. A megatrend is when the number and intensity of hurricanes increases across the globe.
Megatrends can spawn other trends or even megatrends, and tend to unfold relatively slowly. The project team will derive possible scenarios and hypotheses that map the potential consequences of these large-scale changes and how industries might evolve under their influence.
The project’s data collection stage, completed recently, was divided into two phases: literature review and the hosting of expert workshops that include industry representatives. The first phase was guided by a PESTLE framework, which examined Political, Economic, Social, Technological, Legal and Environmental dimensions, and their impact on manufacturing, process manufacturing and the logistics industry. For the second phase, Aston University in the United Kingdom conducted a workshop with 18 experts on December 5, 2017.
In all, 22 megatrends and 66 related trends were identified during the first stage of the project. Here are some examples of the megatrends and associated trends (trends in parentheses).
Political. Protectionism (import tariffs, quotas, different tax structures and subsidies). Political stability (terrorism/conflict, social unrest).
Economic. Global trade shift (economic growth in emerging economies, export growth, investment, globalisation and the emergence of firms created globally). Digital economy (sharing economy, shift from goods- to service-based economy).
Social. Population growth (population boom in developing countries and growing demand for resources). Demographic change (ageing population, boom in developing countries, young population boom in developing countries, migration flows, labor shortages).
Technological. Digital transformation (big data analytics, artificial intelligence, cloud-based computer systems, blockchain, Internet of Things). Technology development and automation (robots, augmented reality and virtual reality, 3D printing/additive manufacturing, drones, autonomous systems, automated guided vehicles, wearable devices and cyber-physical systems).
Legal. Consumer protection laws (cross-border payments, return products free of charge or under warranty, product safety regulations and privacy). Intellectual property law (patents and data sovereignty).
Environmental. Climate change (pollution). Resource scarcity (lack of resources, increase in waste).
The next stage of the project, now underway, will generate scenarios for each of these six dimensions. These scenarios will be evaluated using various modelling techniques.
With the scenarios in place, the team can identify the challenges that emanate from these potential outcomes.
The NEXT-NET project is due to be completed in September 2019. The scenarios and challenges identified by the project will help research organizations to develop research agendas, and provide a valuable guide for companies as they navigate the many changes that affect the design, creation and management of supply chains.
On a broader level, the work will support the formulation of policy recommendations as well as strategic agendas that enable supply chains to fulfil their full potential for contributing to European economic growth and prosperity.
For more information on the NEXT-NET project and ZLC’s participation contact Dr.Victoria Muerza, Research Fellow, ZLC, at: [email protected].