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2018 in Review: Supply Chain Management

By Karen Lynch

Small and midsize enterprises (SMEs) faced heightened competitive pressures in 2018—especially to speed product delivery—even as they juggled a wide range of challenges in managing their international supply chains. These supply chain management challenges included unpredictable tariffs, non-tariff barriers, and trade flows; volatile shipping costs; cybersecurity concerns; and disruptive natural disasters. At the same time, many SMEs had to wait longer for payment on their business-to-business (B2B) supply chain transactions.

The digital transformation of the global supply chain holds out the promise for better visibility, agility, and speed in managing many of these challenges in 2019. While observers agree that digitalization is coming later to international supply chain management than many other critical business functions, significant strides were made in 2018.


“After years of being relegated to support status, the supply chain is now perceived by manufacturers and retailers as a strategic tool for business performance and growth—from ‘cost center’ to ‘opportunity center,’ ” according to Simon Ellis, vice president with the IDC market research firm. By the end of 2019, a quarter of manufacturers will have doubled investments in distribution automation, he predicted.1


Meanwhile, the cross-border shipping and logistics companies that serve importers and exporters have also realized that “digitalization of processes from booking to documentation handling can bring tangible benefits to customers and logistics service providers alike,” according to the Boston Consulting Group. “New players have introduced a variety of innovative business models that together have the potential to shake up the industry.”2


Faster Shipping is the Order of the Day


Local delivery accelerated at the end of 2018. Millions of holiday items were shipped in the U.S. within one day, the same day, or even two hours, to consumers subscribing to competing e-commerce providers.3 The knock-on effect in the rest of the supply chain increased requirements for visibility across supply networks (for both suppliers and customers), more warehousing (often smaller and closer to large population centers), and more responsive and flexible logistics networks, according to the Council of Supply Chain Management Professionals (CSCMP).4


For their part, freight forwarding and logistics companies have been digitally reducing the paperwork and delays caused by the myriad handoffs among trucks, boats, planes, ports, customs, warehouses, and other points of potential friction in international trade. Startup digital freight forwarders are competing more and more aggressively with established shipping companies on speed and price, while online freight marketplaces have emerged, as well. Some of these providers are offering unprecedented visibility into shipments, so their customers can see if their deliveries are on schedule and adjust to unexpected delays in the supply chain.


Slow and Late Payments Remain an SME Concern


Even with all the pressure to move goods to market faster, late payments and extended payment terms remain a fixture in the international supply chain. Many large U.S. companies’ primary strategy for improving their working capital performance “is simply to hold back payments to suppliers, in some cases extending payment terms up to 120 days,” according to the 2018 Working Capital Survey from Hackett Group, a business transformation consultancy.5


The trend is driving days sales outstanding (DSO) to a 10-year high, the report said, adding that, “the focus on slowing payments to suppliers also significantly drives the burden of working capital performance onto smaller companies.”


Across the Americas, over 90 percent of survey respondents reported late payments by B2B customers, in a 2018 Payment Practices Barometer from Atradius, a trade credit insurance specialist.6 In Western Europe, 58 percent of respondents experienced financial distress due to late B2B payments in 2018.7 Supply chain financing was one way of bridging the gap.


Trade Issues Mean Uncertainty in Supply Chain Management


Toward the end of 2018, the World Trade Organization (WTO) downgraded its outlook for global trade, citing political tensions between major trading nations and growing protectionist measures. Trade in goods was expected to have grown 3.9 percent by the end of 2018, instead of earlier predictions of 4.4 percent. It should drop further in 2019, to 3.7 percent, the WTO said.8 Overall, global economic growth is also slowing, with the International Monetary Fund (IMF) projecting a 3.5 percent rate in 2019, slightly lower than earlier forecasts.9


U.S. international trade growth is slowing only moderately, according to the DHL Global Trade Barometer.10 Partly as a result, overall economic growth in the U.S. will slow from 2.9 percent in the second half of 2018 to 2.2 percent by the second half of 2019, according to the Conference Board, a think tank. “While higher costs and more uncertainty will reduce business profitability, 2019 can still be a good though not spectacular year for firm performance,” the board said.11


General downward trends are exacerbated in some supply chains by country-, industry-, and product-specific protectionist measures. “While new policies are being implemented, shippers and manufacturers all over the world are scrambling to reconfigure their supply chains both physically and financially, by finding alternate production sources and new suppliers,” according to the Amber Road trade management software company.12


Transport and Warehouse Capacity is Constrained and More Costly


Different forces have been driving shipping costs higher. A tight U.S. labor market has strained warehouse and trucking operations, exerting pricing pressure. The ocean transport market faces new emissions requirements that could do the same.13 Meanwhile, after ocean liner consolidations, “we have fewer carriers, and they are very quick to withdraw capacity in a more uniform manner to ensure demand remains tight against available capacity. This results in rates that continue to remain high, on average,” according to Transportfolio blogger Sri Laxmana.14


