Global trade is kicking off with a bang in 2018. After years of stagnation, trade is soaring as major global economies pick up momentum and hope rises that retail is improving. At the same time, conducting global trade and complying effectively with increasing regulatory and licensing requirements has continued to grow in complexity.
To prepare for the new year, it’s worth looking back at 2017. It was a year of great disruption for global trade and commerce: trade agreements canceled and renegotiated, catastrophic weather-related events disrupted supply chains, and e-commerce blew the doors off traditional retail. The “Trade Trends Report: 2017 Survey on Sourcing, Trade and E-commerce” by Amber Road and AAEI confirmed that these uncertainties are the new norm.
Money-making Holiday Season
Consumers were merry with spending over the 2017 holiday season in both retail stores and restaurants, and online buying continued to grow at a faster pace than brick-and-mortar stores. Mastercard’s annual SpendingPulse report on retail spending between Nov. 1 and Dec. 24 saw an increase of 4.9 percent in dollars spent year-over-year across all payment types, including cash, card and check. It was the largest increase since 2011 and an indication that consumer confidence is strong.
While physical stores experienced some traffic, according to RetailNext Inc, the number of shoppers in U.S. stores Thanksgiving and Black Friday fell 4 percent from 2016 figures, while online sales garnered a 16.9 percent increase over the same period. With traditional retail decreasing, companies responded by shifting their sights to e-commerce sales and fulfillment channels. Some 51 percent of the Trade Trends Report respondents experienced an upsurge in web-based/e-commerce sales in the last 12 months. Among survey respondents, 69 percent of companies have an online sales channel, with 56 percent managing that channel internally and 12 percent using a third-party.
This reflects a fundamental change in consumer buying, thus requiring supply chains to adapt by more closely managing the flow of goods for both online and brick-and-mortar fulfillment. The surging e-commerce sales channel has proven itself and is here to stay—and not just for the holiday rush. New concerns come along with it, though, ensuring delays don’t occur at the factory or during shipment; accurate cross-border documentation to streamline clearance; and stocking the shelves with the high-quality, innovative and cost-competitive products that consumers want.
For 2017 holiday shoppers, product quality was a top concern when deciding where to shop for gifts. The U.S. holiday shopping outlook reported 58 percent of consumers saw quality as the most important factor, followed by low price. The highest-ranking vulnerability reported in the Trade Trends Report supported this concern, with 25 percent of respondents noting product quality was a top concern. After the holiday season is over, companies must ensure their products meet the high quality that consumers expect, or they will be hit with costly reverse logistics that can take a huge bite out of profits.
As companies move forward in 2018, capturing a larger share of the online global marketplace must be more than just a footnote for those looking to remain competitive. Extensive planning is needed to address the risks identified with expanding online sales; mitigating those risks requires finding the right technology solution to help your organization grow.
Digitization for the Future
Beating the challenges in running a global supply chain and capturing the e-commerce wave requires the right tools for the job. The first step is to embrace supply chain 4.0 practices in 2018. This should start with digitizing your supply chain, as the old ways of doing business get put aside for a leaner, faster, more connected supply chain.
No matter how fast a product moves from concept to consumer, if the cost is too high, the quality is lacking or if it’s not truly innovative, the bottom line will suffer. To truly increase speed without compromising on other equally-important factors, a company must become both more efficient and more agile. While there are a few different methods to accomplish this, digitization is the only answer worth exploring.
Many companies have realized that going digital is the best solution to break traditional supply management chains and move boldly into the future. Digital technology will create a significant improvement in business outcomes, as long as businesses reinvent their supply chain strategies while concurrently reimagining their supply chains in the digital sphere.
Digitizing in 2018 will encompass many aspects of day-to-day business, including:
- Adopting digital product lifecycle management (PLM) software to integrate tech specs, images and other product details in one space to spur collaboration.
- Global product compliance management to centralize standards and regulatory requirements with globally distributed vendors, factories and compliance teams.
- Gain visibility over day-to-day supply chain management that alleviates bottlenecks through management by exception.
- Achieving transparency and traceability through end-to-end visibility with all of the information located in a safe and secure portal, which can track items, lots and shipments from raw materials all the way to the consumer’s doorstep.
According to a McKinsey report only about 40 percent of businesses were digitized in 2016. New industry dynamics are driving supply chains to new levels, with digital transformations occurring across manufacturing sectors and into supply chains at every level.
While it will take time for companies to become "fully digitized," many sectors have passed the halfway point in their transformations. The new year offers opportunities to continue making changes. More than ever before, now is the time to digitize or die.