The Supply Chain Renaissance

As businesses or end consumers, we tend to think of access to goods and inputs exclusively along the axes of location and timing – are goods readily available when and where we want and need them? Not only do we expect access, but a particular kind of it: quick, convenient, abundant, and uninterrupted.

Rarely do we think about how these goods are made, or how they reach these locations at these times. It is only when the where and when are compromised that we become intimately aware (and concerned) with the process that underpins and enables that access: supply chains.

Over the last decade, the repeated disruption to access to goods brought the topic of supply chains to the limelight. From a global shutdown and trade disputes to geopolitical conflict, the structural reality of existing manufacturing, trade and supply networks laid bare for the world to see: manual, (overly) distributed, monopolistic and opaque – characteristics creating a host of challenges from disruptions, delays, inefficiencies, insecurity, and environmental harm.

By one estimate, companies experience a disruptive event for a duration of one to two months every 3 years – most of which have no way of monitoring potential vulnerabilities, and only a few have visibility beyond their direct suppliers. Surveys have found that less than 50% of supply chain executives know the location of their tier-one suppliers, let alone the key risks they face. The global nature of today’s supply chains has hampered both their ability to meet the demands of consumers at the necessary speed in a fast-moving world, and resist external and internal shocks to the system.

This is feeding a growing movement for localization to securitize and future-proof supply chains. Technology is due to facilitate a renaissance in what has historically been a largely tech-averse industry.

The future of supply chains – digital, local and sustainable – is already being built and spearheaded by innovators in markets outside the world’s classic trade powerhouses. Where there never was industrial manufacturing capacity, what does local production look like? Where there are no street addresses, how do we think about first, middle and last-mile delivery? Where roads are unreliable and distances are long, how, and where do supply and demand meet? In a deglobalizing world, how will emerging markets serve as examples of supply chain agility and resilience?

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The UAE’s industrial manufacturing sector makes a nominal contribution to its national GDP, at 10% (versus 15% in Egypt and 20% in Bahrain) with most non-food trade items imported – creating an overreliance on steady global trade flows to satisfy domestic demand. By 2031, that number is set to double to 25%, resulting in the industrial sector becoming one of the driving forces of the economy. Achieving this objective is not a matter of building more factories where few existed but investing in Industry 4.0 technologies such as additive manufacturing that shift the national supply chain reality from the unpredictable just-in-time inventory to local, self-reliant, just-in-time manufacturing.

As supply chain and production starts with manufacturing and materials, it is important to note the advances in material sciences; the growing adoption of, and use cases for 3D printing as well as the widening pool of material options needed in the manufacturing of specific products. This has significant implications on the sourcing of inputs and overall supply chain structures. With a plethora of materials available just-in-time, the element of unpredictability inherent to the producer-supplier-distributor relationship is erased, and supply is more closely aligned to customer demand. In the world of manufacturing, speed to market and costs of production can make or break a business. The winning models of tomorrow will be those that bring production closer to the end consumer, and they will originate from the markets where there never were large-scale manufacturing capacity to begin with.

Additionally, emerging markets will be at the forefront of innovation in logistics across the supply chain – how goods move from one node to the other.

Sub-Saharan Africa (SSA) is the world’s fastest-growing region for mobile penetration. By 2025, over 50% of its population will have a mobile subscription. With every mobile connection, comes greater access to goods and services but also, a geographic positioning system (GPS) that has wide-ranging applications for how products move. Where GPS can precisely pin and tag individual locations or geofence areas, logistics look radically different to trucks, buses or motorbikes transiting between locations on congested roads and highways. In the world of geolocation, it is not far-fetched to imagine a future where logistics don’t even happen on-ground, but in air with drones or eVTOLs, providing fast and effective (and climate-friendly) deliveries by drones from ports to warehouses and between warehouses and retailers.

Across the supply chain process, there is much to be created and deployed: when additive manufacturing can replace traditional subtractive manufacturing, it creates benefits that extend far beyond reducing reliance on external sources of supply; it means significant material and resource efficiency throughout the production process. When production is brought closer to the end consumer, it generates more than time, labor, and material savings; it means shorter transit times, space savings and less transport-related pollution. When deliveries are made by air, it means less congestion in urban centers and lower emissions from transportation. Leapfrogging is not only about faster adoption of digital technologies; it is also about resource-efficiency, curbing and cutting carbons emissions and cleaning industries. From 3D printers to drones, new supply chain technologies are inherently more sustainable.

The opportunity to build from scratch allows emerging market entrepreneurs to develop and test new innovations that capture opportunities in supply chains. In a geopolitical climate where globalized models of trade are under scrutiny and deglobalizing narratives are gaining ground, the world is turning to localization. Within that shift, emerging markets are well positioned as a hotbed for supply chain technologies - an industry that attracted over $69 billion in venture capital dollars globally in 2021 - in what is essentially a whitespace.