Notoriously Difficult! Making Predictions for Logistics and the Supply Chain 2016
Making predictions about the future of logistics and the supply chain is a notoriously difficult task. However, now and again the experts get it right, so it’s worth paying attention to what they say nonetheless. A lot of predictions are based on current trends that are simply projected into the future, but these predictions rely upon the factors behind the trends remaining the same, which is not always the case.
With this in mind, here are some of the most prominent trends and factors that will have an impact on the operations and strategies of logistics and supply chain managers during 2016:
• Oil Markets: In the recent past, people were talking about the price of oil reaching $300 per barrel, and the subsequent effect this would have on the processes of logistics networks and the supply chain. This speculation has proven to be very far wide of the mark, with oil prices currently at $35 per barrel, and they could even go as far as $20 per barrel due to supply outstripping demand. There must be a consideration about how inventory, transportation and sourcing strategies will be affected in these circumstances.
• Interest Rates: The US Federal Reserve has raised interest rates for the first time since 2006. Interest rates, like oil prices, have a significant impact on how inventory, transportation and sourcing strategies, with inventory being the most effected. The question is whether interest rates will continue to rise during 2016, and if this is the case, how will inventory levels be affected? Or will the current interest rate rise be short lived? The US economy is large enough that anything that takes place within it will have an effect on the global economy and therefore the actions on monetary policy of other national central banks, and thus the supply chains of companies based abroad also.
• Terrorism: Recent attacks carried out by terrorists in Paris and San Bernardino, and the current instability in Iraq and Syria, combined with the rise of ISIS, mean that the risk of terrorism related disruptions to the supply chain is very real in 2016. History shows us that terrorism has an effect on everything from oil prices to markets and can also trigger regulations and security actions that will affect the supply chain directly.