The digital transformation of the supply chain is increasingly
necessary. In this QAD Precision Report we look at the current state
of global trade and how an integrated supply chain helps businesses
meet tomorrow’s challenges.
Global trade has experienced a series of unexpected challenges in the
last twelve months. The Covid-19 crisis caused a deep slump in trade
volumes, particularly in the second quarter of the year. The World
Trade Organization’s Goods
Trade Barometer, published this February, found that trade
rebounded in the third quarter. World merchandise trade volumes growth
was due to increased exports from Asia and rising imports in both
Europe and North America.
Trade volumes remained strong in the fourth quarter. However, the WTO
is pessimistic that expansion will continue during the first half of 2021.
The pandemic has also caused a global
shortage of semiconductors. As the crisis took hold, factories
shut down, creating shortages. Although production has resumed, the
pandemic also created demand for electronic devices. Consumers sought
new TVs, computers, 5G-enabled mobile phones and games consoles — all
of which use semiconductors.
Semiconductors are also crucial for electrical vehicles. Ford, Nissan
and General Motors have all experienced production halts or slowdowns
due to the shortage.
The shortage has also impacted the world’s largest electronics
companies. Apple had to delay the launch of the iPhone 12 for two
months. In mid-March, Samsung stated that it may need to postpone the
launch of its latest high-end smartphone. The irony is that Samsung is
also the world’s second largest manufacturer of computer chips.
Geopolitical tensions remain between the world’s two largest
economies, disappointing anyone hoping for a thawing of relations
between Washington and Beijing. Officials from the United States and
China met in Alaska this March, but talks got
off to a chilly start.
Also in March, the European Union and the United Kingdom imposed
sanctions on China. This was done in a coordinated action with
the US and Canada. These sanctions targeted four Chinese officials for
human rights abuses of Uighur Muslims in Xinjiang province.
China responded by imposing retaliatory sanctions. Beijing’s
sanctions target a number of European and British officials, including
members of the European Parliament and national politicians.
Added to the tit-for-tat sanctions and the war of words, is Brexit.
The UK’s Office of National Statistics reported that UK
exports to the EU fell 40.7 percent in January.
Relations between the EU and UK are likewise strained. In mid-March,
the EU launched legal action against the UK for unilaterally delaying
the implementation of the Northern Ireland Protocol.
In February, the UK stated it would waive customs procedures due to
come unto effect on 1 April. These regulations require additional
customs paperwork for food and agricultural products traded between
Great Britain and Northern Ireland.
Northern Ireland remains a part of the EU single market. This avoids
a hard border on the island of Ireland. However, the EU has stringent
rules about food products — making the checks a necessity from an EU perspective.
Geopolitical relations have always impacted how multinational
companies conduct business. When you ship from and to multiple sites
around the world, you need to be able to nimbly respond when sanctions
and trade laws change.
Multinational companies must also adapt to unexpected crises in the
global supply chain. Some can be planned for such as storms, fires or
production slips. Others come out of leftfield, such as a global
pandemic or a massive container ship blocking the Suez Canal.
survey by McKinsey & Company found that global executives
are responding to the pandemic with a new focus on digitization. The
respondents claimed that Covid-19 had accelerated the digitization of
customer interactions and supply chain processes by several years. As
the pandemic pushed people to online channels, businesses needed to respond.
According to the survey, global executives now see technology as
strategically important and critical to business success. Technology
is no longer just an enabler of cost efficiencies.
Almost a third — 30 percent — of respondents said that digital
transformation would allow their companies to keep pace with
competitors. A further 38 percent stated that technology gave them a
competitive advantage over their competitors.
Business has changed, driven by digital transformation and
globalization. These trends were already underway and have been
spurred on by the necessity of adaptation due to the global pandemic.
To meet this challenge, enterprises are looking to digital supply
chain transformation. Specifically, the need for a connected
end-to-end supply chain. This allows enterprises to digitize and
integrate all their global trade and transportation operations — from
sourcing to final-mile delivery. Companies can leverage supply chain
technology to automate business processes, creating efficiencies and
from sourcing — including admissibility flags, tariff concerns
and other regulatory requirements — reduces unexpected delays and costs.
A further critical requirement is remaining in compliance with global
trade rules and country-specific regulatory requirements. These
trade compliance requirements are often siloed from transportation
management and logistics operations. As a result, compliance and
logistics do not work in harmony. This leaves a company vulnerable to
compliance missteps, fines and increased cycle times.
Enterprises need to balance the competing demands of controlling
supply chain costs while meeting customer expectations. Global trade
is becoming increasingly complex at a time when customer expectations
regarding rapid delivery are also increasing.
routing along with multi carrier shipping allows enterprises to
customer demands for on-time delivery, while controlling costs.
As companies move to mature their supply chain operations, they are
turning to integrated global trade and transportation solutions to
manage this complex process.
Integrating global trade management with multi carrier transportation
allows enterprises to:
Improve classification processes
Gain early visibility into tariffs and other regulatory requirements
Automate trade compliance checks and license determination
Leverage real-time insights across trade and transportation operations
Increase visibility from sourcing to final mile delivery
Improve logistics ROI by eliminated expedited shipments
Reduce costs by auditing freight invoices
Improve customer service by increasing on-time deliveries
With an integrated supply chain, companies improve every step of the
process from your supplier’s
supplier to the end customer.
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MINUTE EXPLAINER: WHAT IS RESTRICTED PARTY SCREENING?
BENEFITS OF INTEGRATING COMPLIANCE AND MULTI CARRIER SHIPPING SOLUTIONS
MINUTE EXPLAINER: WHY YOU SHOULD AUTOMATE TRADE COMPLIANCE