We have written before in this blog and the press about the strategic value of understanding your global supply chain using process mining technology. And, we’ve shared the success Celonis customers, such as Siemens, have had in managing and improving their order-to-cash (and other) processes globally. But there are important geopolitical shifts occurring which will move proactive global supply chain management from “important” to “mission critical.”
Over the past 30 years or so, trade barriers have been steadily torn down, resulting in an increase in global trade. Subsequently, business built their supply chain strategy on the underlying assumption that we should expect more, and freer, trade in the future.
The result of this uptick in global free trade is a massively interconnected global supply chain in which finished goods may involve raw materials, parts, labor and services sourced from tens, if not hundreds, of unique individual locations. Business operates on the assumption that this supply chain will flow reasonably unimpeded, especially once it’s been established. To the extent that these flows are interrupted, the assumption is that supply lines can easily be rerouted and reestablished to a backup supplier or service provider. And, most critically, business assume that over time these global relationships will change because business terms change, not because free trade has fallen out of favor.
And yet, recent events have begun to call into question these assumptions. The two most obvious events are Brexit and the current US conflict around trade and tariffs (China and Canada/Mexico most notably). The major symptom of these events is that these nations are moving towards fewer open border policies and increased restrictions on trade.
These changes are forcing businesses to evaluate their global supply chain relationships and strategies. To do this effectively, business must elevate the importance of proactive global supply chain management. Specifically, businesses need to:
The world may not be quite as flat as Thomas Friedman had opined. Success in the modern era will come not from assuming a smooth global supply chain which is only made smoother by decreasing trade barriers, but by proactively managing your global supply chain to react quickly to changes in the global trade landscape.
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