Extreme disruptive events, such as the volcano eruption in Iceland, the Japanese tsunami, and the COVID-19 pandemic, as well as constant changes in customers’ needs and expectations, have forced supply chains to continuously adapt to new environments. Consequently, it is paramount to understand the supply chain characteristics for possible future scenarios, in order to know how to respond to threats and take advantage of the opportunities that the next years will bring. This chapter focuses on describing the characteristics of the supply chain in each of the six macro-scenarios presented in Sardesai et al. (2020b), as final stage of the scenario building methodology. Supply chains for each scenario are characterized in eight dimensions: Products and Services, Supply Chain Paradigm, Sourcing and Distribution, Technology Level, Supply Chain Configuration, Manufacturing Systems, Sales Channel, and Sustainability.
The late 1990s is often described as the time when the term supply chain management started to gain popularity. While the advent of globalisation increased competition and allowed for the search of new products, higher quality and lower cost, customisation brought new challenges to suppliers in order to fit the costumers’ unique needs and expectations. Consequently, those years were characterised by massive changes in the way that companies interacted with each other and with customers (Min et al., 2019).
Since then, the ever-shifting global economy brings great challenges to companies and supply chains, as customers continually demand improvements in products and services and, at the same time, require lower prices, new sales channels, faster deliveries and social and environmental responsibility (Zimmermann et al., 2016). Looking into the future and trying to understand how to compare the possible scenarios and the corresponding innumerable challenges, as well as how to take advantage of the opportunities that the next years will certainly bring, are challenging tasks. These have to be faced by companies and governments in order to keep or increase competitiveness and to be able to create resilient and sustainable supply chain over time (Calatayud et al., 2019).
This chapter considers the macro-scenarios presented in Sardesai et al. (2020b) to discuss the fit of the supply chains, in terms of its overall characteristics. Thus, the research question driving this chapter is: Which are the supply chain characteristics for the six macro-scenarios for Europe in 2030?
This objective follows the scenario building method and describes the supply chains for each future macro-scenario based on the approach of the Consequence Matrix (Sardesai et al. 2020a). The idea is to provide insights into how the trends of each macro-scenarios can influence the behaviour of the companies and the supply chains. The results are a set of descriptions of the supply chains for the future macro-scenarios based on eight dimensions: Product and Service, Supply Chain Paradigm, Technology Level, Sourcing and Distribution, Supply Chain Configuration, Manufacturing Systems, Sales Channels and Sustainability.
The research method followed to define the characteristics of the supply chains for the macro-scenarios for Europe 2030 is based on the consequence analysis of the scenario projections for various decision fields and is presented in Sardesai et al. (2020a). This consequence analysis is then represented in the “Consequence Matrix”, which is the basis of the scenario transfer phase of Gausemeier et al. (1998) approach to scenario building (Sardesai et al. 2020a).
The decision fields for the Consequence Matrix were defined through literature review. As a first step, decision fields from the literature review were organized using the Product—Process—Supply Chain framework, also called three-dimensional concurrent engineering (Marsillac and Roh, 2014). Afterwards, the decision fields were re-organized into a final list of eight decision fields for the characterization of supply chains: Products and Services; Supply Chain Paradigm; Sourcing and Distribution; Technology Level; Supply Chain Configuration; Manufacturing Systems; Sales Channel; and Sustainability. Table 1 presents the list of the eight decision fields together with the alternatives for each of them.
The Consequence Matrix is a table with the decision fields of Table 1 in the lines and the six macro-scenarios in the columns. The inputs to fill in the Consequence Matrix, i.e. to choose the alternative for each macro-scenario, came from three sources. First, the description of the macro-scenarios was used, which is summarized in Table 2. Second, a questionnaire was administered in 2018 and gathered the opinions of 62 experts from process industry, discrete manufacturing, distribution and logistics, ICT industry and academia. For each projection of Table 2, the following question was asked: “Please provide one or more outcomes/changes for your business and supply chain (e.g. SC structure or processes, business model, product portfolio, revenue, staff, IT) that will result from the projection”. Third, a workshop held with 15 experts from industry and 2 from academia at the SCM conference in Portugal in July 2018. During the expert workshops the six scenarios were presented as well as the correspondent product characteristics, and participants were asked to describe the implications of each scenario in the process and supply chain characteristics of their businesses.
