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Walmart Supply Chain: Building a Successful Integrated Supply Chain for Sustainable Competitive Advantage

• Case Studies

Introduction

The global business landscape has witnessed an increasingly fierce competition, pushing companies to seek effective strategies to maintain and enhance their competitiveness. Among these strategies, the role of supply chain capability stands out as a key factor in driving success. A well-optimized supply chain not only ensures efficient delivery and cost-effectiveness but also provides companies with a competitive advantage in the market. In this context, Walmart, the world’s largest retailer, has demonstrated a highly successful and integrated Walmart supply chain, propelling its growth and dominance in the retail industry.

This case study aims to delve into the significance of supply chain capability for enhancing a company’s competitiveness and how it serves as a competitive advantage for companies. Additionally, we will explore the imperative need for supply chain redesign in the global economy to adapt to the challenges of the modern era of globalization. Focusing on Walmart’s exemplary supply chain practices, the purpose of this case study is to analyze the features of its successful integrated supply chain while identifying relevant issues in the context of the current globalized market.

[Read More: Rivian: Navigating Supply Chain and Operational Challenges and Embracing Growth ]

Walmart’s Supply Chain: Integrated Supply Chain Success

Data-driven success factors.

In the realm of modern supply chain management, data-driven strategies play a pivotal role in enhancing a company’s competitiveness. Walmart’s remarkable success as the world’s largest retailer can be attributed to its astute utilization of data analysis and advanced technologies within its integrated supply chain. This section delves into the key data-driven success factors that have propelled Walmart’s supply chain to the forefront of the retail industry.

[Read More: ERP Master Data: A Guide to Improve Quality & Governance ]

Role of Data Analysis through Barcode Scanning and Point-of-Sale Systems

Data analysis is at the core of Walmart’s supply chain prowess. The company has implemented sophisticated barcode scanning and point-of-sale systems to collect real-time data from its stores. By employing these technologies, Walmart gains valuable insights into customer buying behavior, sales trends, and inventory levels. The ability to analyze this data enables the retail giant to make informed decisions on product procurement, inventory management, and demand forecasting.

Efficient Supply Chain Practices: Automated Distribution Centers and Computerized Inventory Systems

Automation is a key component of Walmart’s efficient supply chain practices. The company has strategically invested in automated distribution centers, streamlining the flow of products from manufacturers to stores. These automated facilities not only optimize the handling and movement of goods but also enable faster order fulfillment and replenishment. Additionally, computerized inventory systems provide Walmart with accurate and up-to-date information about stock levels, allowing for precise inventory control and reducing the risk of stockouts or excess inventory.

Utilizing Walmart’s Own Trucking System and Cross-Docking Logistics

Another critical factor contributing to Walmart’s supply chain success is the utilization of its private trucking system and cross-docking logistics. By maintaining its own trucking fleet, Walmart gains greater control over transportation and delivery schedules, leading to improved efficiency and timely product replenishment. Furthermore, the adoption of cross-docking logistics techniques has enabled Walmart to minimize the need for intermediate storage, leading to reduced handling costs and faster product movement through the supply chain.

[Read More: The Ultimate Guide to Contract Logistics: What You Need to Know ]

Information Technologies Driving Efficiency

In Walmart’s journey towards becoming a global leader, information technologies have played a pivotal role in driving efficiency within the integrated Walmart supply chain. The retail giant has strategically adopted various IT initiatives to optimize its operations, enhance collaboration with suppliers, and achieve real-time inventory targeting. These technologies have contributed significantly to Walmart’s supply chain success, allowing them to maintain a competitive edge in the retail industry.

Collaborative Planning, Forecasting, and Replenishment (CPFR)

One of the key information technologies that have bolstered Walmart’s supply chain efficiency is the implementation of Collaborative Planning, Forecasting, and Replenishment (CPFR). This system facilitates seamless communication and coordination between Walmart and its supply chain partners, including suppliers and distributors. By sharing real-time sales data and demand information, CPFR enables accurate forecasting and demand planning, minimizing information distortion, and promoting synchronized inventory replenishment. The CPFR program has been instrumental in enhancing overall supply chain visibility and efficiency, allowing Walmart to respond promptly to fluctuations in demand and supply, reducing stockouts, and optimizing inventory levels.

Vendor-Managed Inventory (VMI) and Its Benefits

Walmart’s adoption of Vendor-Managed Inventory (VMI) has been another critical information technology-driven initiative. Through VMI, Walmart empowers its suppliers to take on the responsibility of managing their inventory stored in Walmart’s warehouses. By granting suppliers access to real-time inventory data and sales information, Walmart facilitates efficient inventory tracking and replenishment. This hands-on approach by suppliers results in streamlined inventory management, reduced delays in replenishment, and lower stockouts. The VMI model has proved particularly advantageous for Walmart due to its vast product range and numerous suppliers, making inventory management complex and costly if managed solely by the retailer.

[Read More: Vendor Managed Inventory: A Comprehensive Guide ]

Leveraging RFID Technology for Real-Time Inventory Targeting

RFID (Radio Frequency Identification) technology has been a game-changer in Walmart’s pursuit of real-time inventory targeting and enhanced supply chain visibility. By employing RFID tags on products, Walmart can track the movement of inventory throughout the supply chain in real-time. RFID enables accurate and automated inventory tracking, reducing the need for manual counting and minimizing errors in inventory management. The technology also provides crucial details, such as production time, location, and expiry dates of goods, allowing for efficient inventory targeting and better control over inventory turnover. RFID technology has been instrumental in Walmart’s cost reduction efforts, ensuring optimal stock levels while avoiding overstocking and unnecessary inventory holding costs.

Achieving Competitive Advantage through Strategy

Walmart’s competitive strategy: “everyday low prices” (edlp).

Walmart’s competitive advantage is deeply rooted in its strategic focus on offering “Everyday Low Prices” (EDLP) to its customers. The EDLP strategy revolves around providing high-quality products and services at the lowest possible prices, ensuring that customers can benefit from affordable prices every day. This approach sets Walmart apart from its competitors and has been instrumental in establishing the company as a dominant force in the retail industry.

Implementing the “Everyday Low Costs” (EDLC) Policy through Direct Procurement

To support its EDLP strategy, Walmart follows an “Everyday Low Costs” (EDLC) policy in its supply chain management. One of the key elements of the EDLC policy is the direct procurement of items from suppliers, eliminating intermediaries in the process. By procuring directly from manufacturers, Walmart can negotiate and understand their cost structure, enabling them to make informed purchasing decisions and obtain the best prices for their products.

Walmart’s emphasis on direct procurement is further bolstered by the use of technology and information systems. The company has implemented a central database, store-level point-of-sale systems, and a satellite network, along with barcodes and RFID technology as previously mentioned. These technologies allow Walmart to gather and analyze real-time store-level information, including sales data and external factors like weather forecasts, to enhance the accuracy of purchasing predictions. This integration of information technology helps Walmart optimize its procurement process and maintain low costs throughout the supply chain.

Utilizing Information Systems for Better Inventory Management

Effective inventory management is critical for Walmart to sustain its competitive advantage through the EDLP strategy. The company relies on information systems and information technology (IT) capabilities to control inventory levels efficiently. By capturing customers’ demand information, Walmart can identify popular products and stock them adequately, leading to an overall reduction in inventory.

One notable example of Walmart’s successful utilization of information systems is its collaboration with Procter & Gamble (P&G) through the Collaborative Planning, Forecasting, and Replenishment (CPFR) program. This program links all computers of P&G to Walmart’s stores and warehouses, allowing for efficient replenishment orders based on real-time inventory needs. Additionally, Walmart’s Retail Link , developed in the early 1990s, serves as another vital IT application for storing data, sharing it with vendors, and aiding in shipment routing assignments.

Challenges and Opportunities

Supplier cooperation and collaboration.

Walmart’s supply chain success can be attributed to its strong relationships with suppliers, but achieving and maintaining supplier cooperation and collaboration is not without challenges. Let’s explore the challenges and opportunities in this area:

Challenges in Obtaining Suppliers’ Cooperation

• Supplier Resistance to Direct Procurement: Walmart follows an “Everyday Low Costs” (EDLC) policy by directly procuring items from suppliers, eliminating intermediaries. However, some suppliers may be reluctant to cooperate with this approach as it can disrupt existing distribution channels and potentially reduce their bargaining power.
• Complex Supplier Networks: With thousands of suppliers across various product categories, managing diverse supplier networks can be challenging. Each supplier may have different production and delivery schedules, making coordination difficult.
• Balancing Profit Margins: As Walmart emphasizes low prices, maintaining a balance between cost savings and ensuring suppliers’ profitability can be a delicate task. Suppliers may resist pressure to reduce prices further to maintain their margins.

Opportunities for Enhanced Supplier Cooperation and Collaboration

• Establishing Transparent Communication Channels: Walmart can create transparent and open communication channels with its suppliers to foster better cooperation. Clear communication regarding demand forecasts, inventory levels, and potential disruptions can help suppliers plan their production and deliveries more efficiently.
• Supplier Incentive Programs: Introducing incentive programs that reward suppliers for meeting certain performance metrics, such as on-time delivery or cost reduction, can motivate suppliers to actively collaborate and improve their supply chain capabilities.
• Collaborative Planning, Forecasting, and Replenishment (CPFR): Walmart can leverage technology, such as CPFR, to share real-time sales data and demand forecasts with its suppliers. This collaborative approach allows suppliers to align their production and inventory management with actual market demand, reducing the bullwhip effect and optimizing the supply chain.
• Sharing Inventory Visibility: Providing suppliers with access to inventory data, including stock levels and sales information, can help them plan production and deliveries more effectively. This visibility can prevent stockouts and overstocking issues.
• Long-term Partnerships: Building long-term strategic partnerships with key suppliers can create a sense of mutual commitment and trust. By assuring consistent business over an extended period, Walmart can foster stronger relationships and supplier loyalty.

[Read More: 3 Types of Supplier Segmentation Matrix You Can Use to Classify Suppliers ]

Importance of Collaboration to Enhance Supply Chain Efficiency

• Reducing Lead Times: Effective collaboration with suppliers can help shorten lead times by streamlining production and transportation processes. Faster lead times enables Walmart to respond quickly to changes in demand, reducing the risk of stockouts.
• Efficient Inventory Management: Collaborative efforts with suppliers enable better inventory planning and management. Suppliers can adjust production based on actual demand, reducing excess inventory and associated costs.
• Supply Chain Flexibility: Collaboration fosters agility and adaptability in the supply chain. When Walmart and its suppliers work together closely, they can quickly adjust to market changes, supply disruptions, or new opportunities.
• Cost Reduction: Improved supplier collaboration can lead to cost-saving opportunities. By eliminating unnecessary intermediaries and optimizing production and transportation, overall supply chain costs can be minimized.

The Incentives Alignment Issue

In any supply chain, maintaining a balance of profit margins among different parties is essential for efficient collaboration and sustained success. However, achieving incentives alignment can be challenging, and this issue is particularly relevant in the case of Walmart supply chain. Addressing misalignment of interests between Walmart and its suppliers is crucial for optimizing the overall performance of the supply chain and ensuring long-term success. The following points highlight the incentives alignment issue faced by Walmart:

1. Balancing Profit Margins Among Different Supply Chain Parties:

Walmart’s success is attributed to its ability to offer high-quality products and services at the lowest affordable prices. To achieve this, Walmart employs various cost-cutting strategies, such as direct procurement from suppliers and streamlined distribution practices. While these strategies help Walmart maintain competitive prices, they can create challenges for suppliers who may face pressure to lower their own profit margins to meet Walmart’s demands. This misalignment of profit margins can lead to strained relationships and potentially impact the overall efficiency of the supply chain.

2. Misalignment of Interests Between Walmart and Suppliers:

Walmart’s size and market dominance can lead to power imbalances in supplier relationships. Suppliers may feel compelled to comply with Walmart’s demands to maintain access to its large customer base. However, this can lead to situations where suppliers may not have enough leverage to negotiate favorable terms, impacting their own profitability. As a result, suppliers may be less inclined to invest in innovations or improvements that would benefit the supply chain as a whole.

3. Conflict Between Inventory Growth and Sales Growth:

Walmart faced inventory growth issues in the past, with the inventory growth rate outpacing the sales growth rate. This can be indicative of conflicting incentives between Walmart and its suppliers. Suppliers may prioritize producing and delivering more inventory to ensure they meet Walmart’s demands, even if the sales growth does not keep up with the increased inventory. This misalignment can lead to excess inventory, increased carrying costs, and potential stockouts.

4. The Need for a New Triple-A Supply Chain:

Addressing the incentives alignment issue requires a fundamental shift in the supply chain strategy. Lee (2004) proposed the concept of a new Triple-A supply chain for Walmart and other companies in the 21st century. The Triple-A supply chain emphasizes agility, adaptability, and alignment to create a sustainable competitive advantage. Achieving alignment among all participating parties is crucial to optimize supply chain performance and ensure that risks and rewards are distributed fairly.

The Triple-A Supply Chain Approach

In today’s competitive business landscape, companies like Walmart recognize that a successful supply chain is not just about having a fast and cost-effective system. To maintain a sustainable competitive advantage and address the challenges of the global economy, it is essential to redesign supply chains that incorporate agility, adaptability, and alignment. This section explores the concept of the Triple-A Supply Chain Approach, which emphasizes these three key qualities that an ideal supply chain should possess: agility, adaptability, and alignment of interests among all participating parties.

The Three Qualities of an Ideal Supply Chain

Agility for quick and cost-effective responses:.

Agility refers to a supply chain’s ability to respond quickly and cost-effectively to sudden changes in demand, supply, and external disruptions. In the fast-paced business environment, companies must be able to adapt swiftly to fluctuations in customer preferences, market conditions, and unforeseen events. For Walmart, agility has been a critical factor in maintaining its leadership position in the retail industry. The company’s investments in technology and supply chain optimization strategies have allowed them to optimize inventory levels and respond rapidly to changing customer demands, ensuring the availability of products while minimizing inventory costs.

Adaptability to Handle Changes in Demand and Supply:

Supply chains should be adaptable and flexible enough to handle variations in demand and supply patterns. Demand forecasts can be uncertain, and unexpected supply chain disruptions may occur, making adaptability a vital quality. Walmart’s focus on omnichannel and various fulfillment options, such as in-store pickup and ship from store, demonstrates their commitment to adaptability. By utilizing multiple channels, Walmart can cater to diverse customer preferences, ensuring an uninterrupted flow of products to meet demand.

Alignment of Interests among All Participating Parties:

One of the significant challenges in supply chain management is ensuring alignment of interests among all parties involved, including suppliers, manufacturers, distributors, and retailers. Walmart’s scale and dominance in the retail market have allowed them to establish strong relationships with vendors, enabling strategic partnerships with vendors who can meet their high-volume demands. Additionally, Walmart’s adoption of Vendor Managed Inventory (VMI) allows suppliers to manage their own inventory stored in Walmart’s warehouses. This collaboration aligns the incentives of suppliers and Walmart, streamlining inventory management and ensuring timely replenishment.

In conclusion, Walmart’s integrated supply chain has been a crucial factor in the company’s global dominance and sustained competitive advantage. By strategically investing in technology and optimizing its supply chain, Walmart has managed to maintain its position as the world’s largest retailer with over $572 billion in revenue in 2022.

Walmart’s success serves as a compelling example of the importance of a well-integrated supply chain in achieving and sustaining competitive advantage in the global market. As businesses continue to navigate the complexities of the 21st-century economy, building and enhancing supply chain capabilities will remain a critical aspect of ensuring sustainable growth and profitability. By prioritizing agility, adaptability, and alignment, companies can follow in Walmart’s footsteps and position themselves for continued success in the dynamic and ever-evolving global marketplace.

References:

• Lee H.L. (2004): The triple A supply chain. “Harvard Business Review”, Vol. 82, No. 10, pp. 102-112. 
• Nguyen T.T.H. (2017): Wal-Mart’s successfully integrated supply chain and the necessity of establishing the Triple-A supply chain in the 21st century. “Journal of Economics and Management”, Vol. 29(3), pp. 102-117

About the Author –  Dr Muddassir Ahmed

Dr MuddassirAhmed  is the Founder & CEO of SCMDOJO. He is a  global speaker ,  vlogger  and  supply chain industry expert  with 17 years of experience in the Manufacturing Industry in the UK, Europe, the Middle East and South East Asia in various Supply Chain leadership roles.   Dr. Muddassir   has received a PhD in Management Science from Lancaster University Management School. Muddassir is a Six Sigma black belt and founded the leading supply chain platform SCMDOJO to enable supply chain professionals and teams to thrive by providing best-in-class knowledge content, tools and access to experts.

