As the supply chain landscape continues to face geopolitical disruptions, 2023 showcased challenges that are likely to persist into 2024. The escalating series of attacks by Houthi rebels in the Red Sea and ongoing conflicts in Ukraine and Gaza have created a recurring migraine for supply chain professionals. Acknowledging the inevitability of such disruptions, executives are turning to strategic mergers and acquisitions (M&A) with tech firms as a key tool to prepare for and mitigate risks.
While traditional methods such as diversifying suppliers, supply chain audits, and insurance valuations remain crucial, emerging technologies offer innovative solutions. Technologies like artificial intelligence (AI) and augmented reality (AR) enhance supply chain visibility and provide real-time information on goods. Predictive data analytics offer pre-emptive insights, allowing executives to proactively address potential crises with a crucial head start.
AI and AR systems can be surgically deployed to mitigate disruptions, offering possibilities like dynamic route optimization to navigate areas of instability and enhanced supply chain visibility using AR overlays. AI-powered simulations can model geopolitical scenarios, aiding in the development of contingency plans and staff training.
However, the cost and expertise required for developing AI and AR systems in-house pose challenges for many retailers and logistics companies with tight margins. The solution lies in strategic M&A with specialized tech startups, allowing companies to instantly access these technologies, benefit from market-tested solutions, and avoid the lengthy recruitment process for sought-after talent.
Notable examples of this strategy include UPS’s acquisition of Coyote Logistics in 2015 and Walmart’s acquisition of Parcel in 2017. The operational impact of effectively deployed AI and AR is significant, offering exponential improvements in supply chain resilience. The ongoing tech arms race in logistics highlights the stakes, where winners can significantly mitigate future disruptions, while losers bear the brunt of crises.
As 2024 shapes up to be a challenging year for logistics professionals, the imperative is to plan for the future. Strategic M&A with tech firms emerges as a top priority, providing a competitive edge in the arms race and technological capabilities to fortify both supply chains and bottom lines.