The following section describes the supply chains characteristics for each macro-scenario and Table 9, in the conclusions section, presents the overview of the consequence matrix.
3 Supply Chains for Macro-Scenarios
This section presents the supply chain characteristics of each macro-scenario. Each table in the sub-sections is one column of the consequence matrix, plus the justifications provided by the experts for the alternative selected in each decision field. The brackets in the tables include the projections of Table 2 that support the supply chain characteristic of each macro-scenario. The full description of the macro-scenarios is available in Sardesai et al. (2020b).
3.1 Supply Chain for Macro-Scenario “aSPIRANT”
In aSPIRANT macro-scenario, economic climate is shaped by the multiplicity and competitive capabilities of born-global firms and platform businesses. According to this scenario, Europe and neighboring regions do not face political upheavals, calamities, or any other political risk factors that affect the demand predictability and interrupt the flow of commerce. Therefore, the product portfolio will be mainly standardized, i.e. supply chains are dominated by mainstream products. Consensual and market-preserving political settings, consolidated by state unions, bring both economic flexibility and market certainty in bargaining process; whereas, soft regulations facilitate liberal trade security, easy access to raw materials and investment finance. In this sense, the predominant supply chain paradigm is “Efficient”, characterized by low supply and demand uncertainty (Lee, 2002; Wagner et al., 2012).
The aSPIRANT scenario is linked to high-tech manufacturing, where servitisation strategy plays an important role in designing the business/operating model of manufacturing processes, which are based on the digital. Technology level in aSPIRANT is increased by: (1) high investments on technology and related processes, (2) training, and R&D; (3) development of new digital technologies and cybersecurity systems; (4) automation of non-value-added activities; and (5) development of technical skills and specialized IT staff. New digital business, data-driven and real- and near-time tracking/traceability technologies contribute to the development of omnichannel sales, demand pooling (leading to raw materials cost savings) and new revenue streams. Thus, this scenario is predominately characterized by global sourcing and distribution and by hyperconnected factories in terms of supply chain configuration. Furthermore, in a scenario with low variety, low supply uncertainty, large production facilities and digital technologies adoption, digital lean manufacturing is the most suitable manufacturing system.
Finally, in terms of sustainability, this scenario is characterized by environmental and social awareness and companies are prone to adopt green and socially responsible closed-loop supply chain strategies. Table 3 presents the summary of the supply chain characteristics for aSPIRANT scenario.
3.2 Supply Chain for Macro-Scenario “PrOCEEDINg”
The “PrOCEEDINg” macro-scenario is a positive scenario in the sense that most of the trends change in such a way that they help companies with the implementation of innovative SC models, where political and legal situations are stable and new market opportunities are arising from social conditions. This scenario, characterised by political stability and combined with free trade between contended unions, opens up possibilities for wide customisation opportunities. The continuity of power dominance of Europe and the U.S.A., coupled with digital transformations and collaborations between traditional financial establishments and FinTech companies, encourages rapid advancement of digitalisation processes, as well as dynamic development of autonomous technologies. These features, combined with the expected global sourcing and distribution, lead to hyperconnected factories as supply chain configuration. In PrOCEEDINg, start-ups and SMEs will take up business, while global competitors must adapt products to local culture, especially with the advent of a DIY focused society strongly supported by individualism. In this sense, customized product portfolios, servitization, as well as omnichannel and C2C sales channel, as well as digital mass customization as manufacturing systems, are required to succeed on this scenario. This increase in customization leads to an environment characterized by high degrees of demand uncertainty, although with relatively low levels of supply uncertainty—due to the easier access to materials and components, many supply sources and predictable lead-times—requiring companies to adopt strategies that combine characteristics of a lean and agile supply chain strategies, usually know as a leagile strategy (Zimmermann et al., 2020).