You can follow him on  LinkedIn ,  Facebook ,  Twitter  or  Instagram .

• Walmart Walmart Supply Chain

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During the last decade, a cascading series of unpredictable events—including earthquakes, volcanic eruptions, catastrophic storms, disease outbreaks and armed conflicts—has exposed deep fragilities in global supply chains. These events served as initial alarm bells for much greater challenges to come.

Intricately woven supply chains were built on concepts such as just-in-time manufacturing and designed to reduce labor and operating costs. Over the years, companies relentlessly optimized their supply chains to serve markets with relatively predictable supply and demand patterns. However, recent and unprecedented events have shown how these choices have created inflexible supply chains that are brittle under stress.

Breaking a single link in a globalized supply chain can have a ripple effect, impacting customers thousands of miles away from the point of disruption. “Supply chain issues” has become a catchphrase for economic dislocation.

“In recent years, supply chain has gone from the background, something people did not think about, to a boardroom-level topic,” says Rob Cushman, Senior Partner, IBM Supply Chain Transformation. “It’s a concept that people have had very painful personal experiences with. And that’s why thinking about supply chain is pivoting from cost to being about resilience and agility, and ultimately driving growth.”

Cost savings

By deploying a cognitive supply chain, IBM reduced supply chain costs by USD 160 million   and built in more resilience and agility

100% order fulfillment 

Even during the peak of the covid-19 pandemic, IBM maintained a 100% order fulfillment rate of its products to clients

The worldwide reach, size and complexity of its supply chain organization represented a significant challenge as IBM began exploring transformation strategies for delivering a differentiated customer experience to promote customer loyalty and growth. IBM employs supply chain staff in 40 countries and makes hundreds of thousands of customer deliveries and service calls in over 170 nations. IBM also collaborates with hundreds of suppliers across its multi-tier global network to build highly configurable and customized products to customer specifications.

Previously, the IBM supply chain ran on legacy systems spread across different organizational silos, making information sharing slow and incomplete. Employees also performed much of their work on spreadsheets, which impeded collaboration and real-time data transparency.

However, at the same time the IBM supply chain was re-thinking business processes and transforming its technology platforms, IBM was making major strides in AI, cloud, data fabric, IoT, edge computing and other tools. “We saw the advances IBM was making in all these new technologies,” says Ron Castro, Vice President of IBM Supply Chain. “So, we asked, ‘Why not leverage our own technology to move our own supply chain forward?’”

“The principle behind why we embarked on this journey was to answer the question, ‘How can we best react to disruptions to manage resiliency and our client experience?’” says Castro. “We needed to identify disruptions quickly, analyze the data, get insights and decide on the best course of action.”

IBM supply chain management set out a bold vision to build its first cognitive supply chain. The aim was to have an agile supply chain that extensively uses data and AI to lower costs, exceed customer expectations, ruthlessly eliminate or automate non-value add work and exponentially improve the experience of supply chain colleagues.

IBM Consulting® was brought in at the beginning to help develop the processes required to drive the transformation. “We consider ourselves ‘Client Zero’ for IBM Consulting,” says Debbie Powell, IBM Digital Supply Chain Transformation Leader. “We have the technology to do what we need to do. It’s the culture and the processes where change was needed. We also realized that a lot of our knowledge was tribal and often depended on one person. We needed to digitize and democratize knowledge to support decision-making throughout the organization.”

IBM Consulting helped the IBM supply chain team use Design Thinking methods to plan its digital transformation and move from sequential to continuous planning. “We put a lot of effort into agility and a cultural shift to empower people and adjust workflows in a controlled way,” says Matthias Gräfe, Director of IBM Supply Chain Transformation. “We went from a top-down approach to identifying personas from the bottom up, the people that actually make the decisions.”

“Successful digital transformation required us to challenge traditional ways of working that were held sacred for decades and win the hearts and minds of supply chain colleagues for change to stick,” says Takshay Aggarwal, Partner, IBM Supply Chain Transformation.

At a high level, the IBM supply chain digital transformation revolves around building sense-and-respond capabilities. This was accomplished by democratizing data and automating and augmenting decisions achieved by combining cognitive control tower, cognitive advisor, demand-supply planning and risk-resilience solutions. “We view the cognitive control tower as the single source of truth where you have access to all the data and it helps advise the best course of action,” says Castro. “It also helps gather insights from the information quickly across the end-to-end supply chain.”

The cognitive control tower is powered by the  IBM® Cognitive Supply Chain Advisor 360  Solution, which runs on  IBM Hybrid Cloud  and on  Red Hat® OpenShift®  (link resides outside of ibm.com) software. Cognitive Advisor 360 enables real-time, intelligent supply chain visibility and transparency. It also senses and responds to changes in demand as they happen and simplifies the automation of supplier management.

The system uses IBM Watson® technology to enable natural language queries and responses, which accelerates the speed of decision-making and offers more options to correct issues. “I can ask—in natural language—about part shortages, order impacts, risks to revenues and trade-offs,” says Cushman. “There’s a button that recommends actions to solve issues — that’s what Watson does. It’s augmented intelligence so we empower people with better information to make data-driven decisions very quickly.”

“With the cognitive supply chain, we have the benefit of bringing in all these data from legacy systems and internal and external sources, as well as unstructured data, to apply advanced analytics and different elements of AI,” says Castro. “And since the system responds to natural language, think about the power of being able to extract data and get insights and recommendations without having to be an expert in a legacy system or an ERP platform.”

The IBM cognitive supply chain technology architecture also includes  IBM Edge Application Manager ,  IBM Maximo® Visual Inspection  and  IBM Track and Trace IoT —an integrated stack of solutions that connect data end-to-end across the supply chain. “Our procurement, planning, manufacturing and logistics data are connecting in close to real time,” says Cushman. “That’s how we can share inbound information from suppliers, manufacturing status updates with our external manufacturing partners and delivery information with our customers.”

“We’ve added demand sensing, so that the solution pulses the market for changes in demand, predicting the future. We’ve also embedded a cloud-based risk management tool called Resilinc into our procurement and inbound parts management process,” says Cushman. “It essentially uses AI to crawl the web and if there is a disruption, we can take action quickly to secure a second supply source.”

On a minute-by-minute basis, one of the biggest advantages of IBM’s cognitive supply chain is that it provides employees with immediate access to the information they need to read and mitigate disruptions. “There is unbelievable power that comes from taking lots of disparate data and putting it where people can see and understand it,” says Cushman.

“The real-time, single-view of the truth increases the velocity of decisions and leverages rapid response,” says Castro. “It helps us develop ‘what-if’ scenario analysis from a planning perspective all the way through to the execution team and suppliers.”

In fast-moving, real-world situations, quick, informed decisions provide a competitive advantage. “In the past, a major disruption—such as the closing of a major airport—would take days for us to understand the immediate impacts. With our current solution, we have ‘what-if’ capability that brings this analysis down to minutes,” says Powell. “In a supply constrained environment, whoever gets the information first wins.”

Since its cognitive supply chain became operational, IBM has saved USD 160 million related to reduced inventory costs, optimized shipping costs, better decision-making and time savings. “When mitigating a part shortage, it used to take four to six hours per part number,” says Powell. “We’ve brought that down to minutes and made further improvements to seconds.”

“Where’s my stuff?” is a common question in the supply chain industry. Finding an answer can entail hours of phone calls, emails and ERP queries across different geographies. “We’ve built a solution where you can log in and enter an order and you’ll have an answer in about 17 seconds,” says Cushman. “That was an enormous pivot and a powerful change in how we do business.”

By using its cognitive supply chain platform, the IBM supply chain team is also able to create new capabilities much faster. “Years ago, when we started this journey, we needed a long, looping roadmap with one or two years required for major capability upgrades,” says Castro. “With this digital enterprise, we now have teams that complete deployments in two or three weeks. We’ve moved to much more agile development.”

Despite dislocations caused by the COVID-19 pandemic, IBM fulfilled 100% of its orders by using its cognitive supply chain to quickly re-source and re-route parts as necessary. “During the last two years, the IBM supply chain did not fall behind. We met our commitments. Everyone else was screaming supply chain issues and we’re shipping products,” says Daniel Thomas, IBM Business Optimization Manager and Chief of Staff. “We delivered on our promises during the height of the disruptive era we live in.”

“Guaranteed supply is important, but many of our clients are also looking for predictability of supply,” says Castro. “The tools we have now help us address both issues. They enable us to manage the demand side to meet the right client expectations.”

“We have a responsibility to inspire younger supply chain leaders who will keep the IBM supply chain at the cutting edge and beyond for years to come,” says Aggarwal. “People entering the work force today have different experiences than previous generations. They are digital natives and expect a consumer-grade experience when managing their work. As we embarked on our journey, we actively engaged them in designing workflows and digital capabilities. There were trials and tribulations and we had multiple failures in design and rollout. Architecting the cognitive supply chain, and learning from failures and successes, made our young leaders champions of the cognitive supply chain and constant innovators of new capabilities.”

“IBM is the only global services company with its own multibillion-dollar supply chain, and we’ve transformed it into a data-driven architecture to drive our business. There’s a richness of experience that we bring to client conversations because we’ve done this work for ourselves,” says Cushman. “It’s all about how a supply chain delivers a differentiated customer experience to enable stickiness and growth.”

“The collaboration between IBM Systems and IBM Consulting teams to transform our own business and demonstrate the power of exponential technologies in supply chain has been one of our finest moments as a company,” says Cushman. “We look forward to sharing our real-world experience and learnings with our worldwide community of customers, partners and clients.”

IBM is an information technology company based in Armonk, New York. Founded in 1911, the company offers hardware, software and services in cloud computing, AI, commerce, data and analytics, IoT, mobile and cybersecurity, as well as business resiliency, strategy and design solutions. IBM has a global workforce of more than 280,000 employees serving clients in over 175 countries through IBM Consulting, IBM Software and IBM Infrastructure.

To learn more about the IBM solutions featured in this story, please contact your IBM representative or IBM Business Partner.

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Creating an Omnichannel Supply Chain: A Macy’s Case Study

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In February 2020, Macy’s announced their Polaris plan , a three-year strategy created to stabilize profits and create growth. This plan included closing 125 underperforming stores and consolidating offices. It also included a major overhaul of their supply chain model.

But, of course, Macy’s had to close their doors less than 6 weeks later due to COVID-19. As their online presence was the only presence available, their longstanding supply chain strategy, which was already starting to cause major issues within the company, needed immediate attention.

Macy’s CEO Jeff Gennette stated in September 2020, “Everything on the digital agenda has been accelerated. We’re optimizing inventory placement to meet customer demand wherever and however they shop in our store.”

What’s so bad about Macy’s supply chain model?

Customers expect a strong omnichannel experience — one that integrates both the online and offline world of the retailer, enabling a frictionless shopping experience.

For retailers, the goal is to take the retailer’s replenishment cycle from days to hours and reduce inventory at stores. This way, retailers expand their use of stores to fulfil online orders and hold less inventory altogether, allowing them to dedicate more room for digital fulfillment.

Omnichannel shopping is the baseline expectation for customers, as companies such as Gap, Target, and many others have upped their omnichannel game.

And Macy’s is, er, behind.

Macy’s way of viewing their supply chain in the past was traditional: Move products from point A to point B and optimize costs at each stop along the way. Each delivery channel has its own transportation plan and technology stack, siloing all distribution and fulfillment centers.

This supply chain method was acceptable 10 years ago, but to stay afloat in the in-store and online retail spaces, Macy’s needed to make a change. Silos created major cost issues, not to mention slow speed and service in today’s two-day-delivery age.

The company’s supply chain model operated two separate warehouse networks, one for stores and the other for direct customer (online) orders. This system made rebalancing inventory nearly impossible, among other issues.

Macy’s supply chain also lacked a central platform for locating inventory at the SKU level across the chain, and the cost of goods were high compared to competitors since each private brand sold at May’s was sourced independently.

Creating a better supply chain

In 2019 Macy’s hired Dennis Mullahy , the first ever Chief Supply Chain Officer, to transform the supply chain into one that supports an omnichannel strategy.

Since then, Macy’s has made leaps and bounds in optimizing their supply flow, with COVID expediting the process.

The company is transitioning to a centralized warehouse model, implementing a flow and fold design, meaning a light initial allocation to stores and flexible replenishments. Multipurpose warehouses hold inventory, which can both replenish stores and fulfill e-commerce orders.

By having a centralized inventory, the retailer is better able to strengthen its margins and fulfill orders quicker and in the ways customers want.

“Our new model will leverage all of our assets much more productively and improve customer satisfaction by increasing speed of delivery as well as generate efficiencies in our operations and inventory utilization.” Dennis Mullahy wrote.

In addition, Macy’s is getting on board with using data and analytics to not only get items to customers faster, but also improve inventory forecasting and allocation and package consolidation.

The company plans to increase drop-shipping to boost margins in e-commerce, where delivery costs have been the largest drain on profits. They’ll also renew their efforts into Macy’s Backstage operations in order to compete with other off-price companies such as Nordstrom Rack and TJMaxx.

Behind the curve

And while these improvements are giving Macy’s the help it needs, they should’ve seen the warning signs sooner. Retailers of equal size have been making moves to change their supply chain for years now, and Macy’s is just catching up.

For example, Kohls has been working to integrate e-commerce and brick and mortar stores since the beginning of 2018. The company worked to change its purchase and inventory management system by starting with the smallest stores and working their way up.

Nordstrom has been working on omnichannel fulfillment for over 3 years, and brought in tech consulting firm Opex Analytics to help.

Walmart unveiled plans this month to install a high-tech automation system across 25 Walmart regional distribution centers through their partnership with Symbotic, a robotics and automation company — something they’ve been working toward since 2017. This system will digitize and modernize Walmart’s current supply chain facilities to enrich customer experience and support evolving demand.

But even though Macy’s may be a few steps behind, true omnichannel is a journey — and a difficult one at that. It requires a lot from the supply chain, especially in terms of speed, complexity, and efficiency. The global retailer is making strides in executing their Polaris plan by focusing more on the integrated fulfillment strategy and alternative fulfillment options and listening to what their customers want.  

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Partnerships in the Real World: Great Supply Chain Partners 2024 Case Studies

Photo: iStock.com/Wasan Tita

Our annual 100 Great Supply Chain Partners issue is dedicated to showing what supply chain excellence looks like in the real world — through partnership. Technology is critical, of course, but it requires expert help to use it to make supply chains hum.

The best way to illustrate the importance of excellent supply chain partnership is through real-world case studies, and this August’s issue is chock full of them.

See the Full List of 100 Great Supply Chain Partners 2024 Here.

You’ll read how almond producer Blue Diamond developed a strategy to acquire all of the software it needed to run a digitized global supply chain with end-to-end control, one piece at a time.

You’ll learn how BD Biosciences worked with a technology vendor to reduce delivery lead times at a global scale.

We’ll also tell you optimized storage capacity allowed security hardware firm Levata ’s new warehouse to efficiently manage a wide range of SKUs, maximizing storage utilization, and giving the company room to grow.

Read SupplyChainBrain’s latest 100 Great Supply Chain Partners issue now! 

View the Digital Flip Book here.

Then, we’ll dig into how freight brokerage and transportation management company TI & NTG found a way to streamline multiple legacy systems for interacting with customers and carriers. 

Next, you’ll discover how a golf equipment manufacturer, TaylorMade , took advantage of the fact that leases were expiring on its customization and distribution facilities to find a smart way to rejig its distribution network.

Another great partnership success story comes from kitchen cabinet manufacturer, American Woodmark , which deployed voice technology to help workers assembling cabinets perform better, and new employees get up to speed much faster than before.    

Love Twinkies? Find out how snack giant Hostess  significantly increased the accuracy and speed of data available regarding movement of goods in its warehouse.

