Category Archives: Global Trade

Supply Management in the Decade Ahead: Same Old, Same Old — Only the Pendulum Swings Part I

Almost 20 years ago, back in 2007, I wrote a 2-part series on Supply Management in the Decade Ahead: The Eight Major forces (Part 1 and Part 2) where I discussed the various external forces that will impact a company’s supply chain in the years ahead, as verified by CAPS, AT Kearney, and their clients.

And just like you don’t need to read another state of procurement report for five years! because, except for the tech-du-jour, nothing has really changed in the past five, ten, and even twenty years; you don’t really need to do an extensive study or survey to realize that the core supply chain issues are more or less the same, it’s just where the pendulum happens to be in it’s swing on each major issue.

Today we discuss the first four.

Global Competition Contraction

Twenty years ago, we were dealing with the rise of China hitting full swing as a result of the outsourcing craze that started to pickup in the eighties (as a result of pushes by McKinsey and counterparts), as well as other secondary markets becoming more accessible — and a host of global options for just about everything you could buy.

While this hasn’t changed, since the world’s dependence on China is still at an all time high (from about 5% of Global GDP in 2005 to almost 20% in 2025), and there are more and more companies popping up every year to satisfy your needs, their relative availability to you has changed. With canals and straits being shut down on a regular basis, sanctions coming fast and furious, tariffs costing out supply, and so on, the competition you can access in some countries (especially the United States and Europe) is shrinking by the day. The pendulum is swinging back from Globalization to Deglobalization/Contraction, and, as usual, you have to keep track of where the pendulum is and what direction it is (still) swinging in.

Merger, Acquisition, & Supply Market Consolidation

To meet the onslaught of new competition, companies headquartered in developed economies are still attempting to increase in size, scale and market power to ensure they survive stagflation and recessions. Others, in financial (di)stress, need to do whatever they can to survive. This will thus force many companies to continue the merger and consolidation trend that has been ongoing in fits and spurts for the past few decades.

Similarly, in the supply chain software space, paralleling the procurement software space, due to the impacts of the Age of AI Hype, we will see a lot of M&A as the bigger companies, with their legacy SaaS, acquire smaller “AI” players to add the “AI” propaganda to their own marketing, and the smaller legacy companies, struggling to sell their SaaS, put themselves up for (fire)sale to “AI” and I2O (Intake to Orchestrate) providers who need real capabilities and larger companies trying to complete their suites.

Increased Government Regulation

Governments continue to do what they do best — create red tape for the private sector, sometimes with the best of intent, sometimes to fatten their pockets, and sometimes just to keep busy. Sometimes the regulations help competition, sometimes they protect consumers, and other times they just add cost and process for absolutely nothing. Either way, they won’t stop.

This continues to lengthen your supplier / partner research and contract negotiation cycles, which must discuss relevant government regulations, privacy legislation, DEI (must [not] have), AI, and who’s on the hook when (import/export) tariffs get introduced out-of-the-orange. In addition, government actions to support or restrict economic development, such as tax incentives and trade restrictions, will continue to have a large impact on supply strategies.

Technology Advances

(Proclaimed) technology breakthroughs continue to cause major changes in how products and services are provided, especially in the software and control systems spaces. Properly applied technology improvements (i.e. real AI vs. Gen-AI LLMs) will revolutionize design, planning, and production systems and continue to lower total cost of production and the consumer’s total cost of ownership. Aggressive early adopters who overpay for the hammer when they don’t have any nails (just screws) will drive up costs while driving down efficiency and organizational capability (as they lay off workers they actually need and freeze hiring) are increasing their costs significantly and reducing their consumer base. If they can’t rapidly correct, they’ll end up being part of the new M&A frenzy (if not the next bankruptcy), while those who can successfully adapt modern, proven, tech with a plan will win big.

For the rest of the decade, and possibly part of the next decade, the winners will continue to be those that adopt the right SaaS solutions (because, while we may be in the SaaSpocalypse, it’s only going to weed out those overcharging for commodity software and capability, and the companies that survive the next few years will be those that offer true value. The reality is that even agentic (and AI) is still SaaS, it’s just SaaS that requires less (to no) human intervention [beyond maintenance by the provider] for the tasks it is assigned.

