'Flex supply chains' to cope with uneven growth

10 October 2016

Firms will need to adopt different strategies to adapt to varying growth speeds across the world, an economist has warned.

Dr John Glen, CIPS economist, said companies needed to "flex supply chains" in response to the IMF's latest World Economic Outlook (WEO), which lowered growth projections for 2016 from 3.4% to 3.2%.

Glen, who is also director of the Centre for Customised Executive Development at Cranfield School of Management, said: “There is… a requirement to be able to flex supply chains to turn on capability and supply in those parts of the world that are expanding, such as India for example."

He added firms also needed to be able to reduce capacity in “parts of the global economy that are not set to expand as quickly”.

The WEO projected emerging Asia economies, and in particular India, would have high growth rates, while sub-Saharan Africa was experiencing a slowdown.

The IMF downgraded it’s overall global GDP growth forecast primarily because of a drop in commodity prices, sluggish performance from the US and the long-term uncertainty over the UK’s relationship with Europe after the Brexit vote. 

“There is a big theme in the WEO from the IMF that Brexit could be a manifestation of a more protectionist theme emerging globally, some of which is being played out in the US election,” said Glen.

Increased protectionism could put pressure on procurement professionals to find new and competitive sources of supply, he added.

“The danger here is that trade becomes less free and this reduces the ability to source goods and services globally.

“If supply chains were to become shorter this would put pressure on procurement professionals to find new sources of supply which are priced competitively and can be integrated into complex global supply chains seamlessly,” he said.

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