Another intriguing case study comes from 3PL Langham Logistics , which deployed drones for inventory counts, meaning employees no longer spend long, tedious hours doing manual inventory with forklifts, and there is now less likelihood of misplacing product.

A well-designed supply chain should function like a precision Swiss watch. And timepiece brand Breitling  saw sales increase by 20% in the U.S. the month after it introduced an omnichannel inventory management technology, with online sales revenue increasing by 15% to 30%.

Keeping workers happy is important. International shipping and mailing company Pitney Bowe s found a huge opportunity to improve operational efficiency, as well as employee retention, with a lively, ongoing feedback loop between workers and management.

Finally, we plunge into the world of swimming pools, with pool liner and cover vendor Tara Manufacturing , which reduced its downtime by 75%, saving the company $100,000 in the first year, after implementing computerized maintenance management system.

Running through these case studies is the need for new tools that automate manual processes and supplant legacy systems that were designed for a simpler and less volatile time. Artificial intelligence, in particular, comes to the fore as a means of overseeing just about every aspect of the supply chain, with its ability to make sense of more data than humans could ever manage. 

But humans remain firmly in the loop, and here again we’re reminded of the value of partnership.

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Nike's Strategy to Improve Conditions in its Global Supply Chain – A Case Study

Nike’s approach to managing supplier responsibility has greatly evolved since the 1990s, when the media uncovered claims of child labor, underpaid workers, and poor working conditions in several Asian countries. This report explores how Nike’s approach to improving social and environmental conditions in its global supply chain has evolved through integrated management of sustainability and innovation, increased supplier incentives, and systems innovations intended to prevent problems before they arise.

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Get full access to The Supply Chain Management Casebook: Comprehensive Coverage and Best Practices in SCM and 60K+ other titles, with a free 10-day trial of O'Reilly.

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The Supply Chain Management Casebook: Comprehensive Coverage and Best Practices in SCM

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Book description

30 up-to-date case studies illuminate every aspect of modern supply chain management

• Risk management, analytics, global supply chain issues, and much more

• Innovative processes, technologies, strategies, and tactics

• An indispensable resource for both students and practitioners

This casebook brings together 30 focused cases addressing virtually every aspect of supply chain management, from procurement to warehousing, strategy to risk management, IT to supplier selection and ethics. A global team of contributors presents key challenges in industries ranging from pharmaceuticals to fashion and previews issues ranging from the “limits of lean” to the potential of 3-D printing.

Cases vary in length and complexity, offering maximum flexibility to both instructors and readers; a convenient table provides fast access to specific topics. Qualitative cases are supported by relevant discussion questions and sample responses;  quantitative cases are supported by completed numerical solutions, and, where applicable, associated spreadsheets.

Table of contents

• About This eBook
• Copyright Page
• Dedication Page
• Acknowledgments
• About the Author
• Objectives of the Book
• Organization of the Book
• Salvation Army: Origins and Purpose
• United States Southern Territory and Salvation Army–Dallas ARC
• Discussion Questions
• Products and Markets
• Vertically Integrated Supply Chain
• The Manufacturing Process
• Investment in Collaborative Planning, Forecasting, and Replenishment (CPFR)
• Stanford Blood Center: “Give Blood for Life”2
• A Snapshot of the SBC-SUMC Supply Chain in 2006
• Company Background
• Financial Risk Management Background
• The Automobile Industry in China
• Toyota China’s Production Planning and Demand Management
• The Company
• BESSI Leather Goods
• The Central Role of Planning
• The Challenge
• Appendix 7-1 Gantt Chart of the Fashion Product Collection Definition (from Grid Definition to Start of Production)
• Appendix 7-2 Fashion Product Collection Definitions
• Appendix 7-3 Demand Forecasting Process
• Case 9. Multi-Echelon Inventory Decisions at Jefferson Plumbing Supplies: To Store or Not to Store?
• Introduction
• The Indian Pharmaceutical Industry
• The Indian Pharmaceutical Supply Chain
• Upstream Supply Chain for High-Range Cements
• Appendix 13-1: Baseline Data and Three Solutions Offered by UPS
• Organization Background
• Organizational Structure and Facility Layout
• Operations Management

Supply Chain Management

• Two Different Perspectives
• Overview of Fair Trade
• The Fair Trade Supply Chain
• Criticism of Fair Trade
• Starbuck’s Fair Trade Policy
• Company Overview
• The Rebranding Process
• Background for the Cooperative and the Industry
• Transaction Costs Approach
• COAPEL Supply Chain
• Process Reforms
• Organizational Operations
• Case 24-1: Helmets
• Case 24-2: Puffs
• Case 24-3: Sirop
• Case 24-4: Blower
• Jacket’s Decisions
• The Meeting
• Plant Visit
• Bangalore: City Statistics1
• Collection of Waste
• Role of Non-Governmental Organizations (NGOs)
• About the Company
• The Power Sector in India
• Cloud Computing
• Supply Chain Structure of CEL
• Appendix 27-1: CEL’s Balance of Plants Business in the Power Sector
• Appendix 27-2: Trends in Installed Generating Capacity of Electricity Nonutilities in India from 1970–71 to 2010–11
• Appendix 27-3: Business Process of CEL Sourcing
• Spare Parts Supply Chain Management at IGNYS Automotive
• Industry Background
• Introduction of the Case Companies
• Search for an International Partner
• Joint Business Development and Complementary Service Offering
• Joint Project Illustrations
• Mutual Benefits from International Logistics Partnership
• Classification of Risks
• General Supply Chain Resilience Model
• European Case Study
• Appendix 30-1
• Financial Times Press

Product information

• Title: The Supply Chain Management Casebook: Comprehensive Coverage and Best Practices in SCM
• Author(s): Chuck Munson
• Release date: June 2013
• Publisher(s): Pearson
• ISBN: 9780133367300

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Powering up resilience to mitigate supply chain disruption

When supply chain disruptions strike, grocery shelves go empty. Here’s how one company’s new system is keeping them full.

• Call for Change
• When Tech Meets Human Ingenuity
• A Valuable Difference
• Related Capabilities

Call for change

One of the world’s largest food and beverage companies has hundreds of brands under its belt. But amid global supply chain disruption , labor shortages and pandemic-fueled shifts in consumer demand, getting those products onto store shelves was becoming more difficult.

The company’s service level, measured by Case Fill Rate (CFR), was only reaching about 84%—some 11-12 percentage points below pre-pandemic performance. So, for example, a retailer looking to stock 100 bottles of a product may only receive 84 at the expected time of delivery.

With orders delayed or incomplete and shelves empty or understocked, the company was concerned about losing market share—and the trust of consumers. The company needed to rethink how it could effectively and efficiently handle supply chain management. So the company turned to Accenture to help identify the heart of the issue and collaborate on potential solutions.

When tech meets human ingenuity

Accenture helped the company build a roadmap to a more resilient system. They implemented a  control tower  to provide visibility across all operations. A new Sales and Operations Execution (S&OE) team was tapped to handle short-term issues so the supply chain planning team could focus on long-term strategy.

The teams found ways to make existing tools and data more useful and responsive, while adding new processes and governance to fill in the gaps. By connecting existing analytics dashboards to an ERP system and other data sources, the S&OE team could create predictive reports. By adding proactive alerts that addressed potential issues up to six weeks out, they could also make short-term adjustments to save valuable time and effort—and to actively plan for disruptions.

Supply chain control tower – visibility to value

Learn how you can make your supply chain networks more customer-centric, sustainable and agile

A valuable difference

With end-to-end visibility, more efficient organization and a set of new routines and best practices to connect disparate teams, supply chain network issues are now much more manageable. The results are evident in the numbers: The company saw its case fill rate pass 90%—a level it had not achieved in more than two years. Soon, it was finishing its month with record volumes. 

The greater resiliency built into the new system means the company is prepared for what’s ahead and can react more efficiently to future supply chain disruption. In reimagining its operations, the company is orchestrating the change it needs to deliver customers what they expect. Now, retailers are more likely to get the products they want, when they want them—keeping shelves full and consumers happy.

Meet our lead

Gabriel Montoya

Related capabilities, supply chain & operations.

Reimagining tomorrow's supply networks to positively impact business, society and the planet.

Resilient supply chain

Build a secure, responsive supply chain network that anticipates and adapts to disruptions, market changes and customer demands.

Consumer goods & services

Welcome to the new era of commerce.

Taking the pulse of shifting supply chains

Since the onset of the COVID-19 pandemic, we have asked supply chain leaders annually about their efforts to overcome disruptions, mitigate risks, and build resilience in their operations. Our third and most recent survey shows that companies have made significant progress on measures that have been on their agenda since the start of the crisis, and that work has helped them weather supply chain challenges such as geopolitical disruption and the worldwide shortage of semiconductors.

About the authors

This article is a collaborative effort by Knut Alicke , Edward Barriball , Tacy Foster , Julien Mauhourat, and Vera Trautwein, representing views from McKinsey’s Supply Chain service line.

For example, over the past year, many companies have made structural changes to their supply networks by implementing dual or multiple sourcing strategies for critical materials and moving from global to regional networks. And as companies shift their focus from visibility to improvements in demand and supply planning, supply chain digitization efforts are also entering a new phase.

However, most respondents admit that they still have significant work to do. An acute shortage of talent is holding organizations back in their efforts to accelerate digitization and implement advanced planning systems. And despite progress over the past 12 months, many companies still lack a comprehensive picture of the risks lurking deep inside complex multitier supply networks.

Data for this year’s survey were collected from 113 supply chain leaders worldwide, representing organizations from a broad range of industries. We ran the survey over a three-week period from the end of March to the middle of April 2022.

An acute shortage of talent is holding organizations back in their efforts to accelerate digitization and implement advanced planning systems.

Network resilience: Footprints on the move

The turbulence of the past two years has forced many organizations to address vulnerabilities in their complex, highly globalized supply networks. But the 2020 and 2021 supply chain pulse surveys revealed a significant gap between respondents’ ambition and their action. While many respondents said they wanted to diversify their supply base and boost in-region sourcing, the most common action in response to disruption was increases in the inventory of components and finished projects.

Bigger buffers and safety stocks are still seen as an important tool for supply chain resilience. Eighty percent of respondents told us that they increased their inventories during 2021; separate McKinsey analysis of almost 300 listed companies found that inventories increased by an average of 11 percent between 2018 and 2021, 1 S&P Global; Corporate Performance Analytics (CPA) by McKinsey (n = 293 listed companies). with the largest increases in the high-tech and commodity sectors. Some supply chain leaders have told us that they would have increased inventories even further if suppliers had been able to meet their requests.

While higher overall stock levels have become the norm, our survey suggests that companies are now looking for smarter ways to ensure resilience while keeping inventory costs under control. Seventy-one percent of respondents expect to revise their inventory policies in 2022 and beyond (Exhibit 1).

Companies are also reporting significant progress in longer-term strategies designed to increase network resilience. For example, 81 percent of respondents say that they have implemented dual-sourcing strategies during the past year, up from 55 percent in 2020. Forty-four percent of respondents, up from 25 percent the previous year (an even larger relative jump), say they are developing regionalized supply networks (Exhibit 2). Most respondents expect this momentum to continue. Sixty-nine percent of supply chain leaders told us that dual sourcing will continue to be relevant in 2022 and beyond, and 51 percent think the same about regionalization.

Overall, our survey shows that disruption has reshaped almost every supply chain. Ninety-seven percent of respondents say they have applied some combination of inventory increases, dual sourcing, and regionalization to boost resilience. Supply chain leaders believe that these efforts are paying off: Eighty-three percent told us that the footprint resilience measures they have taken over the past two years helped them minimize the impact of supply chain disruptions in 2022. For example, respondents from the commodity, consumer goods, and chemicals sectors were most likely to say that recent geopolitical disruption has not resulted in significant supply chain challenges this year; it is these industries that have focused most on structural changes such as nearshoring or network redesign. This situation may change as disruption continues, however, since data collection for our survey was conducted in the spring of 2022.

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Supply chain planning: a winning formula.

The volatility of the past two years has rigorously tested planning teams. Our survey reveals a formula, with three key ingredients, for resilient supply chain planning (Exhibit 3).

The first of those is visibility—companies can manage their supply chains only when they have a clear picture of each link. This is one area where organizations report significant recent progress: sixty-seven percent of respondents have implemented digital dashboards for end-to-end supply chain visibility. And those companies were twice as likely as others to avoid supply chain problems caused by the disruptions of early 2022.

The second ingredient is robust scenario planning, which can be seen in the planning counterpart to footprint redesign. Scenario planning has not been as widely adopted as visibility tools, with only 37 percent of respondents saying they had implemented the practice. These companies are also twice as likely as others to have avoided supply chain challenges this year.

An essential foundation to both supply chain visibility and effective scenario planning is comprehensive, accurate master data. Just over half the respondents tell us that the quality of the data in their supply chain planning systems were “sufficient” or “high,” suggesting that many companies still have room to improve their data collection and data management processes. High-quality data were associated with lower levels of recent supply chain disruption, although the effect was less pronounced than with visibility or scenario planning.

Digitization: Building on success

Previous surveys revealed that most companies ramped up their digital supply chain investments significantly over the past two years. Digital tools have been critical to companies’ efforts to improve the resilience of supply chain planning and execution.

That story continues in our most recent survey: in almost every sector, more than 90 percent of respondents report that they invested in digital supply chain technologies last year. Only two sectors—automotive and healthcare—report lower-than-expected investments. For the automotive sector, that finding hints at implementation delays, while healthcare companies may have slowed their pace of digitization following several years of rapid progress. Overall, just over 80 percent of respondents expect to make further investments this year and beyond.

However, the focus of these investments is changing significantly, a shift that can be attributed to the success of recent digitization projects. Last year, supply chain visibility was the top priority for companies, with 77 percent of respondents saying they were investing in this area. This year, with little more than half saying they have supply chain visibility systems in place, it has fallen to fourth place (Exhibit 4).

As companies address their visibility issues, digitization efforts are shifting to the next big challenge in supply chain management: capturing the demand signal. In this year’s survey, respondents report that the top two priorities for digital investments were demand and supply planning, cited by 74 percent and 69 percent, respectively. Fifty-eight percent of respondents are prioritizing inventory optimization.

Of the companies looking to invest in advanced planning systems, more than two-thirds say they expect to use the technology offered by their existing supply chain software provider. This is indicative of a continued market shift away from specialized point solutions for specific tasks and toward integrated end-to-end technology platforms. DIY isn’t dead in the supply chain sector, however: thirty-seven percent of respondents tell us that they expect to develop at least some supply chain software in-house, with most focusing on specific point-solutions such as visibility dashboards.

Digital talent remains a significant challenge for companies. In our 2020 survey, only 8 percent of respondents felt they had sufficient in-house talent to support their digital ambitions. By 2021, when many large digitization projects were in full swing, that number had dropped to just 1 percent. The situation has improved somewhat in the past year: in our latest survey, 10 percent of companies indicate they now have the talent they need. Respondents from the high-tech sector report the most progress in acquiring digital talent, with 20 percent more respondents than last year saying they had sufficient talent to meet their needs. Respondents from the automotive, aerospace, and defense sectors, by contrast, were much more likely than last year to report “limited” or “no” in-house digital supply chain talent.

The past two years have also seen a marked shift in companies’ approach to talent acquisition. In 2020, 70 percent of companies were building talent by reskilling their existing labor force. This year, the primary approach, used by 68 percent of companies, was outside hiring. That shift might reflect the dramatic increase in labor mobility that has occurred worldwide following the lifting of coronavirus restrictions.

Risk management: Steady progress

While companies have made radical changes in the way they use technology to manage their supply chains over the past two years, the development of their supply chain risk management capabilities has been much more incremental.

Risk remains a priority for most respondents in our latest survey, with 83 percent of respondents experiencing at least some raw-materials shortages over the past year. Ninety percent say that they want to further increase resilience, and almost three-quarters expect to increase the budget allocated to resilience-related actions. Over the past 12 months, two-thirds of companies have implemented new supply chain risk management practices; among the most popular approaches are new processes to monitor supplier-related risks.

Forty-five percent of survey respondents say that they either have no visibility into their upstream supply chain or that they can see only as far as their first-tier suppliers.