Supply Chain 2026 or Supply Chain 2008? Part III

Still continuing our “the more things change, the more things stay the same” theme, back in 2008, the Supply Chain Digest published an article on Key Trends Impacting Supply Chain Management and Logistics for 2008 where it asked a number of leading academics and practitioners what they saw coming. (Their responses are summarized in this SI post.)

Nine (9) experts weighed in and provided 24 thoughts on what they saw coming in 2008. Those thoughts more-or-less fell into seven themes, and for the most part, those themes are the same themes today. Moreover, the specific concepts addressed are more-or-less the concepts being addressed today. Let’s continue to take them theme by theme and conclude our initial series.

Globalization

Three (3) of the nine (9) experts included globalization as a core theme and stated that they believed:

  • Globalization will continue to take up a lot of organizational focus as companies try to efficiently and cost-effectively manage their global operations.
  • Supply chain globalization is about to enter a new phase, driven by the recognition by many organizations that their initial off shoring decisions were made with a myopic focus on product cost, and not a thorough evaluation of total delivered cost.
  • Freight volumes will continue to fall in the first half of 2008, but will stabilize by the second half of the year.

With the tariffs, global instability, and continually increasing natural disasters, globalization will continue to command organizational focus and attention.

As the pendulum swings back from full globalization to isolationism, we’re returning to an earlier time where trading partners are limited, friend-and-near-shoring is finally gaining traction, and pushes are being made for home-sourcing. (Which won’t happen until proper investments are made because, even with tariffs, it’s still cheaper to use someone else’s multi-million/billion dollar facilities than build your own.)

Freight volumes by country and route will continue to rise and fall as tariffs, oil price surges, recessions, sanctions, border closings and other contributing factors play a factor in actual consumer demand, available supply, and permissible routes.

Multi-Stage Manufacturing

Two (2) of the nine (9) experts included multi-stage manufacturing as a core theme and stated that they believed:

  • More companies will resume manufacturing in-house.
  • Multi-stage manufacturing that allows for decision postponement and re-purposing of parts in-line with fluctuations in demand across product lines will start to become common.

That didn’t really happen much as a result of the financial crisis or the carrier failures because it was still cheaper to outsource, but when tariffs, border closings, oil price surges, and other detrimental factors combine, companies take an analysis of in-house manufacturing seriously and as soon as it looks like it will be cheaper long-term to bring manufacturing back in house (which will happen if the government that pushes an isolationist strategy starts to actively invest in the industries it wants to nationalize / build / resurrect).

This has become common in electronics and control systems where components have been standardized across product variations, and even product lines, to the extent possible to allow for production plan updates and postponement as long as possible to reduce stock-outs in the product versions and lines in greatest demand and minimize overstocks in product versions and lines not selling as well as possible. However, with parts shortages bing common, you can see more and more products are going to be designed with the ability to use multiple components from multiple manufacturers with specs that are “similar enough”.

Green

Two (2) of the nine (9) experts included green supply chain as a core theme and stated that they believed:

  • Activity & Hype around “Green” Supply Chain will continue.
  • “Green” Logistics will continue to attract mind-share, but until profitability is proven, market-share will lag.

While the USA might be rolling back environmental legislation to (at least the) 1970s to please the tech bros so they can build their energy and water intensive data centers for Gen-AI (that can blackout and dry entire towns, while nearby energy plants pollute on a scale not seen in decades), as the same mega corps try to build similar massive data centers in the EU and other environmentally conscious countries, we will see a renewed effort to introduce new environmental legislation, that will renew a push for “green” supply chains in those countries.

Nothing has changed in the past two decades. When the economy is good and consumers have extra disposable income, they become interested in corporate responsibility and green, and the green hype sells. But the reality is that, like corporations, consumers like to virtue signal and when the rubber meets the road, or, more importantly, the plastic hits the terminal, they still won’t spend more than they need to for a product or service they want to fulfill a need.

This concludes our coverage of the market predictions from the thought leaders in 2008 and how nothing has really changed over the past two decades.