With an economy being digitalised in nature and based on growing digital potential, technologies based on the digitalisation concept thrive and receive more R&D investments. However, high automation on developed countries and low automation on underdeveloped countries are expected results, especially when considering the power dominance of the steady titans. The rise of circular economy exposes the need for a closed-loop supply chain, which concerns the circularity in supply chain configurations with restorative and regenerative processes (Batista et al. 2018). This archetype can be integrated with the green supply chain, which relates to scenarios where the decision-making is made based on environmental concerns without much focus on the financial performance (Laari et al., 2016; Melnyk et al., 2010; Salmani et al., 2018). Table 4 presents the summary of the supply chain characteristics for PrOCEEDINg scenario.
3.3 Supply Chain for Macro-Scenario “OFFsET”
The macro-scenario “oFFsET” can be described in general as a moderated scenario. It is characterised by a partially positive political environment due to open borders and reduced import and export tariffs, which enable the conditions for an agile global sourcing and distribution. From the demand point of view, oFFsET scenario is driven by a moderate market expansion mainly due to a constant development of policies in Europe in a free trade setting, where emerging economies, principally from Asia, open new markets. Due to a moderate market expansion and more global competitors (although with some level of adaption of the products to the local culture) this scenario is characterized by less differentiation, more competition and smaller customer portfolio, leading to the predominance of mainstream products. Due to free trade and an increasing political unrest in countries neighboring Europe, companies need to think glocal in terms of supply and distribution. Additionally, as a result of the low demand uncertainty (due to low variety) and high supply uncertainty (due to resource scarcity), a risk-hedging SC strategy is expected to be predominant, as well modular systems and agile manufacturing systems, with large production facilities.
The existence of ambiguous regulation affects both technology and environment decisions. From the technological point of view, the lack of regulations has a direct impact on digital transformation, impeding a sustained development; only occasionally some technologies are successfully implemented by global companies, which can afford its adoption. In this sense, traditional sales channels are predominant. Ambiguous regulations for the environment, which do not face climate change challenges, combined with increasing global population (mainly living in cities fostering the expansion of urban areas), and thus growing consumerism, are exhausting natural resources. Thus, a resource-efficient social-responsible paradigm tends to be predominant. Table 5 presents the summary of the supply chain characteristics for oFFsET scenario.
3.4 Supply Chain for Macro-Scenario “DiThER”
The macro-scenario “DiThER” is a mainly positive scenario as there is an increasing influence of digital transformation, development of autonomous technologies, establishment of electrification technologies and green systems, the continuous exploitation of disruptive technologies and investment in smart cities. Regarding the demand characteristics, the supply chain scenario is based on market contraction, due to protectionism and fragmentation, customization, given that this society is supported on the DIY concept of consumerism, and new markets in emerging countries. Due to the market contraction there will be reduced competition and global competitors will adapt their product to the local culture. Thus, customized products and servitization are required, and, considering the product variety caused by individualism and uncertain demand, there will be a high complexity and mainly small and medium production facilities with flexible manufacturing systems.
Due to protectionism and heterogeneous regulations, there will be moderate supply sources causing uncertain lead-times and a higher suppliers’ risk. An agile supply chain is thus expected to fit with the high demand and supply uncertainty. Regarding the distribution characteristics, the focus will be on local distribution due to protectionism and fragmentation on the political level and C2C will be paramount as sales channel because of individualism, DIY society and digital transformation.