However, understanding the status of complex, multitier supply chains is still proving extremely challenging. Forty-five percent of respondents tell us that they either have no visibility into their upstream supply chain or that they can see only as far as their first-tier suppliers.

Future-proofing the supply chain

There are some signs of progress. Last year, a paltry 2 percent of respondents said they had a good picture of their supply chains down to the third tier or beyond. This year, that fraction has increased to 17 percent, with the greatest progress in sectors with shorter, simple supply chains (Exhibit 5). In the consumer products and retail sector, for example, 21 percent of respondents feel they have sufficient multitier transparency. Forty-three percent of respondents from the commodity sector believe their organizations have sufficient supply chain resilience measures in place, even though only 14 percent have a good view of third-tier suppliers. Deep supply chain transparency remains especially problematic for the automotive, aerospace, and defense sectors, with only 9 percent of respondents confident in their third-tier supplier visibility and none expressing satisfaction with their supplier visibility at all levels.

For the third year in a row, supply chains remain at the top of the corporate agenda. Our latest survey shows that companies have made significant efforts to improve supply chain resilience over the past 12 months by expanding their successful digitization programs and implementing structural changes to their networks. With volatility and disruptions likely to continue, we expect resilience to remain a key topic for the foreseeable future. For leaders, upcoming priorities include more sophisticated approaches to planning, further adaptation of supply networks, and smarter inventory management strategies.

Knut Alicke is a partner in McKinsey’s Stuttgart office; Edward Barriball is a partner in the Washington, DC, office; Tacy Foster is a partner in the Charlotte office; Julien Mauhourat is an associate partner in the Paris office; and Vera Trautwein is an expert in the Zurich office.

The authors wish to thank Tim Beckhoff and Jürgen Rachor for their contributions to this article.

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Revamping Global Supply Chain Strategy: 4 Case Studies

October 27, 2023 - Emily Newton

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Supply chain management is already a delicate juggling act. What if a company wants to scale their services to other countries? It is time to hone in on a global supply chain strategy. Maintaining global logistics, transportation, and production is more intricate than ever. 

Supply chain leaders must prioritize a global supply chain strategy to organize assets and departments, determine their roles, and clarify quotas and responsibilities to ensure resilient, seamless operations worldwide. These case studies explore companies venturing out into international markets and how they achieved success.

1. Starbucks

Starbucks has international acclaim, but it was once a small business like any other starting. It has faced its fair share of supply complications, no matter how well it scaled with its avid fanbase. In 2008, Starbucks had almost 17,000 locations. Stores were not pulling the corporation’s money to fund its supply chain. Profits were decreasing, and expenses to execute a global supply chain strategy were increasing.

Starbucks management had to cut costs. Otherwise, its international presence and reputation would take a hit. Stores might close, and people would lose their jobs. They noticed their supply chain was the issue, exponentially increasing costs. In the U.S. alone, supply chain costs went from $750 million to $825 million. 

They analyzed the catalysts behind it to determine the next steps for their supply chain strategy. The goals were to reorganize, minimize costs to help stores meet targets, and implement resilience features to ensure this didn’t occur again. They noticed:

• Less than half of deliveries made it to stores on time.
• Third-party logistics expenses skyrocketed, which consisted of three of their five distribution centers in the States.
• The supply chain adapted to rapid growth rather than management updating processes for intentional development, making many procedures cumbersome.

They cut ties with ineffective third parties and build new company-owned production facilities. The remaining third parties they had worldwide would be continually graded on performance with new service level agreements for meeting deliverables. They saved over $500 million for a scalable global supply chain before 2010.

Nike could not expand its global supply chain strategy without first overcoming bad press. Unethical labor practices overseas put Nike in a strange position — face international backlash or keep doing what it was doing because they were already reaching international audiences. 

Eventually, they revamped global production for better working conditions and environmental impact. These side effects help global supply chain strategy as a result. They called this the Rewire strategy, which had these goals:

• Integrate organization structure more thoughtfully
• Focus on lean manufacturing principles and training programs
• Craft a supplier incentive program to achieve sustainability with them
• Notify stakeholders of innovations for systemic change

A 2013 case study explores how development happened. Reimagining its global supply chain strategy made Nike more sustainable from an eco-friendly lens and a business resiliency perspective. The work environment became more ethical and stronger as a result. For example, lean training for contractors and workers gave them more agency to influence company decisions, empowering staff worldwide to increase efficiency.

Ultimately, sustainability was the driving factor behind the social changes in their global supply chain. It led to innovation and risk prevention.

3. Campbell Soup

For a staple that has been around as long as Campbell’s Soup, it has gone through significant supply chain adjustments. Over the years, Campbell Soup saw numerous challenges arise in its global supply chain strategy, including:

• Inadequate utilization of programs like SAP and data integration
• Inflated inventories
• Cumbersome procedures
• Lack of cohesion in corporate materials

Their inconsistent data and systems were causing supply chain customers to question their processes. How did they overcome these barriers? They focused on data curation , education, and aligning digital transformation with business processes and values. 

By doing so, they extended their visibility over their products while being able to communicate more effectively with suppliers. Additionally, all staff and stakeholders became more aware of the company’s standing and stock while learning new tools and technologies to keep track of this information.

Campbell Soup had countless boons come from the changes they made to their supply chain. Some were tangible, correlating to increased revenue or saved budgets, while others were more of a mental shift. Campbell Soup saved $40 million in a year that would have otherwise been wasted in supply chain management. They also took a hard look at their inventory and reduced it by 39% while tabulating their stores for 100% accuracy. Finally, their KPIs made sense alongside corporate objectives, emboldening staff and stakeholders alike.

IBM has always been one of the world’s leading tech companies, inspiring others to embrace cognitive supply chains and commit to innovation. Post-pandemic, IBM struggled to get operations back to standard, so a global supply chain strategy had to reimagine within this new world with more disruptions than ever. They embarked on the IBM Supply Chain Transformation journey. The plan sought to:

• Invest in employee growth for more remarkable dedication
• Always refer to client needs
• Leverage scalable, exponential technologies for increasing value, such as blockchain and the IoT
• Become more agile with concepts like automation and multi-source resiliency

For example, they saw results in their digital transformation by incorporating augmented reality for remote maintenance and employee assistance in international locations. They minimized common issues holding them up previously in manufacturing by having real-time analytics and diagnostics before problems compounded. Eventually, their global supply chain became 95% more efficient in handling global challenges.

Global Supply Chain Strategy Success Stories

These case studies explore why a company may want to reevaluate its global supply chain strategy. From Starbucks’ unexpected success to Nike’s publicity faux pas, scaling can be interrupted and stunted at any point. However, overcoming these challenges with a thoughtful eye to recognize expansion opportunities can be just as essential.

It is possible to adjust any business to start having an international audience. With enough planning, market research, and budgeting, every company can reinforce its staff and revenue for infinite expansion possibilities. 

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• DOI: 10.20858/tp.2023.18.4.14
• Corpus ID: 267009942

SUPPLY CHAIN DESIGN: A CASE STUDY IN A PULP AND PAPER COMPANY

• Lucas Cedroni Fava , Marcelo K. Fugihara , Mauro Sampaio
• Published in Transport Problems 31 December 2023
• Business, Engineering

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Fashion at the Speed of Light: Delving into Zara Supply Chain Strategy

Fashion at the Speed of Light: Delving into Zara Supply Chain Strategy – DFreight

The fashion industry is fast-paced and ever-evolving, so supply chain strategies need to keep up with the times to keep up with the competition. Zara, one of the top players in the fashion market, is continuously looking for new ways to enhance their supply chain to provide fast and easy access to fashionable products to their customers.  Digital freight forwarder  DFreight can assist with this process, providing quick, accurate, and dependable solutions to the fashion sector. With dynamic and ever-changing case-by-case services, DFreight is the right partner to help fashion brands remain competitive in an ever-increasing international market.

Read this article to learn more about how ZARA is leveraging supply chain strategies to remain the fashion industry leader.

Table of Contents

Zara’s Rise as a Fast Fashion Powerhouse

Zara , a Spanish fashion powerhouse, has revolutionized the fashion industry. With its fast fashion business model, Zara has become one of the world’s most powerful brands, providing customers with a wide selection of fashionable products at reasonable prices. Zara’s stores still offer seasonal pieces, but the company now provides online shopping for the international market.

With its innovative marketing, production, and logistics system, Zara is able to quickly refresh collections with new products and move merchandise from production to store shelves in record time. It has also focused on creating unique collaborations with designers and artists to appeal to a broader base of shoppers. Thanks to its combination of style, speed, and  innovation , Zara has become one of the most talked-about names in fashion.

Understanding Zara’s Fast Fashion Model

Zara has revolutionized the fashion industry by successfully implementing its fast fashion model, allowing customers to stay on the cutting edge of fashion trends without requiring a hefty investment.

The Concept of Fast Fashion and its Significance

Fast fashion is the process of rapidly producing fashionable items to meet current trends and demands while delivering them quickly and cost-effectively. This allows customers to stay on the cutting edge of fashion at a fraction of the cost.

Zara’s Unique Approach to Fast Fashion and its Benefits

Zara has taken the concept of fast fashion to a new level by having two to three collections a season, enabling it to have the latest styles on the market faster than any other company. In addition, its supply chain strategy enables faster market speed, allowing them to bring items from design to stores in as little as four weeks. Furthermore, it allows for a high level of customization and leveraging of economies of scale, resulting in increased profitability.

How Zara’s Supply Chain Strategy Enables Rapid Production and Distribution

Zara’s supply chain strategy gives them greater control over its production process, allowing for faster speed to market that brings items from design to stores in as little as four weeks. Additionally, it allows for a high level of customization and leveraging of economies of scale, resulting in increased profitability.

In the previous blogs, we looked into the supply chains of famous and leading companies, which you can read about each of them in the section below.

The Role of Vertical Integration in Zara Supply Chain strategy

Zara’s vertically integrated business model has enabled the successful international fashion retailer to gain a competitive edge in the industry by reducing inventory costs, increasing production speed, and continuously offering customers the latest trends.

Exploring Zara’s Vertically Integrated B usiness Model

Zara’s vertically integrated business model is based on owning and controlling each element of the supply chain from production to the finished product. This includes producing raw materials, manufacturing, warehousing, distribution, advertising, retailing, and logistics. By taking control of the entire supply chain, Zara is able to reduce inventory costs, speed up the production process, and provide customers with constantly updated fashion trends that are on-trend with current styles.

The Advantages of Owning the Entire Supply Chain Process

With Zara’s vertically integrated business model, they are able to reap many advantages, including reduction of inventory costs, increased speed of production, and the ability to bring customers the latest trends, as well as price flexibility. With complete control of its supply chain, Zara is able to produce new styles faster than their competitors can and offer them at competitive prices. Furthermore, Zara is able to adjust production levels to better meet customer demand, thus saving money on inventory costs.

How Vertical Integration Contributes to Zara’s Speed and Flexibility

Vertical integration has enabled Zara to have a speed-to-market strategy, offering customers twice-weekly drops of new store items. Zara can provide customers with a constant flow of current fashion trends without worrying about inventory costs or long production times. Furthermore, vertical integration allows Zara to be flexible in their production – quickly adjust their factory output to meet customer demand. This combination of speed and flexibility will enable Zara to remain competitive in the ever-changing fashion industry.

Just-in-Time Manufacturing: Zara’s Agile Supply Chain

Just-in-time manufacturing is an efficient and cost-effective way of managing a supply chain. Zara’s supply chain incorporates this approach, allowing them to quickly produce and deliver small batches of clothes that respond to changing fashion trends and customer needs. While this approach provides many benefits, there can also be challenges associated with it.

An Explanation of the Just-in-Time M anufacturing Concept

Just-in-time (JIT) manufacturing is an efficient and cost-effective way of managing a supply chain. It is a management system involving the close coordination of procurement and production processes to produce the correct item, at the right quantity, at the right time, and in the right place to meet customer demand. This approach is based on the Japanese lean manufacturing concept of creating value with less waste by making needed items only when they are required and no more. The idea is to reduce inventory, streamline production, and improve resource utilization.

How Zara’s Supply Chain Incorporates Just-in-Time Manufacturing

Zara’s supply chain incorporates just-in-time manufacturing principles to improve efficiency. Zara is able to get clothes designed, manufactured, and delivered to stores within just two weeks. They use a network of manufacturers worldwide to produce and deliver the small batches that Zara orders quickly. This gives Zara an advantage over competitors with longer lead times, allowing them to respond rapidly to changing fashion trends and customer needs.

The Benefits and Challenges Associated with this Approach

Just-in-time manufacturing provides many benefits, such as reducing inventory costs and space requirements, streamlining production, and delivering a product that is exactly what customers want. However, it can also come with challenges, such as increased pressure on suppliers to meet tight production timelines and the need for strong communication between different parts of the supply chain to coordinate effectively. Additionally, there is always the risk that unexpected events, such as natural disasters or pandemics, could disrupt the supply chain .

Dynamic Inventory Management: The Secret Weapon

Dynamic inventory management helps retailers stay updated with the latest fashion trends, allowing them to maintain relevancy and profitability in the dynamic fashion industry.

Zara’s Dynamic Inventory Management System

Zara’s dynamic inventory management system is considered pioneering in the fashion industry. It allows Zara to respond quickly to the ever-changing fashion trends and demands of consumers. The quick turnaround helps Zara maintain relevance and profitability in the dynamic industry. The system provides real-time data and consumer behavior insights, enabling Zara to replicate and update consumer preferences. This allows Zara to keep up with the latest fashion trends and choose the right quantities and items to stock in their stores.

The Use of Real-Time Data and Consumer Insights

Real-time data and insights from consumers can be used to make informed decisions about product inventories. Retailers can plan ahead and optimize merchandise stocking by understanding consumer behavior, such as preferred trends, sizes, and colors. Utilizing this information also helps retailers identify potential risks regarding inventory. This helps retailers minimize wasted stock risk and decrease inventory costs.

Strategies for Efficiently Managing Inventory While Minimizing Waste

To successfully manage inventory, retailers need to adopt strategies that help minimize waste. One such strategy is to practice continuous inventory review. This ensures timely identification of slow or discontinued items that do not meet consumer demand or have become outdated. Another effective strategy is to focus on cyclicality. This involves forecasting demand for seasonal items and stocking them based on past sales data. This helps optimize stocking decisions and minimize the risk of wasting time or money on overstocking or understocking items.

Efficient Distribution Network: From Factory to Store

Zara has implemented advanced logistics and transportation strategies to optimize the speed and accuracy of product distribution for their customers worldwide. This allows them to ensure the timely arrival of products and keep up with ever-changing fashion trends. Through careful inventory management , shipments, and pacing, Zara can ensure that their customers get their orders quickly and accurately.

Additionally, they have gone to great lengths to reduce costs, driving their profitability. Through direct connection with suppliers and providing detailed logistics planning and oversight of the entire distribution process, they have been successful in achieving their goal of a reliable and efficiently managed worldwide supply chain network.

Sustainability in Zara’s Supply Chain Strategy

Zara has demonstrated its commitment to sustainability by implementing initiatives and strategies to reduce their environmental impact while offering fashionable and affordable products.

Zara’s Initiatives towards Sustainability and Ethical Sourcing

Zara is one of the largest fashion retailers in the world, and they have implemented a range of initiatives to promote sustainability and ethical sourcing in their supply chain strategy. These include utilizing organic fabrics and natural fibers, limiting the impact of harmful chemicals, and increasing the monitoring of ethical standards within the supply chain. With each new product release, they strive to reduce their environmental impact while still being able to offer their consumers fashionable and affordable products.

Balancing Fast Fashion with Environmental and Social Responsibility

Zara balances the need for fast fashion with environmental and social responsibility. They have put strategies in place to reduce the amount of water used in manufacturing processes while encouraging people to reduce their consumption of fast fashion by creating pieces that can withstand multiple trends, seasons, and occasions. Additionally, Zara incorporates fair wages and safer working conditions as a standard in their production process.

The Challenges and Future Prospects of Sustainable Fashion

While there has been a lot of progress towards green and sustainable fashion over the past few years, there are still many challenges ahead. Suppliers need help to keep up as the demand for ethical and sustainable products grows. Moreover, the production process from raw materials to finished products is complex. It often involves a long supply chain, which can be daunting to track and monitor for sustainable practices. Looking towards the future, companies are turning towards more transparent and efficient supply chains, as well as renewable materials and innovative technologies to reduce their environmental impact.

