Future Scenario Settings for Supply Chains

A stable political and economic environment within the EU and its neighbouring countries characterises this scenario. Common agreements allow for coordinated rules and regulations that are valuable in economic and trading risk situations such as pandemics and natural disasters. Free trade agreements involving the EU and other economic unions support and facilitate the exchange of goods. The EU remains strong in exports and intensifies the role as a net investor in the world. As the political setting allows quick adaptations to regulations, there are clear regulations for handling data, thus creating transparency and IP-security. In addition, the fast and widespread progress of digitalisation supports the digital economy. The advancements of collaborative platforms make it easy to share and utilize resources. New digital business models are emerging in many different sectors. Big companies are the first movers as they have the resources to invest in developing technologies, followed by the tech start-ups that complement the industrial sectors with new services such as Fintech Services, and upcoming platform strategies. These new services innovate complete industrial sectors.

The political and economic setting supports technological developments. Emerging technologies such as advancements in artificial intelligence (AI) assist humans by undertaking autonomous planning and handling tasks. White-collar tasks change from actual decision-making to the supervision of AI-based decision-making systems. Increased exploitation of these technologies leads to a highly automated and autonomous environment. Suppliers of disruptive technologies experience exponential growth rates and existing technologies improve quickly and continuously.

Social networks strongly influence consumer behaviour, thus, companies have to adapt quickly on a large scale. Residents of the EU are more ecologically aware and pay attention to the origin of products as well as their recycling potential. This mindset leads inter alia to a preference for living in the suburbs. Fast transportation and innovation in the mobility sector support this lifestyle development, and hence, those developments strongly influence the economy. Since fossil fuels are depleting as time goes by, renewable electricity generation, transmission and distributed energy resource systems become even more relevant. At the same time, new power grid solutions and grid transformations overcome technological limitations and create a smart grid environment with distributed energy generation and powerful storage systems. Table 1 comprises the individual future projections for the aSPIRANT scenario.

In terms of processes, the political harmony combined with contented unions result in smooth and fast cross-border supply chains. With regard to digitalisation and the use of platform strategies, new digital processes are required to respond to the technology enabling faster and secured information flows. New services and financial payment options enable the implementation of supply chain finance (SCF) methods. Digitalisation provides algorithms that plan supply chains holistically and embrace SCF concepts. Along with the fast legal changes within this scenario, a revision of the supply chain processes is frequently required to fulfil the new and rapidly advancing laws. The common agreements and cooperative approach within the European Union enable fast recovery from natural disasters and pandemic events by supporting the fast ramp up of supply chain capacities and structures. In terms of resources, the advancements in digitalisation and new process technologies necessitate a significant effort by research and development (R&D). In addition, new employment or technological settings are required to deal with recycling and reusing processes across the globe to support the envisaged innovations successfully.

Overall, PrOCEEDIng describes a very harmonious picture of the future with a stable political and economic environment. As political and economic settings allow for quick adaptations to legal regulations, new technological developments rise significantly. Start-ups and SMEs take advantage of this ideal setting by focusing on niche markets and lean organisational structures. In addition, digitalisation is evenly integrated into the business environment and permeates all aspects of society. This empowers advancements in autonomous planning and new emerging technologies assist humans in handling tasks at work.

The technological developments enable platform economies to rise and there is a major trend towards a sharing economy. People take advantage of the numerous offers of a sharing economy both in business to consumer (B2C) and consumer to consumer (C2C) approaches. Further collaborative platforms enable resources to be shared and utilised easily within the work environment as well as in private life. These digital platforms further support the DIY (do-it-yourself) society whereby self-production of fashion, technological equipment and food become the standard as consumers request tailor-made solutions. A DIY society with strong customer awareness obliges multinationals to use a “glocal” approach. Global companies hence compete with local players by recognizing differences in local taste and customs. Accordingly, companies have the flexibility to respond to local customer needs in order to remain on regional and local markets. At the same time, those global companies adapt their product and service offerings to a growing number of markets.

Disruptive technologies develop within this stable political and economic environment and additional solutions spread rapidly. These technologies not only increase the degree of freedom in manufacturing processes but also allow more efficient and effective work processes. Coupled with the ability to share and act upon the associated data and derived insights, new service- and production related business opportunities arise, especially for start-ups. While focusing on niche markets and lean organisational structures, they handle high volumes of data flow efficiently. Emerging technologies such as advancements in AI assist humans by undertaking planning and handling tasks autonomously. Since many physical and intellectual tasks are increasingly taken over by technical developments in automation and economic empowerment, this has the knock-on effect of a decrease in demand for manual labour. With the increasing exploitation of these technologies, the environment becomes highly automated and autonomous. The resulting knowledge-based economy’s labour market is characterised by cross-disciplinary, creative profiles and lifelong learning. Employers cope with the demand for flexibility and will adopt an intercultural model partly equalising the resulting labour overflow.

