Supply chain collaboration will be a key theme of industrial activity over the next ten years, according the UK’s Confederation of British Industry.
In a new study, “The shape of business: the next ten years”, it says the focus of this collaborative activity will be to reduce costs through shared facilities, such as distribution centres and transport, which will also have a positive environmental impact.
Competitors may also work together to share auditing of suppliers, for example to assure their credit worthiness, governance or carbon credentials. But competitor collaboration may have a significant impact on trust in businesses if consumers believe the practice is unfair.
The CBI also predicts that globalism will be overtaken by localism – the desire of businesses for their suppliers to be close to market, making supply chains regional rather than global (although this may not apply to some highly globalised businesses with dispersed markets).
In addition, as wages in low-cost countries rise, the cost advantages of operating in some regions will narrow, making them less attractive as a supply base.
Whether businesses decided to repatriate physical supply chains will depend on a number of factors – value of materials, security of supply, location of major markets and supply chain capability.
For example, it says that in many cases the hollowing out of supply chains over the past 20 years means the UK is likely to miss out to countries such as Germany and Italy where key elements are still in place.
Organisations will focus on a smaller core of people and projects, supported by a much wider range of individuals and businesses around the periphery, the CBI says.
Clearly, one of the implications is that complexity in the supply chain will increase significantly. Supply chains might be physically shorter (but not always) but it will be important to understand what is driving other players in the supply chain. And bringing all the elements in the supply chain into alignment will become even more challenging.