When it comes to the technologies, the focus, especially in the smart cities, will be on environmentally friendly self-driving vehicles, robots and autonomous transport systems. Applications of IoT, data science and communication infrastructure will be widespread, enabling urban manufacturing, mainly due to the dynamic development of autonomous technologies. The environmental awareness will demand green closed-loop supply chain and new environmentally friendly materials will arise given the focus on individualism and DIY. Table 6 presents the summary of the supply chain characteristics for DiThER scenario.
3.5 Supply Chain for Macro-Scenario “UNEasE”
The scenario “UNEasE” describes an unstable political environment in which companies have to face protectionism, economic uncertainty and alliance collapse. This scenario is also characterised by poor legislations in different fields: from the heterogeneous environmental regulations, which cause a continuous resource depletion, to the laws to protect intellectual property and customer data, which are lagging behind significantly. This creates obstacles for a complete digital transformation of society and companies act mainly in the business to business environment. The traditional economy persists, coexisting with disruptive practices, often used by big players. SMEs and start-ups compete in the local markets where they are able to create a large variety of products to answer to customer individual needs, arising from the DIY trends.
“UNEasE” presents supply chains with customized products, leagile supply chain paradigm, glocal sourcing and local distribution strategies. Moreover, these supply chains are low-tech (tech conservatives) and the supply chain configuration is based on urban manufacturing strategy, aided by flexible manufacturing and traditional sales channels. Customization will become a pivotal instrument to meet customer needs above the barriers created by protectionism and cultural differences, and this will demand more flexibility in the supply chain logistics for delivering the required product mix. Hence, the variety of the demand will spread, and companies will be asked to manage wider product portfolios. From the supply perspective, supply chains will be required to comply with lower costs of sourcing and inbound logistic.
Low levels of new technology adoption and the prevalence of small and medium production facilities in the different manufacturing sectors affect production efficiency, and request additional efforts to minimize resource consumption, in particular concerning water, and carbon emission. This kind of SC features allows to face lockdown similar to the one caused by recent COVID-19 assuring the provision of materials and products at local level. Regarding environmental and social strategies, resource-efficient and humanitarian SC strategies are employed with the aim to quickly react to possible disastrous environments. Table 7 presents the summary of the supply chain characteristics for UNEasE scenario.
3.6 Supply Chain for Macro-Scenario “ENDANGEr”
The “ENDANGEr” macro-scenario can be considered as a pessimistic scenario since companies are facing an unstable political environment in Europe, a ‘global trade shift’ from advanced economies towards emerging market economies, as well as protectionism. Moreover, climate change, sanitary crisis, resource scarcity, and the lack of environmental and digital regulations are putting companies to high risks and challenges.
In the “ENDANGEr” scenario, the rise of new business models and digital innovation, the continuous efforts to reduce products’ prices, and the resource scarcity lead to the development of frugal mass products. In fact, companies use frugal mass products to respond to the lack of necessary resources and/or infrastructure and meet their customers’ needs in constrained environments (Mourtzis et al., 2016). One the one hand, markets are composed of different segments that have their own distinct needs and preferences, and companies respond to local needs which are strongly influenced by social networks, leading to relatively low demand uncertainty. On the other hand, supply chains face protectionism (e.g. tariffs on imported goods and import quotas) or lockdowns at global level caused by pandemic diffusion, generating high supply uncertainty and requiring the adoption of risk-hedging supply chain strategies. In terms of manufacturing systems, efficiency and reconfigurability would help companies to face the above-mentioned characteristics.
As protectionism policy restricts the international trade and companies will face barriers and several tariffs, local supply chains will be developed. That means that upstream in the supply chain, companies will source glocally by forming new partnerships and downstream in the supply chain, companies will sell their products locally. Regarding the technological dimension, the political and social instability limits the development of emerging technologies. Due to high costs and risks, the digitalisation is only afforded by big companies. However, that gives the chance to SMEs to develop autonomous technologies and become tech-beginners to face the need to have self-standing production and assure remote working conditions.