Dangerous Procurement Predictions Part III

As per our first two posts, if you read my predictions post, you know SI hates predictions posts. It fully despises them because the vast majority of these posts are pure optimistic fantasy and help no one. Why are the posts like this? Because no one wants to hear the sobering reality off of the bat in the new year and the influencers care more about clicks than actually helping you.

But the predictions are not only bad, they’re dangerous if you believe them. So we are continuing to lay bare the reality of the situation to make sure you understand that this year isn’t much different than last year, no miracles are coming, and only hard work and the application of your human intelligence are going to get you anywhere. Today we tackle the next three, and while we hope we’re getting close to the end of the series, we’re pretty sure there will be at least one more entry.

8. Global Trade Will Shift, Prioritizing Resilience Over Cost.

In the mid to long term some trade will shift to prioritize resilience, but most trade won’t. While defence procurements, critical mineral and material acquisitions for high-end electronics, and valuable commodities that can be traded like currency (such as gold, silver, platinum, diamonds, etc.) will be shifted for resilience, the reality is that, even with natural disasters, sanctions, trade wars, and actual wars, most companies aren’t going to make any changes to their supply chains (unless given absolutely no choice) because

  • finding new suppliers (in new countries) takes time and effort
  • qualifying new suppliers (in new countries) takes time and effort
  • identifying and contracting reliable carriers takes time and effort
  • building and securing new supply lines takes time and effort
  • etc.

and most companies are in constant fire-fighting mode, overworked, overstressed, and they just don’t have the time as long as the current supply chain, while strained, still works. Until their supply completely dries up, their primary production lines and revenue streams are threatened, and they have no other choice, they won’t change because they’ll keep telling themselves random natural disasters won’t impact them, the tariffs are only temporary, sanctions change with administrations, and wars eventually end.

9. Your employees will orchestrate outcomes.

Woody Woodpecker, take it away!

The level of talent needed to orchestrate outcomes is well beyond the average level of talent in an average (and even most above average) Procurement Department(s). There’s a reason that talent is a concern, a <href=”” target=_blank>top risk, and a top barrier for not just the last five years of studies and surveys, but at least the last ten. Talent has been scarce for a decade, and the situation is much worse since COVID. COVID saw many early retirements of the forced and chosen variety. Then the constant fears of recession saw more layoffs, starting with the highest paid (and most experienced) talent first. And you can be damn sure many of them are not coming back. We told you a year ago that talent is about to become scarce, and we’re sad to say we think we underestimated just how scarce talent is about to become.

And the reality is that only top talent can orchestrate outcomes. All the vast majority of talent can do is execute tasks one by one in a well-defined process. They can’t create new processes, and they certainly can’t define new outcome-centric processes on the fly. Especially when the ORCestration platforms they are given can’t even “orchestrate” a process to lead a mouse to the cheese it desperately wants.

10. New Year, New Me.

Who were you last year?

That’s right, the same person you are this year.

This BS lasts until all the bubbly you drank on New Year’s eve wears off, the rose coloured glasses go dim from the glare of doing the same damn thing as you stare at the same damn screen 12 hours a day, and you get overwhelmed with all the same tasks you were doing last year. Within two weeks at most, the new year, new me bullcr@p disappears with your last new years resolution and you’re just fighting to survive being overworked, understaffed, underfunded, and under-resourced, especially on the tech side (because the C-Suite wasted all the budget on a Big X Consultancy Gen-AI project that never even got to beta testing because the prototype phase never actually worked).

Most people won’t even make an effort to improve, which is the best one can hope for! (So if you have an employee who does, proactively give them a raise, any training they ask for, and keep them. Because, as per our response to the last false, and dangerous, prediction, talent is scarce and you should do whatever you can to keep whatever talent you have [instead of trying to replace it with fake AI that will never work fully autonomously].)

Primary ProcureTech Concern: Weakness & Volatility in Emerging Markets / Trade Wars

Emerging markets are your future markets, and often the source of critical raw materials.

Why?

