Background and Developments
What are MaxTrends™?
MaxTrends™ is the term I use to identify certain developments or events which have the potential to change world commerce as we know it. The long-term impacts of MaxTrends™ on the global economy are often not appreciated until they are eventually widely embraced, but those companies, governments and individuals which recognize MaxTrends™ early on find themselves with a distinct advantage over their competitors.
In my recently published book, Transforming the Global Supply Chain: Cyber Warfare, Technology and Politics (Ankerwycke Publishing, August 2021), I take an in-depth look at today's global supply chain and how its traditional ways of operating are fractured, and in some cases, collapsed. There are four MaxTrends™ which I believe are contributing to the evolution and transformation of the traditional supply chain.
MaxTrends™ One: Cyber Warfare
Over the last year, the number and brazen nature of cyber attacks has directly affected the global supply chain. Many larger companies which recognized the problem up front are experiencing some level of success in protecting their own networks. As these larger companies are becoming more effective in fighting off cyber attacks, hackers are turning their focus to attacking the supply chains of smaller companies. The reason is simple. Smaller companies are more reliant on third party vendors and thus are much more vulnerable to attacks.
MaxTrends™ Two: The 3D Printing Revolution
3D printing (also known as 3D manufacturing) has been around for more than 30 years. Initially, it was an inexpensive way to produce prototypes for products because the material costs and time investment could be drastically reduced. What is not widely recognized is that 3D printing has gone far beyond making prototype models out of plastic. 3D printing is now a highly sophisticated way of producing items by fabricating intricate parts out of a variety of materials, including metals.
For more than 40 years, American and European companies outsourced production to factories in China and elsewhere because it was an inexpensive way to get their goods to the export market. As 3D printing has developed, it is now possible to produce parts and components faster and at lower costs than previously thought possible. This is an important development because companies are no longer dependent on overseas manufacturing facilities with often unreliable supply chains. What became obvious during the COVID-19 pandemic is that it is no longer viable or realistic to rely on goods that are coming from long distances, most often slowly by cargo ship. The future abilities for 3D printing will only increase, and this will significantly affect where and how companies have their components produced. Its impact upon China will be the most significant.
Read Dennis's American Express article on this MaxTrends™ development here.
MaxTrends™ Three: Robotics
The combination of robotics and artificial intelligence (AI) will forever alter the way the global supply chain operates. With the merger of automation and people, the historical location of supply chain vendors in low-cost labor countries is no longer a driving force. The cost of manufacturing a product as the human factor decreases means that manufacturing will be able to locate closer to the actual customer. The COVID-19 pandemic demonstrated how vulnerable supply chains are to disruptions, and so having an efficient and reliable workforce, even if it is mostly composed of robotic machines, is an irreversible trend. Factoring in the impact of companies like Amazon, conditioning customers to expect delivery of products within one or two days, further accelerates the demand on the supply chain for immediacy.
MaxTrends™ Four: National Security and Globalism
For three decades, much of the West decided to offshore its manufacturing capabilities to Asia, where items could be produced inexpensively. These nations are now well aware of how vulnerable they are to the inherent weaknesses of the global supply chain. When any link of a supply chain is disrupted by a pandemic like COVID-19, adverse weather, or perhaps a large container ship blocking the Suez Canal, the realization begins to occur of how important it is to keep all or most manufacturing within national borders. This growing sentiment has been resulting in barriers to foreign direct investment, not just in the United States but throughout Europe and parts of Asia, including China itself. The risks posed by a failing supply chain, combined with national security concerns, are an irreversible trend which governments will increasingly embrace in the future.