It’s no secret that U.S. manufacturing companies are fueling our nation’s economic engine in significant new ways. With increased globalization and the rise of ecommerce, manufacturing is on the move – not just here, but around the world. Since 2009, the U.S. manufacturing sector has grown steadily, contributing more than $2.09 trillion to the economy most recently, up from $1.73 trillion just six years ago. According to the National Association of Manufacturers, manufacturing is responsible for 12 percent of U.S. GDP. The story is similarly impressive in other countries, with the manufacturing sector accounting for 17 percent of GDP and 14 percent of employment globally.
But as manufacturing companies evolve and expand, what will happen to the complex supply chains that support and connect them to their customers and vendors? How will supply chain management practices adapt to the changing expectations of globally connected, internet-driven businesses and end consumers? These questions are the focus of a comprehensive new report published by DHL Customer Solutions & Innovations. Entitled “Building the World – A DHL Perspective on Future Engineering & Manufacturing Supply Chains,” the report outlines six influential trends related to the economy and the environment, as well as politics, society and technology, and analyzes the implications of these trends on future supply chains for engineering and manufacturing (E&M) companies.
One of the most important takeaways from the DHL report is this: to better meet customer demands, a global network of regionalized supply chains will be the order of the day. In recent years, E&M companies have restructured their production processes and adapted their business models to become more customer-centric and competitive. Supply chains must be restructured to adapt as well, and in order to speed up delivery and respond more quickly to globalization and to changes in customer demand, this restructuring will likely mean that E&M companies will rely on a series of interconnected, regional supply chains that span world.
The report notes two additional key elements of tomorrow’s E&M supply chain: resilience and sustainability. Greater volatility in customer demand means that future supply chains will have to be adaptable, pushing companies to compromise between efficiency and redundancy, with contingency planning essential to the equation. Resilient, regionalized supply chains will be more agile and responsive, ready to deal with smaller batches of customized products or unpredictable variations in demand. As a result, solutions such as 3D printing and smarter inventory management will be part of the strategy, as well as inbound-to-manufacturing and lead logistics provider concepts.
And sustainability? As we’ve discussed in the pages of DHL Expressed, the move toward sustainability in every area of business, including the supply chain, is well under way. Just consider that 75 percent of S&P 500 companies published Corporate Sustainability Reports in 2014, and that 93 percent of CEOs surveyed in a 2013 UN Global Compact – Accenture study viewed sustainability as important to the success of their business. The fact is, customers increasingly choose suppliers based on their ecological performance, and the supply chain must reflect this reality. Increased visibility to track carbon emissions along the supply chain is part of the solution, and integrated supply chains will ultimately be essential. Imagine if data regarding emissions could be easily tracked from the very beginning of the supply chain to the very end, from every supplier and sub-supplier along the way. With this kind of transparency and improved collaboration, efficiency could be continually assessed and improved.
Of course, many E&M companies are already successfully applying innovative supply chain strategies. And as the DHL report notes, well-established concepts from other sectors are ready for application in E&M, especially ideas from the automotive and technology industries.
To learn more about manufacturing supply chains in the future, and to learn how experienced logistics providers can help navigate the way, be sure to review the report.
How are your supply chain management practices changing with the growth of the global economy?