Today we live in a highly interconnected world economy that organizes millions of businesses operating across different regions or countries. Given smooth economic coordination is a pre-condition for the successful functioning of the global economy, supply chain management offers the most needed service to ensure a strong network between a company and its suppliers to manufacture or produce, then to distribute goods to customers. As a commercial system of organizations, resources, information and people, the supply chain network forms a complex and dynamic supply and demand network between a multitude of economic agents. The expansion of international trade triggered the importance of supply chain management further. For instance, the
was worth roughly 16 billion U.S. dollars in 2020. Over the last decade,
expanded more than twice. These networks of supply chains form the so-called global value chains (GVCs), which is the prevailing method of interaction in international trade relations.
Disrupting the frontiers of supply chain networks
International cooperation between firms throughout the production cycle makes some industries operate more efficiently at times absent from disruptions. Yet, when some supply chain disruptions occur, things look much gloomier than one could wish.
Some industries are more vulnerable to sudden disturbances in the supply chain than others. Industries with a high dependency on the smooth functioning of the GVCs are more likely to be exposed to a shock with high magnitude and persistence, such as
the global semiconductor shortage in the automotive industry.
Firms shaping the supply chain economy
Every single node, like a firm or an organization, on a supply chain network, has the potential to shape and affect the entire system. Aggregation of firm dynamics to provide supply chain services exhibited across the world determine the direction, potential, and growth path of the global market for supply chain management. In 2020,
SAP and
Oracle were the main
supply chain management software suppliers worldwide based on revenue. During that period, the German company, SAP generated from
its software support segment over 11.5 billion euros in revenue. After a new innovation is introduced to the market, idea dissemination takes place at a rapid rate. More than one-third of surveyed supply chain professionals stated that their company already
adopted cutting-edge inventory and network optimization tools to sustain competitive advantage in the marketplace. In addition to profit-maximization, the need to mitigate climate change catastrophe also urges supply chain firms to react. For example, roughly 45 percent of logistics industry professionals revealed that their plans are unchanged in
implementing environmentally sustainable practices.
Potential outlook
Despite the long-lasting coronavirus (COVID-19) pandemic, which hit global value chains immensely, supply chain management will remain and become a more integral part of a growing global economy in years to come. During the upcoming decade, the
global supply chain management market is expected to more than double in size, while the
supply chain management software market is expected to follow a similar tendency over the next couple of years. Although there is a possibility that the entire production mechanisms will change as a result of the fourth industrial revolution, it is still unsure to definitively tell how the supply chain management will be affected. As long as the overall industrial production and economic interaction across regions or countries will increase, so will follow the supply chain management market.
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