By Kelby Woodard
The year 2011 will undoubtedly go down in the record books as an uneventful one for the global supply chain, which was exactly what most of us were looking for after the economic tumult of the previous few years. In regards to supply chain security, however, we should be prepared for a very interesting 2012. A few events in 2011 point to a very fun year if you like a little excitement with your supply chain.
By far the most interesting event of 2011 was the ‘Occupy the Ports’ movement. These misguided protestors intended to shut down the West Coast ports and bring attention to the supposed harm our global supply chain inflicts on the American economy. Fortunately, the immediate effect on the movement of goods was negligible to slightly annoying. The biggest winner in these protests was the security teams in the ports, who were fully prepared and acted in a highly professional and effective manner. The plans and procedures implemented in the years following September 11th were vital during these protests. I predict that the ‘occupy’ movement will continue to try to convince Americans that the global supply chain does not in fact create jobs, or help keep inflation in check, or actually create prosperity. As a result, the actions of the Occupy movement in 2012 could prove to be interesting for those of us who thrive on solving complex supply chain security problems.
Wal-Mart recently revealed that they are conducting an internal investigation focused on possible violations to the Foreign Corrupt Practices Act (FCPA). When the world’s largest commercial supply chain publically recognizes that it may have issues with corruption and fraud at high levels, you can bet it will be headline news in 2012. That in turn will mean a renewed focus on ensuring the integrity of every supply chain operation. In case you think only the mighty are affected, take a look at what happened at Fry’s Electronics in 2011. Former Fry’s executive Ausaf Siddiqui was sentenced to six years in prison for receiving over $65 million in kickbacks from vendors. Siddiqui was a highly respected sourcing executive and was able to perpetrate his crimes over many years. Is it surprising that with the billions of dollars being spent on commercial supply chains that no one may be tempted to earn more than their fair share? With a little focus on the part of supply chain security teams, more similar revelations are likely to manifest themselves in 2012.
Finally, there is China. The Conference Board (one of the most prominent business forecasting organizations in the world) predicts China’s economic growth will gradually slow to 3.5% from 2017 to 2025. While that may not sound too catastrophic, anything less than a 9% growth rate in China will inevitably result in social instability. After trillions of stimulus dollars spent by the Chinese government (that may sound familiar), the flexibility to respond to economic downturns will be extremely limited in the coming decade. We may witness the slow decline of China’s preeminence in global trade beginning in 2012. The result would not only have a tremendous impact on the global economy, it may also shift significant supply chain risk to the ‘world’s factory’.
That’s why the ‘cool kids’ will be hanging out in supply chain security in 2012.
All Rights Reserved--Trade Innovations, Inc. 2012
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