Airfreight rates were volatile during the year.15 As for demand, airlines in North America topped the International Air Transport Association (IATA) chart for “freight ton kilometers” (FTK) growth in November 2018, for the sixth consecutive month.16 U.S. and Chinese e-commerce giants needing capacity have been building their own air cargo fleets.17


Supply Chains Experience Human and Natural Disasters


“At a time when supply chains are growing increasingly complex, disruptions such as natural disasters, cyberattacks, and geopolitical conflict can have a significant impact on speed and sourcing,” according to a report in SupplyChainDive.18 As they steel their defenses, companies are developing new key performance indicators (KPIs), such as time-to-recovery, to measure their supply chain resilience in the face of such risks.


Cybersecurity topped the list of concerns in SCM World’s annual Future of Supply Chain survey in 2018.19 Only limited progress has been made in effectively managing data risk in the supply chain, according to Steve Durbin of Information Security Forum.20 In the meantime, the increased deployment of mobile and edge devices, such as for the Internet of Things, has expanded the threat surface, as does the increasing tendency of attackers to route their intrusions into major corporate networks via less fortified suppliers and other third parties.


Extreme weather and natural disasters continued to disrupt supply chains in 2018. The wildfires in California, for example, closed roads, airports, warehouses, and manufacturing facilities, in addition to destroying homes and lives.21


Digitalizing Supply Chains


In the face of all these challenges, it’s no wonder that “digital supply chain” and “supply chain innovation” were the top two “key initiatives” in a recent SCM World survey.22


“Supply chain digitalization technology is enjoying an innovation surge today, thanks to technologies like artificial intelligence (AI) and blockchain promising to transform global trade,” according to a recent article. “At the heart of many of these solutions is the promise to connect trading partners and other players in supply chains, from logistics players to banks to customs officials.”23


The digital transformation itself can be a struggle, however. The article underscored the need for collaboration across supply chain partners, as well as a cultural embrace of the business process changes that come with new technological approaches.



Looking back, 2018 was a year of growing customer expectations and unprecedented, unpredictable change in international trade and the global supply chain. Looking ahead, 2019 promises to be as demanding, complex, and uncertain. Digital supply chain transformation is targeting these mounting challenges.

Karen Lynch - The Author

The Author

Karen Lynch

Karen Lynch is a journalist who has covered global business, technology and policy in New York, Paris and Washington, DC, for more than 30 years. Karen also is a principal at Content Marketing Partners.


1. “Top 10 Predictions for Worldwide Supply Chains in 2019,” Material Handline & Logistics Magazine;
2. “The Digital Imperative in Freight Forwarding,” Boston Consulting Group;
3. “Amazon Customers Made This Holiday Season Record-Breaking with More Items Ordered Worldwide Than Ever Before,” Amazon;
4. “CSCMP’s State of Logistics Report Shows Stronger U.S. Economy Fueling Supply Chain Innovation and Opportunities,” Council of Supply Chain Management Professionals;
5. “U.S. Cos Improve Working Capital Performance; Deterioration in Receivables and Inventory Management Masked by Significant Slowing of Payments to Suppliers,” Hackett Group;
6. “The Americas: An Increase of Overdue B2B Receivables in 2018,” Atradius;
7. “Late Payment, Growing Problem in Western Europe,” Atradius;
8. “WTO Downgrades Outlook for Global Trade as Risks Accumulate,” World Trade Organization;
9. “A Weakening Global Expansion Amid Growing Risks,” International Monetary Fund;
10. “DHL Global Trade Barometer: World Trade Momentum Weaker but Growing,” DHL;
11. “Stock Market Turbulence Reflects Weaker Environment for Profits,” Conference Board;
12. “The Top 6 Global Supply Chain Expectations for 2019,” Amber Road;
13. “3 Forces That Will Move Freight Markets in 2019 … and 1 That Won't,” SupplyChainDive;
14. “Ocean Shipping Trends: What to Expect in 2019,” Transportfolio Blog;
15. “Expeditors Warns of Airfreight Rate Volatility,” aircargonews;
16. “Air Freight Market Analysis: November 2018,” International Air Transport Association;
17. “Online Giants Building Air Cargo Capacity,” Journal of Commerce;
18. “As Disruptions Accelerate, Supply Chains Learn to Measure Them,” SupplyChainDive;
19. “Farewell to 2018: The Year of Trading Turbulence,” SCM World;
20. “Supply Chain Cybersecurity to Evolve in 2019,” Supply Chain Management Review;
21. “How the California Wildfires Affected Supply Chains,” Thomas;
22. “Digital Supply Chain, Cost Optimization More Allied Than You Think,” SCM World;
23. “The Limitations of Tech in Supply Chain Digitization,”;

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