Insights & News

The Story of the First Half of 2018 in Supply Chain? Explosive Growth, and Explosive Costs.

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Posted On July 27, 2018

What was the story in supply chain management during the first six months of 2018?

Growth. Lots of it.

When Q2 data is released, economists expect to see real GDP growth for the first time since 2005. And it isn’t just the domestic economy that’s booming. The International Monetary Fund (IMF) expects global growth of 4.9% in developing economies for 2018 and 2019, which is roughly 2.5% higher than the predicted growth for developed economies. The IMF also predicts overall global growth of 4.5%, which is comparable to global economic growth during the 1990s and pre-Great Recession 2000s.

In the retail sector, e-commerce continues to drive growth. While brick-and-mortar sales through June are growing at roughly 5%, e-commerce sales are growing by roughly 15% over the first six months of 2017.

What does this all mean?

To begin with, it is good news. When this decade began, it looked like the economy might never experience growth like this again—or at least it wouldn’t experience growth like this for a long time.

However, good news for consumers, retailers, manufacturers, and the overall economy has placed additional pressure on shipping departments and supply chain managers. Strong economic growth has occurred in an era when shipping capacity is already limited. The ongoing shortage of truck drivers is an issue that won’t be solved anytime soon. While we will one day have driverless trucks transporting goods across our highways, that day is still years (and many regulatory hurdles) from becoming a reality.

The tension between rapidly accelerating demand and limited capacity is one big reason why companies are increasingly turning to supply chain management software. In 2017, spending on supply chain management software grew by 13.9%. Much of that growth is driven by midmarket companies that, for the first time, recognize the challenges of managing a supply chain in a strong economy.

Given that real GDP growth hasn’t occurred in 13 years, shipping managers and supply chain professionals may never have worked in an economy like this.

Fortunately, solving complex supply chain problems is exactly what the Flat World Holdings family of companies specializes in. Since 2006, we’ve worked with businesses of all sizes—including midmarket companies—to help maximize efficiency, visibility, and profitability within increasingly competitive supply chains.

Our clients are in business to deliver excellence to their customers by manufacturing and distributing the best products and parts possible.

That’s their job.

Our job is to deliver excellence to our clients through industry-leading supply chain and transportation management technology along with a team of customer-focused supply chain experts. The teams at Flat World Supply Chain, Flat World Hospitality Management, Ram International, Ram Custom Crating, and Prologue Technology have worked with clients of all sizes during strong and weak economies. The first six months of 2018 tell us that our clients face unique challenges resulting from a strong economy.

There are certainly worse problems to have. However, a “good” problem can still be a problem your company needs to solve. Right now, your shipping department needs help solving the problem of an overburdened supply chains struggling to keep up with booming demand.

And the Flat World family of companies is here to help solve that problem and ensure your company makes the most of a great economy.