Implications for other Fashion Brands and the Industry as a Whole

For other fashion brands to remain competitive, they must take Zara’s lead and develop effective supply chain strategies. This involves creating a production system responsive to trends, investing heavily in research and design teams to create unique products, and utilizing agile forecasting. It’s important to note, however, that both Zara’s success and the strategies of other fashion brands may also be shaped by the emergence of technologies in the fashion supply chain—such as predictive analytics, robotics , blockchain , and artificial intelligence like chat GPT . As these technologies grow in sophistication, it will be essential for fashion brands to keep up with the changing landscape and adjust their supply chain strategies to remain competitive.

The Future Direction of Supply Chain Strategies in the Fashion Industry

Looking to the future, it’s clear that supply chain strategies in the fashion industry will need to keep pace with consumers’ rapidly changing consumer preferences. The challenge for fashion brands will be maintaining agility and flexibility while mitigating cost and risk. Zara’s success offers key lessons for the industry, and for fashion brands to succeed, they must learn from Zara’s example and leverage the same strategies to remain competitive.

Zara’s supply chain strategy is a valuable case study for businesses across industries. We have summarized the key takeaways and lessons that can be learned from Zara’s success, including the importance of agility, responsiveness, and customer-centricity in supply chain management. By understanding and applying these lessons, other companies can adapt and thrive in today’s rapidly changing business landscape.

What is Zara’s supply chain strategy?

Zara’s supply chain strategy is based on a vertical integration business model, where the company controls the entire production process, from design and manufacturing to distribution and retail. By having control over every aspect of the supply chain, Zara is able to quickly analyze trends, come out with new styles and get them into stores faster, enabling it to stay ahead in the fashion industry.

What makes Zara’s supply chain unique?

Zara’s supply chain is unique because it is built on a short, agile production cycle that allows them to keep up with fast fashion trends and respond quickly to changing market needs. From design to delivery, the process takes only a few weeks, enabling Zara to introduce new styles for its customers continuously.

How does Zara use technology to remain competitive?

Zara uses several innovative technological solutions to remain competitive. These include a barcode system for tracking and monitoring in-store inventory, RFID technology to track products in warehouses and stores, and AI-driven algorithms for forecasting sales and optimizing production. Zara has also implemented a cloud-based platform, allowing it to collaborate with its global suppliers easily.

How does Zara’s supply chain enable it to offer lower prices?

Zara’s vertical integration model and agile production cycle allow them to save time and money, which they can pass on to their customers. Additionally, due to the reduced lead times in their supply chain, Zara can minimize the costs associated with inventory and warehousing, resulting in lower customer prices.

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Enhancing supply chain resilience through market research.

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Amaan Kazi is the CEO of Verified Market Research , a global market research & consulting firm focused on niche & emerging markets.

Before making a significant purchase, we often research extensively in the hopes of avoiding disappointment. Similarly, businesses can engage in thorough market research to enhance their supply chain resilience.

Let's delve into how various industries can fortify their supply chains through innovative strategies and market research.

The Role Of Market Research In Modern Supply Chains

Despite being the backbone of commerce and industry, the supply chain's complex nature also makes it vulnerable to disruptions—from natural disasters and geopolitical tensions to pandemics and cyber attacks.

Market research provides a detailed understanding of market conditions, including potential risks and emerging trends. This knowledge can help businesses anticipate disruptions, adapt to changing circumstances and implement strategies that enhance the resilience and efficiency of their supply chains.

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From my experience leading a global market research and consulting firm, here is how I see five supply-chain-dependent industries using market research to tackle challenges and implement innovative solutions.

1. Automotive And Transportation

The automotive industry continues to face supply chain disruptions due to geopolitical tensions, semiconductor shortages and the shift toward electric vehicles (EVs). Ways to help mitigate include:

• Digital twins: Digital twins create virtual replicas of supply chains, enabling companies to simulate scenarios and optimize operations, thus identifying bottlenecks and improving efficiency.

• Flexible supply chains: Flexible supply chain models let automotive companies dynamically adjust production and inventory levels, swiftly responding to market changes and minimizing disruptions.

These strategies allow for real-time adjustments and predictive analysis, which I see as especially critical for the highly volatile automotive sector.

2. Electronics And Semiconductors

The electronics and semiconductor industries are also grappling with supply chain complexities due to rapid technological advancements and global demand surges. Some innovative solutions for this sector include:

• AI and robotics: AI-driven forecasting and robotic automation streamline production, enhance accuracy, improve worker safety and facilitate efficient inventory management and order fulfillment.

• Cybersecurity: As supply chains become more digitized, cybersecurity measures become crucial to protecting against cyber threats and ensuring the integrity of digital assets.

Pro-Tip: Start with small-scale pilot projects, gradually scaling up your investments in AI software and robotics while ensuring robust cybersecurity protocols.

3. Pharmaceuticals

The pharmaceutical industry is heavily regulated, with stringent requirements for product quality and traceability. The Covid-19 pandemic highlighted the vulnerability of global supply chains to sudden disruptions; however, it also highlighted some innovative solutions for the future of pharmaceuticals.

• Blockchain for traceability: Blockchain technology ensures the authenticity and traceability of pharmaceutical products, combating counterfeit drugs and improving transparency. Traceability tracks the origin and movement of products, while visibility provides an overall view of the supply chain's current status.

• AI and predictive analytics: AI-driven predictive analytics helps enhance demand forecasting and inventory management, ensuring that critical drugs are available when needed without overstocking. While similar in aims to AI and robotics, predictive analytics focuses on forecasting and optimizing inventory, whereas robotics automates physical tasks, which in turn improves efficiency and accuracy.

4. Food And Beverages

The food and beverage sector faces numerous challenges (download required), including climate change, fluctuating consumer demands and logistical disruptions. There are a couple of potential solutions for those in this industry to employ.

• Digital agriculture: IoT and AI in agriculture enable precision farming, optimizing resource use and increasing yields by providing real-time data on soil health, weather and crop growth. Start by deploying IoT sensors for real-time data collection and invest in AI platforms to analyze the data for actionable insights.

• Supply chain visibility: Those in fast-moving consumer goods can use visibility tools to track products from farm to shelf, ensuring quality, reducing waste and providing a comprehensive understanding of the supply chain.

Retailers also face supply chain challenges due to shifts in consumer demand, logistical disruptions and the need for rapid replenishment cycles. Some ways to use market research to strengthen supply chains for retail include:

• Omni-channel logistics: Many retailers are integrating omnichannel logistics to help create a more seamless shopping experience, improve inventory management and meet customer expectations. I recommend you begin by integrating online and offline inventory systems, ensuring consistent data flow and training staff for new methods of operation.

• Data-driven decision making: By leveraging big data and analytics, retailers can better predict consumer demand, optimize inventory levels and streamline supply chain operations .

When employing data-driven decision making, make sure to focus on predicting consumer trends, optimizing stock levels and enhancing customer satisfaction.

How Research Can Lead To A Strong Supply Chain Network

Last year, one of my clients (a major automotive component manufacturer) sought my firm's expertise to strengthen its supply chain network across the Middle East and Asia Pacific markets.

Our research highlighted potential risks and opportunities, identifying reliable suppliers, optimal logistics routes and key market trends. Armed with this information, the client was better able to forge partnerships with local suppliers, streamline their logistics operations and implement robust risk management practices.

This allowed the manufacturer to establish a supply chain network that could both meet the demands of their production schedules and adapt swiftly to market changes. I believe this type of success story underscores the pivotal role of market research in enhancing supply chain resilience and securing a competitive advantage.

Steps To Building A Resilient Supply Chain

No matter your industry, to help build a resilient supply chain, consider the following steps before seeking external market research assistance.

1. Conduct geopolitical, environmental and market risk assessments.

2. Leverage technology to monitor and optimize supply chain operations.

3. Integrate software for end-to-end supply chain visibility and transparency.

4. Foster strategic partnerships to strengthen supply chain networks.

5. Adopt environmentally and operationally sustainable practices.

6. Stay informed of developments, be agile and be ready to adapt.

Just as an architect meticulously plans and assesses every aspect of a building before construction, businesses can apply the same rigor to fortify their supply chains. Market research is the blueprint that can provide critical insights toward a robust and resilient supply chain framework.

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Enhancing sustainable supply chain management through digital transformation: a comparative case study analysis.

1. Introduction

2. theoretical background, 2.1. sustainable development and supply chain management, 2.2. digital transformation.

• Data collection and monitoring [ 40 ].
• Supplier assessment and compliance [ 41 ].
• Inventory and demand management [ 42 ].
• Transport optimization [ 43 ].
• Waste reduction [ 44 ].
• Carbon footprint monitoring [ 45 ].
• Product traceability [ 15 ].
• Stakeholder communication [ 15 ].
• Decision-making [ 46 ].
• Continuous improvement and adaptation [ 47 ].

2.3. Supply Chain Management Resources and Capabilities

2.4. business performance, sustainable impact, and business excellence.

• Enhanced reputation and image [ 52 ].
• Strategic supplier relationships [ 53 ].
• Improved efficiency [ 54 ].
• Optimized inventory management [ 55 ].
• Data-driven decision-making [ 56 ].

2.5. Sustainable Strategies

• The sustainable technology development strategy, which aims to develop IT capabilities that can contribute to sustainable development through innovation.
• The networking strategy, which aims to develop collaborative skills within the company and between all stakeholders.
• The sustainability strategy, which includes investments in feasibility-related technologies and aims to provide financial incentives for employees to propose and implement innovative ideas.
• The sustainable product marketing and promotion strategy, which aims to develop marketing and promote the benefits of sustainable products to customers in order to increase demand for products and services.
• The research and development strategy, which aims to develop research units within the company in order to improve products and processes.
• The sustainable skills and competencies development strategy, which aims to create an enabling environment for employees to develop green and sustainable skills.

2.6. Conceptual Framework

3. research method, 3.1. research design, 3.2. case selection, 3.3. data collection procedures, 3.4. data coding and analysis, 4. case studies’ description and findings, 4.1. case study—3pl company, 4.1.1. resources and capabilities.

• Efficient warehouse management through the “Mantis WMS”, which enabled the company to automate and effectively manage its processes, achieving accuracy and speed in the storage and preparation of orders.
• Automation, quick product identification, and information management through the use of “barcode” labels on each product and pallet and connection to wireless terminals, allowing operators to quickly access and alter information.
• Employee development through investment in staff training.

4.1.2. Sustainable Impact

4.1.3. business performance, excellence and sustainable strategies, 4.2. case study—retailer, 4.2.1. resources and capabilities.

• Driver information.
• Location at all times.
• Temperature in storage areas for the better and safer transport and monitoring of products.

4.2.2. Sustainable Impact

4.2.3. business performance, excellence and sustainable strategies, 4.3. case study—producer, 4.3.1. resources.

• Financial Supply Chain Management (FSCM);
• Logistics Execution (LE).

4.3.2. Capabilities and Sustainable Impact

• Commitment to sustainability.
• Resilience in financial performance.
• Social contribution and community support.
• Digital transformation.
• Ethics and compliance training.
• Effective management of distribution centers.

4.3.3. Sustainable Strategies

• Research and development.
• Networking.
• Marketing and promotion.

5. Results and Discussion

• Increasing productivity.
• Reducing operating costs.
• Efficient management of supply chain processes.
• Automation.
• Knowledge transfer and training.
• Customer satisfaction and loyalty.

5.1. Theoretical Implications

5.2. managerial implications, 6. conclusions, author contributions, institutional review board statement, informed consent statement, data availability statement, conflicts of interest.

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Stroumpoulis, A.; Kopanaki, E.; Chountalas, P.T. Enhancing Sustainable Supply Chain Management through Digital Transformation: A Comparative Case Study Analysis. Sustainability 2024 , 16 , 6778. https://doi.org/10.3390/su16166778

Stroumpoulis A, Kopanaki E, Chountalas PT. Enhancing Sustainable Supply Chain Management through Digital Transformation: A Comparative Case Study Analysis. Sustainability . 2024; 16(16):6778. https://doi.org/10.3390/su16166778

Stroumpoulis, Asterios, Evangelia Kopanaki, and Panos T. Chountalas. 2024. "Enhancing Sustainable Supply Chain Management through Digital Transformation: A Comparative Case Study Analysis" Sustainability 16, no. 16: 6778. https://doi.org/10.3390/su16166778

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The Morning

The changing supply chain.

We explore why commerce has changed — and how companies and governments are reacting.

By Peter S. Goodman

I cover the global economy.

For decades, major companies have behaved as if geographic distance were almost irrelevant. A factory in China was the same as a factory in Michigan. The internet, container shipping and international trading arrangements had supposedly shrunk the globe.

No longer. The pandemic and geopolitical upheavals have exposed the risks of depending on faraway industry to make critical things like computer chips, protective gear and medicines.

I recently wrote a book on this topic, “How the World Ran Out of Everything.” I’ll use today’s newsletter to help you understand why commerce has changed — and how companies and governments are reacting.

The pandemic shock

The emergence of Covid in China ended the previous version of globalization. Quarantines shut Chinese factories at the same time that Western consumers, stuck in lockdown, ordered more manufactured goods like exercise equipment and electronic gadgets.

This combination of reduced supply and surging demand made other countries realize that they had become heavily dependent on a single nation — China — for many items, including medical supplies. Covid eventually faded from the headlines, but policymakers and business executives in the United States and Europe faced pressure to diminish their reliance on China.

A central reason for concern was the rise of geopolitical tensions. China wasn’t merely the world’s factory; it is also an autocracy that, under President Xi Jinping, has become more aggressive in asserting global influence. Xi, for instance, has been vocal about bringing Taiwan under China’s control, using force if necessary. Taiwan is the dominant manufacturer of the most advanced varieties of computer chips.

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Keeping value chains at home

How china controls foreign access to technology and what it means for europe, key findings.

• In a shifting geopolitical environment, China’s government is sharpening and testing its tools for controlling technology-related outflows. As domestic firms climb up value chains, there is increased emphasis on controlling foreign access to retain critical innovation capacity within China.
• The party state uses dual-use export controls flexibly. It seeks to present itself as a responsible stakeholder contributing to non-proliferation, while supporting its domestic industries and signalling the ability to mobilize controls for other ends if needs be, such as retaliation. 
• China is unique in having a parallel, civilian technology export control regime geared towards protecting domestic innovation and industrial capacity. This regime is increasingly deployed to establish and defend China’s supply chain dominance.
• Xi Jinping’s push for “comprehensive national security” has resulted in other instruments also being repurposed to manage technology outflows. China’s toolbox is unmatched by any OECD economy when monitoring and limiting cross-border flows of capital, data, talent and IP. 
• European governments and firms must prepare for an era where China may be more willing and able to exploit its advantages and leverage along technology value chains, often in a highly opaque manner. At the same time, China still faces constraints and tradeoffs when it comes to instrumentalizing its strengths.

China rapidly builds up capacity to defend and leverage its value chain dominance

In recent years, China has become a more proactive adopter of export controls, affecting technology supply chains of huge economic and strategic importance for Europe. In August 2023, it began requiring a license for exports of gallium and germanium metals and several of their compounds. The move was widely seen as a response to coordinated restrictions on semiconductor technology exports from the United States, Japan and the Netherlands. 1 In December, China tightened export controls for some graphite products and banned the export of technology to make rare earth magnets. 2 These are just few high-profile cases, but they illustrate the critical importance of understanding how China uses export controls today and how it may do so in the future.

Beijing’s actions reflect profound shifts in both the geopolitical landscape and the way China relates to it. Supply and value chains are being reconfigured and weaponized as countries fiercely compete for technological dominance and choose resilience over globalization. China, meanwhile, is turning from a technology seeker to a technology provider. While its aggressive efforts at appropriating foreign technology have long been a prime cause for concern, foreign governments and firms now face an additional challenge: As Chinese companies ascend critical technology value chains, Beijing appears intent on monitoring and limiting foreign access to those. 

