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European Supply Chains: A 2015 Retrospective

We are about to close another very exciting year in Europe that has had–and will continue to have–a huge impact on supply chains and their performance.

GDP growth in the EU remains weak, despite massive stimulus and the recent sharp fall in oil prices. In addition, the slowdown in China will tend to hold back the EU–especially Germany, the most important economy in the EU. And the recent Volkswagen scandal has not contributed to the powerful “made in Germany” brand.

We have also seen multiple strikes in France and Germany resulting in significant transportation and delivery delays, and we have had the Greece debt crisis, dubbed the Grexit discussion. By the way, do you think Great Britain go for a disruptive exit?

However, perhaps the most worrying development is the nervousness caused by the refugee influx, and the geopolitical instability, for example in Syria and Russia. It is stressing the political and economic playing field and challenging the EU to the maximum.

 Against the backdrop of this turbulent environment, supply chain executives have to set up effective supply chain strategies and show outstanding results in terms of costs and (on-time) service. 

On 21 October 2015 Chainalytics hosted a European Executive Roundtable in Milan, Italy. The main objective of this executive gathering was to identify, understand, and discuss the impact of recent developments and supply chain trends on the growth agendas that many companies have nowadays. During the discussion 20 pan-European supply chain executives identified and acknowledged the change of regulatory demands, customer requirements, market forces and operating strategies, including:

  • Weaker emerging market currencies, which are driving up imports resulting in longer inbound supply chains
  • Automated vehicle technology, which will inevitably reduce the cost of over-the-road, long-haul transportation

  • Omni-channel and direct fulfillment trends that have resulted in a year-on-year increase of B2C sales (€600 billion B2C sales expected for 2017; as a result, the average order size has been significantly reduced)

  • Lower fuel costs, which impact fuel-intensive outbound modes

  • “Cobots” –human-assist robotics—that lower the entry point for automation initiatives

  • Low interest rate environment, which facilitates greater capital investment

Overall, we concluded that the complexity of the current business environment has increased significantly due to increased customer expectations, changing cost structures, globalization, and increased demand volatility and dynamics. Surprisingly, despite these developments supply chain management is still not considered a top priority on the C-level agenda despite the fact it can help mitigate many of these aforementioned issues.

Click on the image below to start a slideshow of the top five EU supply chain trends we've identified:

Top Five EU Supply Chain Trends of 2015

Multinationals doing business in Europe will face continued supply chain pressures going into 2016, given increasingly disrupted global economies, the scaling up of omni-channel shopping, new technologies and network structures and evolving regulations like Basel III.

We look forward to successfully navigating these challenges. Let us know the challenges you see facing you and your organization next year in the comments section below.

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