Orchestrated Flow

Supply Chain Coordination in a Post-Global Economy

2 years ago   •   7 min read

By Envisioning
Originally published on Envisioning Cities

In a capitalist system, the flow of goods and services dictate the directions in which economic activity unfolds. In an era where political skirmishes impose heightened challenges to global trade, while digital connectivity drives consumer expectations towards convenience, cities that harmoniously coordinate their supply chain and manufacturing strategies, at local and regional levels, with emerging technologies are set to gain leverage. Orchestrated flow is the symbiotic articulation of digital technologies and tools across a hyperlinked, automated, and predominantly local supply chain. From end-to-end, any economic activity is embedded with traceability features using blockchain systems and urban sensors, allowing both commodities and sophisticated manufactured goods to be fully traceable and move efficiently across the city and region.

“The golden age of globalization, in 1990–2010, was something to behold. International commerce soared as the cost of shipping goods in ships and planes fell, phone calls got cheaper, tariffs were cut and the financial system liberalized (…) Moving forward, the new world will look different. Deglobalisation will lead to deeper links within regional economic blocs. Supply chain in North America, Europe, and Asia will increasingly be sourcing more from close to home.”

— Luca D’Urbino, The Economist Writer and Journalist

Global Reshoring

For many decades wealthier countries have relied on underdeveloped nations to satiate their thirst for overconsumption. “Made in somewhere else” labels are the norm, and the majority of things consumed in the west are manufactured in the east. The culture of production offshoring erupted in the second half of the 20th century and was a key factor in the world’s economy becoming even more intertwined and globalized.

During the past few years, the production offshoring tide is rapidly changing, leading the global economy to be less globalized, and focused instead on the trade flow of regional and local goods, rather than intercontinental trade.

Anticipatory Shipping Technology

Three key factors are pushing this driver forward:

+Trade wars: Ongoing trade disputes between the US and China are destabilizing the global economy and don’t appear to be headed towards resolution anytime soon. To guarantee the production of goods while safeguarding their bottom line, corporations across multiple sectors are being compelled to move their production back home or to countries where long-term trade tensions are not a factor.

+Rise of wages: Once perceived as a competitive advantage, cheap labor is (rightly) becoming increasingly scarce across the developing world. The physical and mental abuse of this workforce led to global scandals around poor working conditions. As a result, local initiatives pressured governments to adopt pro-worker regulations, including better working conditions, training, and higher minimum wages.

+Autonomous technology deployment: While wages across the globe rise, the implementation cost of autonomous technology has fallen sharply. This macro movement allows more corporations to automatize their production lines and better coordinate their complex supply chain, thereby becoming less reliant on human labor.

Offshoring the production of goods thousands of miles away loses its purpose when it offers fewer financial benefits. Transferring the production of goods closer to their point of consumption is one emerging movement that is expected to produce crucial changes in the current economic system. This shift, curiously, may be driven as much by consumers as corporate interests.

ETA Anxiety and the Evolution of Convenience

As a marketing tool, convenience emerged during the 1950s as a response to faster and busier urban lifestyles. Over the following decades, the notion that products and services could save us time and effort gained ground, and the consumption mantra “the easier, the better” became an inherent message of most consumer categories. Convenience as an idea quickly morphed from a market strategy into a cultural artifact of the modern urbanite.

Cloud-Connected Supply Chain Technology

Although convenience can be subjective to each individual, it’s certainly not static. What was once considered convenient becomes an expectation in a matter of years, if not months. The five-minute wait for your Uber can feel like an eternity today, but would you tell yourself the same five years ago? Probably not. How about same-day delivery services? In 2015, it was a magic trick only Amazon could pull off and now nearly every e-commerce business offers it. This notion of “zero time to wait” has reshaped our relationship with consumption and therefore with the urban canvas — and how efficiently “we” and “stuff” move inwards and around city limits.

The adoption of new technologies plays a fundamental role in pushing this reality forward. As our lives become even more connected to screens and digital applications, corporations need to strive even more to keep up with the pace of our expectations. After all, capitalism adapts better than any other economic model for our societal demands. Now we’re more demanding, more impatient, and accustomed to paying the least for convenience, like never before.

To stay competitive, companies are deploying more sophisticated supply-chain strategies to reduce our “ETA anxiety”. Even before we decide to push the buy button, corporations attempt to imagine what we wish to purchase. Equipped with anticipatory technologies and tools, such as sensors, consumption and production data, dynamic pricing, and backed by artificial intelligence, both small and global businesses now have the necessary intelligence to optimize their supply chain.

COVID-19 and the Global Supply Chain

Spreading at a tsunami-speed, COVID-19 has been one of the most violent interruptions of modern life. The losses and effects on humanity are immeasurable. As of July 2020, thousands of human lives have been lost to this pandemic, and we’re still quite far from locating a cure or even an effective treatment. Adding up to the global-shared trauma, the virus has caused major disruptions across the world’s supply chains.

During the first weeks of the quarantine, as people feared they might run out of necessities while sheltering in place, a full-spiral into a “panic buying mode” occurred. Creating a snowball effect, this sudden change in shopping behavior resulted in an increase in demand for some products, and empty supermarket shelves. For the first time in decades, consumers, increasingly used to having goods and services available at the “push of a button,” started to worry about the scarcity of certain basic goods like toilet paper.

Governments and corporations also faced supply chain challenges during the first months of the pandemic. With severe lockdowns, closed airspaces, and closed national borders, major strains have occurred, affecting access to even the most essential items needed to fight the virus such as PPE, hand sanitizers, and medication. The inability to provide essential medical items to those at the forefront of the fight against the virus sheds light on systemic problems of a globalized and interdependent supply chain.

P2P Delivery Technology
“Globalization has made our trade system more fragile and vulnerable to disruption. This is, perhaps, so you’d think that would give companies more options. Instead, a node in a supply chain has become more singular and specialized, and the need to transport various components across borders creates potential snags. The pandemic is forcing the world to confront that fragility in real-time.”

— Alexandra Ossola, Futures Editor at Quartz.

Even the most powerful nations were not immune to essential medical supply shortages, hence the unexpectedly high demand for some items. The hospital-grade N95 respirators quickly became globally known, as countries started a race to guarantee the supply of this product to their frontline health workers. And like most products before the outbreak began, the manufacture of the N95 respirators was largely outsourced to Asian countries, those of which were also struggling themselves to contain the virus spread and by no means could supply the entire world demand at the same time; And as expected, even during a pandemic, money tends to rule. The nations with the deepest pockets were privileged with access to these products beforehand, or as the British publication The Guardian coined it “modern piracy”.

Instead of waiting for the eventual return to equilibrium of the global supply chain, the need to save lives came first. Quickly responding to the outbreak, companies and other entities started to adapt their production lines to meet the new demands at an unprecedented speed. In a matter of days, countless acts of creativity and braveness occupied the news cycle all over the world as critical products began to be manufactured locally. Some examples: beauty companies reorganized their production lines and interrupted the manufacturing process of their top-selling products to supply pharmacies and hospitals with hand sanitizers. College students in developing nations started to design and manufacture low-cost versions of hospital ventilators using 3D-printing equipment and distributed it to their local communities. This level of local coordination is unprecedented and reaffirms to the world the need for strong and efficient local industries.

To understand future possibilities for you or your company when it comes to Orchestrated Flow, please check our recommendations here

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