The end goal is to manage technology-related outflows to keep supply and value chains in China. Xi Jinping has been adamant about the need for China to become indispensable in global technology production. 3 The official concept of “self-reliance and self-empowerment” (自立自强) is often associated with policymakers’ push to make China more self-sufficient in science and technology (S&T). But the second part of the phrase masks a more offensive intent. 4 According to Xi, “trump card” (杀手锏, literally “assassin’s mace”) technologies should not only deter foreign governments from denying China the inputs it needs, but also be leveraged asymmetrically to attain technological superiority and hence geopolitical power. 5

This trend is only poised to accelerate as the efforts by G7 members countries at establishing China-free supply chains (part of the so-called ‘de-risking’ strategy) threaten to erode China’s indispensability and techno-industrial upgrading. 6 This complex external environment provided the context for the recent Third Plenum of the Chinese Communist Party (CCP)’s Central Committee, which took place in July after an unexplained delay. The plenum pledged to “safeguard S&T security” and “build autonomous and controllable industrial and supply chains.” The latter shall be accomplished, inter alia, by reshoring key industries and improving the system of strategic national reserves. 7

To anticipate potential risks and disruptions, it is crucial to understand how Chinese export controls sit within a wider drive to develop and retain critical innovation capacity within China. The government has a wide range of instruments not only to shore up China’s value chain dominance but also to control and potentially leverage foreign access to technology inputs and outputs. 8 Although many of these predate Western de-risking, how they may get mobilized in this new era of global technology competition deserves attention. Beijing’s strategic motives, means and constraints will significantly shape the nexus of geopolitics and technology in the years to come. 

The party state’s toolkit includes: 

• Dual-use export controls (Export Control Law, ECL)
• Civilian technology export controls (Foreign Trade Law and Technology Import/Export Regulations, TIER)
• Other instruments (blacklists, localization of data, technical information and intellectual property (IP), restrictions on talent mobility, managed trade and investment, and party-state control of S&T development)

China is not the only country seeking to manage foreign access to ‘sensitive’ technology and the associated value chains, but it stands out for its comprehensive and opaque approach. Many OECD economies have stepped up measures to protect economic security, on top of traditional national security and non-proliferation goals. What makes China unique is the breadth of the instruments it has and the lack of transparency and predictability surrounding their application. The CCP’s sweeping definition of national security, 9 coupled with its track record of forcefully extracting geopolitical and strategic gains from economic interactions, are causes for concern. 

However, weaponizing one’s advantage risks weakening one’s leverage by encouraging others to speed up diversification. In fact, Beijing appears aware that restricting technology-related outflows is a double-edged sword and entails a careful balancing act. While remaining mindful of these limitations and avoiding overreactions, the PRC’s trading partners should take seriously China’s long game to shore up and leverage its technological dominance. 10

Beijing’s flexible adoption of dual-use export controls: national security meets industrial policy

China’s export control regime 11 serves disparate goals, spanning retaliation and technology dominance as well as more consensual national security interests and international non-proliferation aims. The State Council’s 2021 White Paper on export controls directly reflects this broader focus, referencing Xi’s “comprehensive national security concept” (总体国家安全观) as a core guiding principle. 12 For Xi, national security also encompasses S&T self-reliance and competitiveness.

The notoriously opaque way in which China’s government handles licenses for exporters of controlled items diverges from international standards, particularly as it gives the authorities wide scope for discretion. For instance, from 2020 to 2023, Swedish battery startup Northvolt was suddenly unable to get artificial graphite from China, whereas Chinese battery makers building plants in Hungary had no such problems. 13 China’s unofficial rare earth export embargo against Japan in 2011 was, officially, to address environmental concerns, though the coercive intent was apparent. 14

Although China’s government has sought to make the system more transparent and predictable, the outcome has been a mixed bag. Before the 2020 Export Control Law (ECL) was passed, export controls were spread over multiple lists and bureaucracies. Most have been consolidated into two lists. 15 However, no available list is complete, nor is China’s end-user blacklist public. 

Recent cases offer useful lessons about China’s flexible and untransparent use of export controls.

Export controls for non-proliferation – and to bolster domestic industries

Beijing carefully uses export controls to present itself as a responsible stakeholder that strives to prevent arms proliferation, without hurting its industry’s interests. For instance, it first included drones under export controls in 2002 on the Export Control List for Missiles and Related Items and Technologies. It also included autopilots for unmanned aerial vehicles (UAVs), precise gyroscopes, and UAVs able to carry a payload of more than 500 kilograms for at least 300 kilometers. 16

The narrow parameters (a Mavic-3, a common Chinese drone, only has a flight range of 50 km) meant China could still permit many drone exports. Domestic commenters have argued that these controls served China’s core competitiveness, and their expansion in 2015 was “conducive to the healthy development of China’s drone industry”. 17

Russia’s invasion of Ukraine has put Beijing’s opportunistic stance in the spotlight. In 2023, as Chinese drones popped up among Russian armaments on Ukrainian battlefields, Beijing imposed extra controls to signal its constructive stance. 18 However, these were designed in a way that most Chinese commercial exports were not affected. More recently, Beijing has included certain aerospace and aviation sector equipment, software and technologies, as well as bulletproof vest components in its control list. 19 It remains to be seen whether and how this will be enforced, considering that China remains Russia’s top supplier of dual-use components used in Moscow’s war of aggression against Ukraine. 20

Leveraging critical minerals to rebuff Western export controls and hinder de-risking

Trade data suggests that some worries regarding Beijing’s weaponization of strategic inputs are legitimate, even though fears of a trade blockade were overblown. On the one hand, China’s mineral export controls mostly covered a handful of minerals and their importers. Export volumes for the vast majority of the 22 custom lines for gallium, germanium and graphite products on China’s 2023 control lists were unaffected. On the other hand, regional disparities in trade patterns following the controls fuel legitimate fears among partners of a geopolitical bias to licensing decisions (see details below), with clear retaliatory intent in some cases. 

China announced export controls on gallium and germanium in July 2023, months after the United States, alongside Japan and the Netherlands, barred Chinese firms from buying advanced computing chips and related tools. Both metals are used across important electronics supply chains, including semiconductors. Around 90 percent of global production of both metals is in China. 21 Gallium and germanium are also crucial for US and NATO defense-industrial bases. They fall under the multilateral Wassenaar Arrangement, 22 which allows China to justify the export controls on national security grounds. 

The controls seem to have been used to retaliate against what China views as the abuse of export controls by other partners. Exports of unwrought gallium and germanium as well as phosphide from China to the US, Japan and the Netherlands disappeared completely once the new controls were enforced. The brief uptick before the implementation suggests importers were stockpiling. Exports to OECD countries have since rebounded to slightly below pre-control levels, but not for the United States, Japan and the Netherlands. 

Again, these controls allow China to show its capacity to hurt the United States and partners without affecting domestic industries. Only the exports of unwrought metals, which need extensive processing to make usable materials, and phosphides, vital in LED manufacturing, have been affected among the many customs categories included in the export controls. Exporting final products rather than raw materials is in the interest of China’s industries.

In fact, China selects its targets carefully. Beijing could have chosen silicon carbide (SiC), a semiconductor material showing promise for specific, economically important chips for which China makes 44 percent of the world exports. 23 No other country supplied more than 10 percent of exports, while the United States, Japan and the Netherlands are key importers. China seeks to dominate both the production of SiC-based chips (often called compound semiconductors) and the growth of SiC crystals (also called ingots) which these chips are cut from. 24

However, SiC is not a raw material. Silicon and carbon are both relatively abundant materials with wide applications; this and China’s large imports of both make them poor targets for export controls. China could restrict the export of finished SiC ingots or wafers, but doing so would jeopardize an emerging strategic industry by disincentivizing foreign companies from sourcing there. China does not have a decisive technological lead, and its nascent SiC industry must compete with others. 

China’s controls on graphite seem to follow the logic of industrial and technological competition, even though graphite, too, has military applications and features in Wassenaar. The sudden and unannounced halting of artificial graphite exports to Sweden in early 2020 conveniently coincided with the expansion of Chinese EV battery makers in the EU. Politically motivated economic coercion cannot be ruled out as bilateral relations became fraught in 2019. It is worth noting, however, that exports briefly resumed in January 2023, shortly before Chinese company Putailai announced plans to make battery anodes from synthetic graphite in Sweden. 25 Chinese supplies to Sweden suddenly resumed in 2024, without any public announcement or explanation.

Against this backdrop, it is hardly surprising that the announcement of the new measures in October 2023 led to massive orders by OECD countries, especially those that are striving to shift battery and EV value chains away from China. G7 countries and South Korea saw the biggest frontloading and subsequent drop in Chinese sales of both spherical and natural graphite. The United States and Japan even had an unprecedented month of zero imports in December, possibly indicating that the authorities were delaying licenses for imports to those countries. 

It must be noted that exports of those two graphite products seem to have returned to normal since March 2024, at slightly lower levels than before but rather homogeneously for all trading partners. 

In summary, China uses dual-use export controls flexibly. It seeks to portray itself as a responsible stakeholder yet seems to carefully design controls to develop and support domestic industries in key dual-use areas. Within the global technology rivalry, export controls signal not only China’s ability to hit back at similar measures taken by other countries, but also an intent to keep them dependent on China. 

China’s civilian technology export control regime prioritizes economic security

While China’s dual-use export controls are partially consistent with multilateral regimes and international practices, Beijing’s parallel export control regime for civilian technologies is more unique. It centers on innovation and industrial policy motives and is anchored by the “Catalogue of Technologies Prohibited or Restricted from Export”, last amended by MOFCOM in December 2023. The catalogue sits under the Foreign Trade Law and related regulations, chiefly the Technology Import-Export Regulations (TIER). 26 The regulations explicitly allow China’s government to protect economic security, so they are even more versatile than control lists under the ECL, whose main policy objectives are safeguarding national security and contributing to non-proliferation. 

The economic security logic was underscored by a move to preserve “China’s indigenous development and controllability of key and core technologies.” 27 Since 2018, a security assessment has been needed for transfers to foreign parties of Intellectual Property Rights (IPR) tied to technologies marked as restricted in the catalogue. This includes patents, exclusive rights to integrated circuit layout designs, computer software copyrights or new plant varieties. 

Importantly, the rule applies to any transfer of IP to a foreign entity, including if they are based in China or if the transfer results from the purchase of Chinese firms. 28 For example, China applied export controls on TikTok’s content recommendation algorithm in 2020 after the US government tried to force mother company ByteDance to divest from the live-streaming app. 29

Limiting technology exports to keep industrial chains in China 

One sector Beijing has moved to protect is rare earth manufacturing technology, by banning the export of technology to make rare earth-based magnets. These can be seen to complement the controls on the exports of the minerals themselves. China’s controls do not limit the export of finished magnets: the goal is to retain China’s dominance of rare earth processing and to prevent production capacity being built outside of China with Chinese technology. 30 A ban on the export of rare earth extraction and separation technology was already in place. 

Rare earths are key value chains where the PRC has a massive footprint. Despite only producing 60 percent of the world’s rare earths, the country processes nearly 90 percent. 31 Chinese firms have amassed IP and technical expertise so restricting the export of processing technology protects domestic industry. 32 Permanent magnets (especially neodymium-iron-boron NdFeB magnets), for instance, are used in EV engines and wind turbine generators, and are therefore vital for the green transition. At the end of 2021, China controlled 87 percent of the global market for these magnets, which amounts to a strategic sourcing dependency for the EU. 33

However, it appears that China’s restrictions cannot effectively impede the viability of alternative value chains. The Chinese footprint in some areas of the value chain largely stems from massive domestic demand and obscures foreign firms’ advantage in some high-end segments. 34 For example, South Korean group POSCO International claims to have developed a China-free NdFedB magnet supply chain jointly with Star Group. 35 E-Vac Magnetics, a subsidiary of German magnet manufacturer Vacuumschmelze, is building a US plant in South Carolina with Pentagon funds, while Canadian Neo Performance Materials is constructing one in Estonia. 36

The double-edged sword of weaponization

Ultimately, banning technology exports – or tightly restricting licenses – could backfire for China. Where foreign firms hold relevant technical expertise and IP, imposing export controls can erode rather than protect a country’s advantage by further incentivizing de-risking efforts elsewhere. China’s policymakers seem aware of the pitfalls of weaponizing ‘choke points’ 37 along highly complex and global value chains. They are testing different ideas, likely to see where China can exploit dependencies without scoring an own goal. 38

Domestic technologists and industry insiders are debating such tradeoffs. For example, MOFCOM imposed export restrictions on 3D laser scanning technology (also called LiDAR), which has applications ranging from drones to self-driving cars. Chinese companies like Hesai mainly compete on price, so there is uncertainty whether controls would strengthen their competitive position or rather hamper overseas expansion and cooperation. 39 Going forward, the TIER-based controls could make it harder for Chinese firms to license their technology to European partners.

These kinds of discussions have influenced export control decisions in some cases, leading to more restraint on the part of the authorities. In an earlier draft of the catalogue, MOFCOM proposed banning exports of certain core technologies for making solar panels but dropped the idea from the final version. Chinese companies and experts had raised concerns, pointing out some European and US competitors had already responded by restarting their own production. 40

Nevertheless, the advantages Chinese authorities can gain from improving their ability to monitor technology-related outflows should not be discounted. This benefit is strong when the catalogue introduces a licensing requirement rather than a blanket ban. Through processing the license applications of Chinese and foreign companies the government could be gathering useful supply chain data for industrial policy purposes. 41

Beijing’s toolkit for controlling tech-related outflows goes beyond export controls

China’s capacities and tools to preserve national technological leadership go much farther than export controls and are unmatched by any OECD economy. Some of these are not specific to China, and indeed the Unites States also considers long-term competitiveness a national security objective. 42 What sets China apart are the number of instruments it has and its tendency to use them beyond their designated purpose, based on a broad definition of “national security and interests”. 

Xi’s national security push has created multiple new legal and regulatory tools. His emphasis on the geostrategic importance of S&T, coupled with China’s track record of economic coercion and absence of rule of law, sparks legitimate worry of discretionary application among its trading partners. Noteworthy clauses even allow retaliatory measures to actions by a foreign government. 43 By tightly managing outflows of technology, raw materials, capital, IP, S&T personnel, as well as data and technical information, Beijing can onshore value chains and control foreign access.

Monitoring and controlling S&T development, talent and IP

For starters, Chinese authorities have an extra lever to control S&T inputs and outputs that OECD countries lack, namely their outsized involvement in technology research, development and commercialization. The party state directly manages a lot of research and development (R&D) activity in strategic sectors. Research centers are undergoing tighter centralized monitoring and guidance. 44 State-owned enterprises, abnormally prevalent in patenting, have been ordered to contribute more to S&T development. Their new tasks include better controlling strategic value chains, especially tech-intensive sectors. 45 There has been an uptick in state involvement even in areas that tend to be privately driven, such as startup funding. 46

China’s government also has unique powers over the outflow of talent. 47 The Ministry of Education (MOE) has required university approval for all academic overseas trips and collaborations since 2016, though it seems enforcement only began more recently, generating complaints from prominent Chinese academics. 48 Top talents even face travel restrictions. 49

Foreign access to Chinese IP, meanwhile, is tightly monitored. As mentioned in the previous section, a review process is required for any foreign transfer of IPR related to technology on the civilian technology export control catalogue. The S&T Progress Law, meanwhile, hinders the overseas transfer of IP generated by government-funded projects, even after its 2021 amendment made some concessions to foreign scientists. 50

The 2020 Patent Law governs a non-public patent registry for applications relevant to “national security or major interests”. Moreover, any preliminary “invention developed in China” must undergo a “confidentiality examination” before any international patent application. 51 Other jurisdictions have roughly equivalent rules around patent classification and (notably the United States) foreign filing licensing

Tightly managing capital, information and trade flows

Beijing’s broad toolbox for managing cross-border capital flows contains an extra layer to keep domestic technology out of foreign hands. Except for a few sectors and small transactions, foreign direct investment (FDI) in and out of China has long been subject to administrative approval. By contrast, most OECD countries screen only inbound investments under narrowly defined conditions. 52 Moreover, since 2023 companies wishing to list on stock markets abroad have needed an administrative approval, with a national security review for strategic sectors. China’s stringent cross-border capital controls allow further monitoring of Chinese companies’ outbound investment.

