CHAPTER 1:
Introduction to
Logistics and Supply
Chain Management
, 1. Megatrends
Megatrends are geo-strategic and macro-economic forces that are changing and shaping the world.
At the time of writing, the past decade has been a period of rapid change for business, most recently
the COVID-19 pandemic what’s impact has devasted global and local supply chains.
→ Globalisation
o The most significant factor that has changed business operations over recent years.
o Globalisation is the movement towards an integrated global economy, which has led to a
more intense economic and geopolitical environment.
o Globalisation also leads to the compression of time and distance and the disappearance
of traditional political boundaries.
o Business leaders cannot rely on traditional sources of supply or on traditional markets.
o Businesses have to function in the global arena in order to remain competitive.
o COVID-19 highlighted the risks and vulnerabilities of global supply chains, which cause
profound and disruptive effects on industries and consumers.
o More flexible and agile strategies will be required from government and business to
mitigate risks to supply chain.
→ The empowered customers
o Customers are empowered, educated and informed- more so now than before.
o The internet allows access to a wealth of information, anywhere.
o E-retailers, online catalogues and social media platforms provide a world of choice.
o Consumers can compare price service and quality with extreme accuracy.
o They therefore demand competitive prices, customised product offerings, convenience
and flexibility.
o Their service expectation is often constant, placing increased pressure on logistics
systems and various supply chain.
→ Shift in global economic power
o The rebalancing of global economic and business activity is transforming countries such
as Brazil, Russia, India and China (BRICs countries) from being sources of labour and
production to consumption-focused economies.
o The direction of capital flow has changed as these countries have become exporters of
innovation, capital and talent.
o New geographies and sources of supply may lead to new and different competitors’
profiles
o Mature markets may lose their influence and become less attractive for business.
→ Demographic Shifts
o Explosive demographic growth in certain geographical areas and declines in others will
more than ever contribute to resource scarcity, shifts in economic power and drastic
changes in societal norms.
o Trajectories differ among countries as some societies age rapidly, some grow
exponentially, and others shrink.
o Countries may have a young and growing population, which may create larger
workforces and markets for consumer goods. These shifts may increase pressure to
create jobs and may affect business models.
Introduction to
Logistics and Supply
Chain Management
, 1. Megatrends
Megatrends are geo-strategic and macro-economic forces that are changing and shaping the world.
At the time of writing, the past decade has been a period of rapid change for business, most recently
the COVID-19 pandemic what’s impact has devasted global and local supply chains.
→ Globalisation
o The most significant factor that has changed business operations over recent years.
o Globalisation is the movement towards an integrated global economy, which has led to a
more intense economic and geopolitical environment.
o Globalisation also leads to the compression of time and distance and the disappearance
of traditional political boundaries.
o Business leaders cannot rely on traditional sources of supply or on traditional markets.
o Businesses have to function in the global arena in order to remain competitive.
o COVID-19 highlighted the risks and vulnerabilities of global supply chains, which cause
profound and disruptive effects on industries and consumers.
o More flexible and agile strategies will be required from government and business to
mitigate risks to supply chain.
→ The empowered customers
o Customers are empowered, educated and informed- more so now than before.
o The internet allows access to a wealth of information, anywhere.
o E-retailers, online catalogues and social media platforms provide a world of choice.
o Consumers can compare price service and quality with extreme accuracy.
o They therefore demand competitive prices, customised product offerings, convenience
and flexibility.
o Their service expectation is often constant, placing increased pressure on logistics
systems and various supply chain.
→ Shift in global economic power
o The rebalancing of global economic and business activity is transforming countries such
as Brazil, Russia, India and China (BRICs countries) from being sources of labour and
production to consumption-focused economies.
o The direction of capital flow has changed as these countries have become exporters of
innovation, capital and talent.
o New geographies and sources of supply may lead to new and different competitors’
profiles
o Mature markets may lose their influence and become less attractive for business.
→ Demographic Shifts
o Explosive demographic growth in certain geographical areas and declines in others will
more than ever contribute to resource scarcity, shifts in economic power and drastic
changes in societal norms.
o Trajectories differ among countries as some societies age rapidly, some grow
exponentially, and others shrink.
o Countries may have a young and growing population, which may create larger
workforces and markets for consumer goods. These shifts may increase pressure to
create jobs and may affect business models.