In terms of sustainability, companies will be forced to become resource-efficient due to the depletion of resources and they will learn to use the resources in a sustainable manner. The impacts of climate change provoke extreme events and therefore humanitarian supply chains will be prepared to quickly respond to these catastrophes. Table 8 presents the summary of the supply chain characteristics for ENDANGEr scenario.
This chapter described six future supply chains scenarios based on eight strategic dimensions: Product and Service, Supply Chain Paradigm, Technology Level, Sourcing and Distribution, Supply Chain Configuration, Manufacturing Systems, Sales Channels, and Sustainability. Table 9 shows the overview of the supply chains’ characterization for each macro-scenario.
The characteristics of the supply chains for each macro-scenario were derived from the macro-scenario projections, complemented by the opinions of experts. The results of this chapter provide the basis for defining the technologies that are needed in each of the future scenarios (Senna et al., 2020), which will then lead to the analysis of Research Priorities and Public Policy Recommendations for the future supply chains in Europe 2030 (Fornasiero et al., 2020).
In this work, a proposal of the supply chain characteristics or features is presented as a support for companies to understand how to link their way of working to the external conditions (political, economic, social, technological, legal and environmental), towards reacting and adapting to them. Given this, it is important to discuss some managerial implications for the definition of a path to innovation starting from the awareness that external and internal conditions are interlinked in the definition of this path.
In particular, macro-scenarios with positive features (such as aSPIRANT and PrOCEEDINg) are characterized by a favourable environment for the technological development and creation of appropriate eco-systems for cross-fertilisation among companies and different sectors. Moreover, in this kind of macro-scenarios, SCs have the right capabilities to respond efficiently to the external environment: companies fully master digitalisation and SCs are hyper-connected, integrated with upstream and downstream and inclusive to valorise humans; in this kind of scenarios it is expected that the research can be easily stimulated with the aim of consolidating the strategies and practices already implemented by networks and springing companies to even higher and better performance as well as doing further important steps to explore highly cutting-edge solutions. Also, implementation of sustainability strategies towards circular economy will be facilitated by the legislation and political conditions.
For the other scenarios, where the external conditions can have negative impact on SC, such as social changes (i.e. increasing aging society bringing difficulties to find young workers), economic restrictions (i.e. protectionism, and large companies monopolies bringing difficulties to find global suppliers and global markets) and legal obstacles (i.e. heterogeneous legislation and lack of consumers’ data protection), SCs innovation advancement is limited by all these impediments. Consequently, the full implementation of adequate SC research policies should be accompanied by actions such as training, creation of adequate infrastructures, definition of adequate finance tools, that will help to increase the readiness to invest in research projects in order to pass from being digital beginner or tech conservative to digital masters. In this case, it is necessary to propose innovation paths to help the supply chains and the companies to increase the technological level of the networks by creating tools and models to face efficiently the challenges and issues of each specific scenario (see Fornasiero et al., 2020).
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We are grateful to all contributors of the NEXT-NET project team and particularly to Kerley Pires, Pedro Campos, Ricardo Zimmermann, Vasco Amorim, Rosanna Fornasiero, Aristides Matopolous, Markus Stute, Saskia Sardesai, Cemre Multu, Victoria Muerza, and Mustafa Çagri Gürbüz. This work was financially supported by the European Union’s Horizon 2020 Research and Innovation Program under the Grant Agreement No. 768884 for the project NEXT-NET: Next generation Technologies for networked Europe.
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Barros, A.C., Senna, P.P., Marchiori, I., Kalaitzi, D., Balech, S. (2021). Scenario-Driven Supply Chain Charaterization Using a Multi-Dimensional Approach. In: Fornasiero, R., Sardesai, S., Barros, A.C., Matopoulos, A. (eds) Next Generation Supply Chains. Lecture Notes in Management and Industrial Engineering. Springer, Cham. https://doi.org/10.1007/978-3-030-63505-3_4
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