Given that a lot of outsourcing has been redirected to these “low cost” markets over the past two to three decades, any rapid increase in volatility becomes a significant concern, especially if the markets are not strong enough to weather the storm. A major event could wipe out an entire subset of the supply base literally overnight, greatly increasing supply shortages and increasing the market complexity. Or at least make it unsustainable, such as a 145% tariff on China which is the source of over $500 Billion dollars in imports into the USA.

Impact Potential

The impact of a “low cost” market becoming unavailable, or at least unsustainable, is moderate to severe, especially if all of your outsourced eggs are in the same country basket. One lesson that some companies haven’t learned yet is that dual sourcing is not reducing risk if the two sources of supply are in the same country (or the same small geographic region — because if you have two factories located 100 miles from each other on two sides of a border, guess what, one natural disaster can wipe them both out).

If your primary source of affordable supply is wiped out overnight, it could take months to identify a new source of supply and quarters to secure the supply and get your supply chain flowing properly.

Major Challenges/Risks

Foreign Market Predictions
It’s hard to predict what’s going to happen in a foreign market that you aren’t in everyday. You can follow economist predictions, follow currency trends, try to get a grip on the trade relations between that country and your home country, and so on, but it’s not easy. If you can predict early enough, you can take action. But if an administration, without warning, decides to drop 100%+ tariffs on your source of supply, you’re in trouble.

Alternate Sources of Supply
Sometimes there’s few sources of supply for a given material, part, or product outside of a given country that has a similar total cost of acquisition, especially if you aren’t sourcing at full volume. Identifying alternate sources of supply that you can switch to quickly can be quite a challenge.

New Market Identification
If the emerging market also happens to be one of your primary emerging sales markets, the hit from volatility can be quite significant if the volatility results in rapid inflation, job loss, or both and your sales start to drop rapidly.

Final Words

Given the globalization of today’s supply chains, where a product can depend on materials and parts from dozens of countries, weakness and volatility in emerging markets is a significant concern. And we have yet another (fourth) reason you need an economist!

Primary ProcureTech Concern: Geopolitical Uncertainty

As Koray Köse would be quick to point out, trade is dependent on politics, and with politics comes geopolitical uncertainty.

Why?

Geopolitical uncertainty is a huge concern because geopolitical uncertainty often results in instability of supply and cost and contributes to the three highest risks: rising cost, supply shortages/constraints, and regulatory compliance. In addition, it also strengthens the one of the more significant barriers to success: category/market complexity.

Impact Potential

Geopolitical uncertainty often leads to sanctions, port shutdowns, border closings, and sometimes the complete termination of supply lines. It can also lead to product, factory, and bank account and also asset seizures. All of these impacts are significant. Best case scenario, it’s just millions in losses, the organization can afford it, and keeps going. Typical scenario, major interruptions, if not termination, of product lines; very unhappy customers; significant, ongoing, losses; and possible closure of divisions or loss of markets. Bad scenario: one of the only sources of a key rare earth or technology component becomes unavailable, the source can’t be sufficiently replaced, and your main business line is terminated. Worst case scenario: a regime change seizes all of your assets in a country, terminates your supply line, indicts your senior executive in the region for treason, and your business is terminated.

Major Challenges/Risks

Event Monitoring: monitoring and detecting events that not only signal that a significant geopolitical event has taken place that is likely to interrupt your supply chain but also events that signal that a significant geopolitical event might be coming. For example, polls a short time apart that signal a rapid shift in political leanings (to the far left or far right) can signal a major shift in the next election. Massive, violent, protests and riots can signal a possible uprising. Unsanctioned military operations can signal an attempt to overthrow the government. Detecting the right events is key to making the right predictions.

Impact Analysis: detecting an event is one thing. Predicting a likely outcome is another. Determining the extent of that outcome can be harder still. And, finally, determining the full, long-term, impact on the organization is often extremely difficult, as some assumptions will need to be made in each step of the reasoning, and the wrong one will lead to the wrong conclusion.

Final Words

Geopolitical uncertainty is a huge concern because you can never know for sure what is going to happen, but you need to have a good idea if you want to prepare. So you need to ensure you have access to a trade expert as well as an economist.