There is also a comprehensive framework for monitoring outward flows of data and technical information. The Cybersecurity Law, Data Security Law, Personal Information Protection Law and related regulations, as well as specific localization requirements for scientific data and human genetic resources, amount to stringent data export controls. They impact foreign firms’ R&D, for example in the pharmaceutical sector. 53 In another illustration of how data rules allow Beijing to onshore value chains, Tesla recently accepted to train its autonomous driving algorithms in China.

Moreover, China has a longstanding regime that protects S&T secrets which also affects scientists’ foreign collaborations. 54 Fresh amendments to the State Secrets Law, in force since May 1, 2024, expand investigative and enforcement powers – highlighting the scope for mission creep in national security work. 55 Authorities have also cracked down on foreign due diligence and corporate research firms alongside an expansion in counterintelligence legislation. 56 This quest for secrecy is partly to obscure the state of China’s S&T progress to prevent further US government restrictions. 57

Finally, China also manages cross-border exchanges through duties, quotas and reporting requirements, especially for commodities, which it has used to give domestic component makers preferential access to rare earths and other critical raw materials. 58 In November 2023, MOCFOM ordered rare earth exporters to report to how much they ship and to whom. 59

Outlook: Information and cross-cutting coordination are key to dealing with China’s actions

China’s newly proactive adoption of export controls should not merely be seen as tit-for-tat retaliation against US measures. It is part of a wider trend for Beijing to protect industrial and innovation interests more forcefully. After decades of chasing foreign technology, the Chinese government is now intent on managing technology-related outflows and limit foreign access to favor domestic champions while hindering Western de-risking. 

Many of the instruments we have discussed are still being developed and tested. There are not many technologies where China has a sufficiently unassailable lead to give its toolbox similar firepower to US export controls on semiconductor technology. Even in segments where China has a strong leverage, such as strategic minerals, the government has arguably shown restraint in restricting exports. Moreover, China is careful not to hurt domestic industries and strategically picks its targets, which makes it difficult for foreign companies and governments to predict the impact of its measures. This sometimes leads to overreaction by China’s trading partners.

Nevertheless, China’s toolbox plays a valuable role in providing the government with intelligence about industrial and technological developments and progress. It can enable the government to identify frontrunners and their technological lead early, monitor their international partnerships and protect them where necessary.

Intelligence about China’s progress along key technology value chains 

While China’s success is no foregone conclusion, EU governments should invest more in tracking China’s progress in technology value chains, especially in areas where it is already a frontrunner such as the so-called “new three industries” (EVs, solar panels and lithium-ion batteries), third-generation semiconductors and quantum communications. After all, clear-cut dominance in such value chains is a precondition for credibly restricting foreign access. Combined with continued monitoring of European dependencies on China, this could serve as an early warning system against future Chinese attempts at exploiting technological advantages. 

Coordination with the private sector to track Chinese actions 

European governments should improve coordination and communication with industry in a confidential and effective manner. Companies who source from or do business in China could share information about their on-the-ground experiences with governments – for example, regarding China’s licensing practices. It could help countries monitor and respond to instances where Beijing uses discriminatory licensing to orchestrate Chinese supply chains overseas. Governments should first build up the necessary expertise in critical sectors and technologies, so they can understand the insights they receive. Each industry’s specific vulnerabilities that Beijing might, at some point, exploit, need to be considered. 

Information sharing among like-minded partners to bolster resilience 

Like-minded OECD partners should coordinate to counter Chinese export restrictions and other actions that limit technology-related flows, especially those of critical inputs. Beijing has demonstrated its readiness to apply such measures in a discriminatory, opaque and at times overtly coercive way. 60 Countries should share information to counteract China’s habit of trying to drive wedges. Within the EU, information sharing obligations could be made more stringent to make sure member states are not played off against one another.

The EU-US Trade and Technology Council created a first early warning mechanism after China announced controls on gallium and germanium. It could become more structured and extended to manage disruptions beyond the semiconductor supply chain. Whether such coordination would even be possible in the event of a reelection of Donald Trump as US president, though, is a big question mark. 

1 | Ministry of Commerce of the PRC (2023). “商务部 海关总署公告2023年第23号 关于对镓、锗相关物项实施出口管制的公告 (Announcement No. 23 of 2023 of The Ministry of Commerce and The General Administration of Customs on The Implementation of Export Controls on Gallium and Germanium Related Items.” July 3. https://archive.is/bNZpf. Accessed: July 23, 2024; Seaman, John (2023). “China’s Weaponization of Gallium and Germanium: The Pitfalls of Leveraging Chokepoints.” French institute of international relations. July 27. https://www.ifri.org/en/publications/briefings-de-lifri/chinas-weaponization-gallium-and-germanium-pitfalls-leveraging. Accessed: July 23, 2024.

2 | Ministry of Commerce of the PRC (2023). “商务部 海关总署公告2023年第39号 关于优化调整石墨物项临时出口管制措施的公告 (Announcement No. 39 of 2023 of The Ministry of Commerce and The General Administration of Customs on Improving and Adjusting Temporary Export Controls on Graphite Items.” October 20. https://archive.is/GjtCP. Accessed: July 23, 2024; Ministry of Commerce of the PRC (2023). “商务部 科技部公告2023年第57号 关于公布《中国禁止出口限制出口技术目录》的公告 (Announcement no. 57 of 2023 of The Ministry of Commerce and The Ministry of Science and Technology on Publishing the ‘Catalogue of Technologies Prohibited or Restricted from Export’.”  December 21. https://archive.is/irrFc. Accessed: July 23, 2024.

3 | Xi, Jinping 习近平 (2020). “国家中长期经济社会发展战略若干重大问题 (Certain Major Issues for Our National Medium- to Long-Term Economic and Social Development Strategy).” Speech at the seventh meeting of the Central Financial and Economic Affairs Commission on April 10, 2020. Qiushi. Translated by Center for Security and Emerging Technology. https://cset.georgetown.edu/wp-content/uploads/t0235_Qiushi_Xi_economy_EN-1.pdf. Accessed: July 23, 2024.

4 | Naughton, Berry, Xiao, Siwen and Xu, Yaosheng (2023). “The Trajectory of China’s Industrial Policies.” University of California, San Diego and UC Institute on Global Conflict and Cooperation Working Paper. June. https://ucigcc.org/wp-content/uploads/2023/06/Naugton-et-al-working-paper-1-jun-2023.pdf. Accessed: July 23, 2024..

5 | CPC News 中国共产党新闻网 (2016). “习近平论科技赶超战略：应该有非对称性 “杀手锏” (Xi Jinping discusses the catching up strategy in science and technology: we must have asymmetric “assassin’s mace” technologies).” March 22. https://archive.is/5QVW7. Accessed: July 23, 2024.

6 | The White House (2023). “G7 Hiroshima Leaders’ Communiqué.” Briefing Room. Statements and Releases. May 20. https://www.whitehouse.gov/briefing-room/statements-releases/2023/05/20/g7-hiroshima-leaders-communique/. Accessed: July 23, 2024.

7 | CCP Central Committee (2024). “中共中央关于进一步全面深化改革 推进 中国式现代化的决定 (Resolution of the Central Committee of the Chinese Communist Party on Further Deepening Reform Comprehensively to Advance Chinese-style Modernization.” July 18. https://www.gov.cn/zhengce/202407/content_6963770.htm. Accessed: July 24, 2024.

8| In this report we deliberately take a broad definition of technology inputs and outputs, encompassing data, patents, technical information, personnel, hardware, software, equipment and upstream inputs.

9 | Drinhausen, Katja and Legarda, Helena (2022). “Comprehensive National Security" unleashed: How Xi's approach shapes China's policies at home and abroad.” MERICS. September 15. https://www.merics.org/en/report/comprehensive-national-security-unleashed-how-xis-approach-shapes-chinas-policies-home-and. Accessed: July 23, 2024.

10 | Arcesati, Rebecca (2023). “Export Controls: China’s Long Game to Defend Its Tech Chokepoints.” China Observers in Central and Eastern Europe. December 14. https://chinaobservers.eu/export-controls-chinas-long-game-to-defend-its-tech-chokepoints/. Accessed: July 23, 2024.

11 | Export controls are the regulations that govern the export, re-export and transfer of commodities, software, technology and sometimes services (e.g., technical assistance) to specific end uses, end users or destinations, in order to accomplish a country’s national security or foreign policy objectives. The focus of the four multilateral export control regimes that were created after the end of the Cold War is chiefly to prevent the proliferation of items, either military or dual-use items, that may enable the development, production or use of conventional weapons and weapons of mass destruction. Of these four, China is only a member of the Nuclear Suppliers Group. However, it maintains national control lists for military goods, nuclear goods, and dual-use items and technologies.

12 | The State Council of the PRC (2021). “Full Text: China's Export Controls.” December. Official English translation. https://english.www.gov.cn/archive/whitepaper/202112/29/content_WS61cc01b8c6d09c94e48a2df0.html. Accessed: July 23, 2024.

13 | European Commission (2023). Export restrictions for artificial graphite products by China. Trade Barriers. Last update February 28, 2024. https://trade.ec.europa.eu/access-to-markets/en/barriers/details?barrier_id=17542&sps=false. Accessed: July 23, 2024; China introduced temporary controls on the relevant graphite items in 2006, officially due to their possible applications in the development of nuclear weapons. However, there was no official explanation for the sudden change in licensing policy towards Sweden. Ministry of Commerce of the PRC (2006). Ministry of Commerce, Commission for Science, Technology and Industry for National Defense and General Administration of Customs (2006). “关于决定对石墨类相关制品实施临时出口管制措施的公告 (Announcement on The Decision to Implement Temporary Export Control Measures for Graphite-Related Items.” July 27. https://archive.is/arMfj#selection-721.4-721.10. Accessed: July 23, 2024.

14 | Adachi, Aya, Brown, Alexander, Ghiretti, Francesca et al. (2021). “Dealing with China’s economic coercion – The case of Lithuania and insights from East Asia and Australia.” MERICS Executive Memo. December 20. https://merics.org/en/executive-memo/dealing-chinas-economic-coercion-case-lithuania-and-insights-east-asia-and-australia. Accessed: July 23, 2024.

15 | These are: the Catalogue of Goods subject to Export License Administration (for general goods) and the Catalogue of Import and Export Licenses for Dual-Use Items and Technologies (for dual-use goods and technologies). Both are issued by MOFCOM and GAC. China is also known to maintain a non-public list of restricted end-users.

16 | The State Council of the PRC (2002). “中华人民共和国导弹及相关物项和技术出口管制条例 (Regulations of The People’s Republic of China on Export Controls for Missiles and Related Items and Technologies.” https://web.archive.org/web/2/https:/www.gov.cn/gongbao/content/2002/content_61742.htm. Accessed: July 23, 2024.

17 | Economic Daily 经济日报 (2015). “我国为何限制部分无人机出口 (Why our country restricts some drone exports)” August 5. https://archive.is/2MxB3#selection-431.3-435.0. Accessed: July 23, 2024. 

18 | Ministry of Commerce of the PRC (2023). “商务部 海关总署 国家国防科工局 中央军委装备发展部公告2023年第27号 关于对无人机相关物项实施出口管制的公告 (Announcement no. 27 of 2023 of the Ministry of Commerce, the General Administration of Customs, the State Administration of Science, Technology and Industry for National Defense and the Equipment Development Division of the Central Military Commission on Implementing Export Controls on Drone-Related Items.” July 31. https://web.archive.org/web/20240510090803/http:/www.mofcom.gov.cn/article/zwgk/gkzcfb/202307/20230703424598.shtml. Accessed: July 23, 2024.

19 | Ministry of Commerce of the PRC (2024). “商务部 海关总署 中央军委装备发展部公告2024年第21号 关于对有关物项实施出口管制的公告 (Announcement no. 21 of 2024 of the Ministry of Commerce, the National Administration of Customs and the Equipment Development Department of the Central Military Commission on The Implementation of Export Controls on Relevant Items).” May 30. https://archive.is/C9ttg. Accessed: July 23, 2024.

20 | Bilousova, Olena, Hilgenstock, Benjamin, Ribakova, Elina et al. (2024). “Challenges of Export Controls Enforcement: How Russia Continues to Import Components for Its Military Production.” Yermak-McFaul International Working Group on Russian Sanctions and Kyiv School of Economics. January. https://kse.ua/about-the-school/news/challenges-of-export-controls-enforcement-how-russia-continues-to-import-components-for-its-military-production/. Accessed: July 23, 2024; Office of The Director of National Intelligence (2023). “Support Provided by the People’s Republic of China to Russia.” Unclassified report. July. https://democrats-intelligence.house.gov/uploadedfiles/odni_report_on_chinese_support_to_russia.pdf. Accessed: July 23, 2024.

21 | Funayole, Matthew P., Hart, Brian and Riggs-Powers, Aidan (2023). “De-risking Gallium Supply Chains: The National Security Case for Eroding China’s Critical Mineral Dominance.” August 3. De-risking Gallium Supply Chains: The National Security Case for Eroding China’s Critical Mineral Dominance (csis.org). Accessed: July 23, 2024; Carrara, S., Bobba, S., Blagoeva, D. et al. (2023). “Supply chain analysis and material demand forecast in strategic technologies and sectors in the EU – A foresight study.” Publications Office of the European Union. Luxembourg, 2023, JRC132889. doi:10.2760/334074. 

22 | The Wassenaar Arrangement is the multilateral regime that governs transfers of conventional weapons as well as dual-use items and technologies. The Wassenaar Arrangement. About us. https://www.wassenaar.org/about-us/#faq. Accessed: July 23, 2024.

23 | This was confirmed by industry insiders.

24 | The Observatory of Economic Complexity. Silicon Carbide. https://oec.world/en/profile/hs/silicon-carbide. Accessed: July 23, 2024. 

25 | Financial Times (2023). “Chinese group Putailai to build Europe's largest anode factory in Sweden.” May 4. https://www.ft.com/content/80d34254-3e12-4fa7-8f02-fdceb1c2fa2e. Accessed: July 23, 2024.

26 | Ministry of Commerce of the PRC (2021). “中华人民共和国技术进出口管理条例（2020年修订）(Regulations of the People’s Republic of China on The Administration of Import and Export of Technologies (2020 Revision).”  November 29. https://www.pkulaw.cn/fulltext_form.aspx?Db=chl&Gid=348783. Accessed: July 23, 2024.

27 | People’s Daily 人民日报 (2018). “维护国家安全和创新发展能力 建立完善知识产权对外转让审查机制 (Protecting national security and innovative development capacity, building a complete review system for the outbound transfer of intellectual property rights.” April 4. https://archive.is/wGfFv. Accessed: July 23, 2024.

28 | The State Council of the PRC (2018). “国务院办公厅关于印发《知识产权对外转让有关工作办法（试行）》的通知 (Notice of the General Office of the State Council on Printing and Distributing the Working Measures for the Transfer of Intellectual Property Rights to Foreign Countries (for Trial Implementation).” March 18. Accessed: July 23, 2024.

29 | The New York Times (2020). “TikTok Deal Is Complicated by New Rules from China Over Tech Exports.” August 29. https://www.nytimes.com/2020/08/29/technology/china-tiktok-export-controls.html. Accessed: July 22, 2024.

30 | Bloomberg (2023). “China Turns Up Heat on Trade with Rare Earths Tech Curbs.” December 21. https://www.bloomberg.com/news/articles/2023-12-21/china-bans-exports-of-some-rare-earth-processing-technologies-lqf1pzw8. Accessed: July 23, 2024; Yang Men’s Insights杨门灼见 (2023). “中国强化稀土管理，商务部公布目录：出口需要报告 (China strengthens rare earth regulation, MOFCOM releases catalogue: exports must be reported).” November 10. https://archive.is/JL96W; The Paper 澎湃新闻 (2023). “"中国限制出口稀土技术，美西方在供应竞争中受阻” (“China restricts exports of rare earth technology, U.S. and West hindered in supply chain competition”).” December 22. https://archive.is/3KC2Z.  

31 | Baskaran, Gracelin (2024). „What China’s Ban on Rare Earths Processing Technology Exports Means.” Center for Strategic and International Studies. January 8. https://www.csis.org/analysis/what-chinas-ban-rare-earths-processing-technology-exports-means. Accessed: July 23, 2024.

32 | China has been trying to climb up the value chain by moving away from less value-add steps like mining, where the highest environmental and social costs lie, towards more advanced steps. Che, Chang (2021). “The Rare Earth Myth.” The China Project. September 2. https://thechinaproject.com/2021/09/02/the-rare-earth-myth/. Accessed: July 23, 2024.

33 | Ma, Damien and Anderson, Joshua (2021). “The Impermanence of Permanent Magnets: A Case Study on Industry, Chinese Production, and Supply Constraints.” Macro Polo. November 16. https://macropolo.org/analysis/permanent-magnets-case-study-industry-chinese-production-supply/. Accessed: July 23, 2022. European Commission (2022). “EU strategic dependencies and capacities: second stage of in-depth reviews.” February 21. https://ec.europa.eu/docsroom/documents/48878. Accessed: July 23, 2024.  

34 | Ma, Damien and Anderson, Joshua (2021). “The Impermanence of Permanent Magnets: A Case Study on Industry, Chinese Production, and Supply Constraints.” Macro Polo. November 16. https://macropolo.org/analysis/permanent-magnets-case-study-industry-chinese-production-supply/. Accessed: July 23, 2024; Hmaidi, Antonia and Gunter, Jacob (2023). “China faces an uphill climb while the West needs to make unpopular choices.” MERICS. August 15. China faces an uphill climb while the West needs to make unpopular choices | Merics. Accessed: July 23, 2024.

35 | POSCO (2024). “POSCO INTERNATIONAL Establishes ‘China Excluded’ Supply Chain for Rare Earth Magnets.” March 18. https://newsroom.posco.com/en/posco-international-establishes-china-excluded-supply-chain-for-rare-earth-magnets/. Accessed: July 23, 2024; Global Times 环球时报 (2024). “韩国永磁体大单“试图摆脱中国”，专家：背后离不开美西方支持 (Korea’s large order of permanent magnets “attempting to get rid of China”, expert: background is US and Western support).” March 13. https://archive.is/kbrod. Accessed: July 23, 2024.

36 | U.S. Department of Defense (2024). “DOD Looks to Establish 'Mine-to-Magnet' Supply Chain for Rare Earth Materials.” March 11. https://www.defense.gov/News/News-Stories/Article/Article/3700059/dod-looks-to-establish-mine-to-magnet-supply-chain-for-rare-earth-materials/. Accessed: July 23, 2024; NEO’s former CEO downplayed the controls, stating that China already restricted the technology from being exported. Reuters (2023). “China bans export of rare earths processing tech over national security.” December 22. https://www.reuters.com/markets/commodities/china-bans-export-rare-earths-processing-technologies-2023-12-21/. Accessed July 23, 2024. Vacuumschmelze has a plant in Shenyang which makes magnetic cores, among other products, but we could not verify whether this has any implications for the company’s ability to undertake the US project without needing to obtain a Chinese government license.

37 | Choke points are points of failure along global supply chains and within economic networks. In recent years, scholars have demonstrated how governments can leverage such choke points to achieve geopolitical and strategic gains, for example by denying access to adversaries. This was recommended as a strategy the US government should adopt to cut China off certain technology value chains through leveraging the dominance of US and allied countries’ firms over key production steps. Washington effectively tested this in October 2022 when it restricted semiconductor technology exports to China. 

38 | The US government is facing a similar tradeoff. Crosignani, Matteo, Han, Lina, Macchiavelli, Marco and Silva, André F. (2024). “Geopolitical Risk and Decoupling: Evidence from U.S. Export Controls.” Federal Reserve Bank of New York Staff Reports, no. 1096, April. https://doi.org/10.59576/sr.1096https://www.newyorkfed.org/research/staff_reports/sr1096. Accessed: July 23, 2024; Baums, Ansgar (2024). “The “Chokepoint” Fallacy of Tech Export Controls.” Policy Memo. The Stimson Center. February 6. https://www.stimson.org/2024/the-chokepoint-fallacy-of-tech-export-controls/. Accessed: July 23, 2024; Hmaidi, Antonia and Chang, Wendy (2024). “Tech “choke-points” – the long-term side-effects for China and the US.” MERICS. February 1. https://merics.org/en/comment/tech-choke-points-long-term-side-effects-china-and-us. Accessed: July 23, 2024.

39  | 21st Century Economic Herald 21 世纪经济报道 (2023). “激光雷达技术限制出口影响有限，真正壁垒是成本与量产 (The impact of export controls on LiDAR technology is limited; real barriers are cost and mass production).” January 31. https://archive.is/7gY6z. Accessed: July 22, 2024; National Business Daily 每日经济新闻 (2023). “商务部拟禁止激光雷达技术出口 为摊平成本各方加速“上车” (The Ministry of Commerce plans to ban the export of LiDAR technology,  everyone is speeding up the autonomous driving game to spread costs).” February 8.  https://archive.is/KdIwM. Accessed: July 22, 2024; AlixPartners (2023). “China’s Proposed Export Ban on LiDAR Technology: What Impact Will It Have on the Automotive Industry?” April 5. https://www.alixpartners.com/insights/102ic0t/chinas-proposed-export-ban-on-lidar-technology-what-impact-will-it-have-on-the/. Accessed: July 22, 2024.

40 | China Economic Net 中国经济网 (2023). “白重恩委员：建议不限制光伏硅片制备技术出口 (Delegate Bai Chongen: It is proposed not to restrict the export of photovoltaic silicon wafer preparation technology).” March 10. https://archive.is/CXzKy. Accessed: July 23, 2024.

41 | This was confirmed in conversations with multiple foreign government officials.

42 | US House of Representatives. “United States Code – Title 50 – Chapter 58 – Export control reform.” https://uscode.house.gov/view.xhtml?path=/prelim%40title50/chapter58&edition=prelim. Accessed: July 17, 2024; Sullivan, James (2022). “Remarks by National Security Advisor Jake Sullivan at the Special Competitive Studies Project Global Emerging Technologies Summit.” The White House. September 16. https://www.whitehouse.gov/briefing-room/speeches-remarks/2022/09/16/remarks-by-national-security-advisor-jake-sullivan-at-the-special-competitive-studies-project-global-emerging-technologies-summit/. Accessed: July 17, 2024.

43 | Drinhausen, Katja and Legarda, Helena (2021). “China’s Anti-Foreign Sanctions Law: A warning to the world.” June 24. https://www.merics.org/en/comment/chinas-anti-foreign-sanctions-law-warning-world. MERICS. Accessed: July 22, 2024.

44 | Groenewegen-Lau, Jeroen and Laha, Michael (2023). “Controlling the innovation chain: China’s strategy to become a science & technology superpower.” February 2. https://merics.org/en/report/controlling-innovation-chain. Accessed: July 22, 2024; Laha, Michael (2022). “How China plans to engineer its way out of technology ‘strangleholds’.” September 16. https://www.aspistrategist.org.au/how-china-plans-to-engineer-its-way-out-of-technology-strangleholds/. Accessed: July 22, 2024.

45 | SASAC announced in May 2023 the formation of the Leading Small Group for the Accelerated Development of Strategic Emerging Industries in Central Enterprises. Party Committee of the State-owned Assets Supervision and Administration Commission 国务院国资委党委 (2023). “深学细悟笃行 为强国建设贡献国资央企力量 (Deeply study and practice the power of state-owned central enterprises in contributing to the construction of a strong nation).” Qiushi. May 1. https://archive.is/FJ2hB. Accessed: July 22, 2024; People’s Daily 人民日报 (2023). “全面推进美丽中国建设 健全自然垄断环节监管体制机制 (Comprehensively promote the construction of a beautiful China and improve supervision systems and mechanisms in natural monopoly sectors).” November 2023. https://archive.is/GRD9J. Accessed: July 22, 2024.

46 | Brown, Alexander, Chimits, Francois and Sebastian, Gregor (2023). “Accelerator State: How China fosters “Little Giant” companies.” MERICS. August 3. https://www.merics.org/sites/default/files/2023-07/MERICS%20Report%20Accelerator%20State_final.pdf. Accessed: July 22, 2024; Li, Jinlin (2022). “Government as an Equity Investor: Evidence from Chinese Government Venture Capital through Cycles”. Available at SSRN: https://ssrn.com/abstract=4221937 or http://dx.doi.org/10.2139/ssrn.4221937. Colonnelli, Emanuele, Li, Bo and Liu, Ernest (2024). “Investing with the government: A field experiment in China”. Journal of Political Economy 132(1): 248-294; Xinhua 新华 (2024). “国务院国资委确定首批启航企业 加快发展新质生产力 (State-owned Assets Supervision and Administration Commission of the State Council identified the first batch of Set Sail Enterprises to accelerate the development of new quality productive forces).” March 29. https://archive.is/OffPQ. Accessed: July 22, 2024. 

47 | Largely in response to the PRC’s talent poaching and S&T espionage, Taiwan and South Korea have moved to monitor the activities of certain scientific and engineering personnel to protect IP and trade secrets related to critical technologies. Executive Yuan (2022). “Executive Yuan guards core technologies with draft amendments to national security and mainland relations laws.” Department of Information Services, Executive Yuan. February 17. Accessed: July 17, 2024. https://english.ey.gov.tw/Page/61BF20C3E89B856/7e320e20-2216-4142-91de-7e8ab921f6d3; Nikkei Asia (2022). “South Korea to track travel by chip engineers as tech leaks grow.” February 5. South Korea to track travel by chip engineers as tech leaks grow - Nikkei Asia. Accessed: July 22, 2024. 

48 | CCP Central Committee and State Council (2016). “关于加强和改进教学科研人员因公临时出国管理工作的指导意见 (Guiding Opinions on Strengthening and Improving the Management of Teaching and Scientific Research Personnel Temporarily Going Abroad for Official Purposes).” Available at: https://archive.is/ygLYm. Accessed: July 24, 2024; South China Morning Post. “‘Two sessions’ 2024: China urged to ease overseas travel and media rules for academics.” March 8. https://www.scmp.com/news/china/diplomacy/article/3254641/two-sessions-2024-china-urged-ease-overseas-travel-and-media-rules-academics. Accessed: July 22, 2024. One legal expert told us that in the context of a patent litigation case they were involved in, it was found that a Chinese university professor needed around a dozen different permits to file a patent abroad, involving the university and at least five government agencies.  

49 | “Strategic scientists” (战略科学家), a category in China’s talent program for top talents, are included in the restrictions for overseas travel that we know exist for Chinese officials and employees of SOEs. South China Morning Post (2024). “China’s expanding travel curbs are cutting off more state workers from the rest of the world.” June 6. https://www.scmp.com/news/article/3265503/chinas-expanding-travel-curbs-are-cutting-more-state-workers-rest-world. Accessed: July 22, 2024. 

50 | Ministry of Science and Technology of the PRC (2021). “中华人民共和国科学技术进步法(2021年修订) (People’s Republic of China Science and Technology Progress Act (Revised in 2021).” December 2024; European Chamber of Commerce in China (2021). “European Business in China Position Paper 2021/2022”. October. https://sgc.frankfurt-school.de/wp-content/uploads/2021/10/European_Business_in_China_Position_Paper_2021_2022964.pdf. Accessed: July 17, 2024.

51 | National People’s Congress of the PRC (2020). “中华人民共和国专利法(2020年修正) (National Patent Law of the People’s Republic of China (Revised in 2020).” November 23.

52 | Taiwan and South Korea stand out for having limited outbound investment screening legislation, while the United States is on course to introducing one specific to transactions involving Chinese companies in designated technology sectors. Ghiretti, Francesca (2023). “From opportunity to risk: The changing economic security policies vis-à-vis China”. MERICS. February 22. https://merics.org/de/studie/opportunity-risk-changing-economic-security-policies-vis-vis-china. Accessed: July 17, 2024; US Department of the Treasury. Outbound Investment Security Program. https://home.treasury.gov/policy-issues/international/outbound-investment-program. Accessed: July 17, 2024.

53 | Huotari, Mikko, Gunter, Jacob, Hayward, Carl et al. (2021). “Decoupling - Severed Ties and Patchwork Globalisation.” European Chamber of Commerce in China in partnership with MERICS. January 14. https://merics.org/en/report/decoupling-severed-ties-and-patchwork-globalisation. Accessed: July 17, 2024.

54 | Ministry of Science and Technology of the PRC and National Bureau for the Protection of State Secrets (2015). “Regulations on the Protection of Science and Technology Secrets.” Translated by China Law Translate. December 1. https://www.chinalawtranslate.com/en/Regulations-on-the-Protection-of-Science-and-Technology-Secrets/. Accessed: July 22, 2024; Chinese Communist Party Members Network 共产党员网 (2024). “请对照自查！科技保密管理一定要了解的知识 (Please check yourselves! The knowledge that must be understood in the management of scientific and technological confidentiality).” January 4. https://archive.is/sYXuL. Accessed: July 22, 2024.

55 | National People’s Congress (2024). “中华人民共和国保守国家秘密法 (Law of the People's Republic of China on Guarding State Secrets.” Revised on February 27, 2024. 

56 | Von Carnap, Kai (2023). “Amended anti-espionage law aims to curate China’s own narrative.” MERICS. May 25. https://merics.org/en/comment/amended-anti-espionage-law-aims-curate-chinas-own-narrative. Accessed: July 22, 2024; Reuters (2023). “China detains staff, raids office of US due diligence firm Mintz Group.” March 24. https://www.reuters.com/world/us-due-diligence-firm-mintz-groups-beijing-office-raided-five-staff-detained-2023-03-24/. Accessed: July 22, 2024; The Guardian (2023). “China targets foreign consulting companies in anti-spying raids.” May 9. https://www.theguardian.com/world/2023/may/09/china-targets-foreign-consulting-companies-in-anti-spying-raids. Accessed: July 22, 2024.

57 | Von Carnap, Kai (2023). “The increasing challenge of obtaining information from Xi’s China.” MERICS. February 15. https://merics.org/de/report/increasing-challenge-obtaining-information-xis-china. Accessed: July 22, 2024; The Wall Street Journal (2023). “U.S. Think Tank Reports Prompted Beijing to Put a Lid on Chinese Data.” May 7. https://www.wsj.com/articles/u-s-think-tank-reports-prompted-beijing-to-put-a-lid-on-chinese-data-5f249d5e. Accessed: July 22, 2024.

58 | Garred, Jason (2019). “The persistence of trade policy beyond import tariffs.” Center for Economic Policy Research. July 9. https://cepr.org/voxeu/columns/persistence-trade-policy-beyond-import-tariffs. Accessed: July 22, 2024; European Commission (2009). WT/DS395 - China - Measures Related to the Exportation of Various Raw Materials. https://policy.trade.ec.europa.eu/enforcement-and-protection/dispute-settlement/wto-dispute-settlement/wto-disputes-cases-involving-eu/wtds395-china-measures-related-exportation-various-raw-materials_en. Accessed: July 23, 2024; Bown, Chad P. Wang Yilin (2022). “China's recent trade moves create outsize problems for everyone else”. Peterson Institute for International Economics. https://www.piie.com/blogs/realtime-economic-issues-watch/chinas-recent-trade-moves-create-outsize-problems-everyone April 25. Accessed: July 22, 2024. 

59 | Global Times (2023). “China to strengthen regulations governing rare-earth exports: MOFCOM.” November 7. https://www.globaltimes.cn/page/202311/1301346.shtml. Accessed: July 22, 2024.

60 | The New York Times (2021). “Lithuania vs. China: A Baltic Minnow Defies a Rising Superpower.” September 30. https://www.nytimes.com/2021/09/30/world/europe/lithuania-china-disputes.html. Accessed: July 22, 2024.

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Case Study: When Tragedy Strikes Your Supply Chain

• Ram Subramanian

In the wake of a factory collapse, a clothing retailer must decide whether to relocate production.

Laura Cronenberg, the CEO of Tots & Teens, sipped her black tea in the lounge of Shahjalal International Airport and took some time to collect herself before her flight departed. The past few days had been a whirlwind, and she was still trying to make sense of how her work life had transitioned so abruptly from celebration to crisis.

• Ram Subramanian is a professor of leadership at Stetson University.

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