These newly efficient work processes contribute to reducing the overall energy required within the industrial sector. In addition, technological developments allow for renewable energy generation as well as transmission and distributed energy resource systems to become more prevalent. Most importantly, politics actively enforces ecological development and ensures environmental regulations are updated rapidly and early on. The PrOCEEDIng scenario contains the future projections mentioned in Table 2.

In this scenario, the world has to deal with severe environmental problems. CO₂ emissions are increasing around the world and there are major sources of greenhouse gas emissions. The most visible consequences include the continuous escalation of climate disasters and the increase in air, water and soil pollution. Climate change is combined with a severely ongoing depletion of resources for civil as well as industrial use; the ever-increasing global population and economic growth contribute detrimentally to the natural resources of our planet. Highly populated countries face severe issues related to water scarcity or complete lack of access to water. Climate change induces natural disasters and raises the frequency of pandemics, which in turn has a negative effect on the economy and reinforces social disparities. These environmental issues are reinforced by different factors from other future projections. A ‘much and cheap’ consumption attitude is adopted by consumers. Add to this the fact that the world is increasing the production of solid, hazardous and electronic waste. The recycling rate remains low and countermeasures to avoid high waste are implemented poorly, or, strong laws and policies for waste and recycling management are missing. The developments restrict any focus on environmental actions that support climate protection. Nevertheless, there are some ongoing countermeasures. They include, inter alia, the use of renewable energy resources and smart grid solutions that are promoted by better connectivity and efficiency in smart cities. At the same time, in the industrial sector, green systems are progressively applied for power generation, energy storage and transportation, such as hydrogen power cells and biomass. Standard mutual roadmaps and common policies are missing; for this reason, solutions for smart power grids develop more slowly than expected.

Political and economic uncertainties arise, which, inter alia, lead to ambiguous legislation, thus impeding the adoption of new services and important technological developments. It hinders the digital transformation of industries as the high cost of implementation, and reluctance towards new digital processes, slows down the redesign of processes. Only a few companies, mostly multinationals, overcome the legislative and regulatory constraints and implement the digital technologies that are available thus resulting in a coexistence of conventional and disruptive production technologies. Global players dominate while the big five IT companies (Google, Apple, Facebook, Amazon, Microsoft) offer their own financing system to facilitate seamless payments. Table 3 outlines the integrated future projections of this scenario.

From a process perspective, a few new technological advancements allow some processes to be simplified so supply chains can work smoothly with reduced costs, thus serving the ‘much-and-cheap’ society. In addition, the ‘much-and-cheap’ consumption pattern requires lean and efficient process settings to reduce the overall logistics costs.

In this scenario, the economic development in the EU benefits from the advances in technology, such as additive manufacturing, automation and the dynamic development of autonomous technology. These innovations make the production of individualised products with specific adjustments cost-effective, both for global players and SMEs. Companies try to postpone their production until the latest point possible to allow individual customisation, while the exploitation of disruptive production technologies promotes design-driven manufacturing processes and precise control in industry. These conditions promote the continuous exploitation of technologies and the fast development of autonomous technologies. Even though technology advances create new jobs, emerging skills are required and the re-employment of workers becomes difficult. In particular, robots and autonomisation take over manual and white-collar tasks: the unemployment rate increases and this contributes to social and political unrest. Pandemic outbreaks further enhance these developments and simultaneously trigger technological developments as well as business disruptions and social disparities.

Despite constant political development in the EU, across the globe, enclosed political environments lead to policies to protect domestic industries against foreign competition, entailing trade policies such as geographic barriers, tariffs, import quotas or other restrictions on imports from foreign competitors. These lead to complications in logistic structures, and some companies withdraw from the market. The EU is going into crisis and several countries are putting their own needs first and choosing to leave the union. This, though, in combination with the technology innovations, supports the establishment of DIY production. It particularly enables start-up companies to enter local market segments and introduce technological advancements. Such companies use new relations towards emerging economies, e.g. MINT countries (Mexico, Indonesia, Nigeria and Turkey). At the same time, stringent legal regulations, data management and privacy issues impede digital transformation. Digital transformation is advocated principally by multinationals who have the required financial resources to adopt the latest technological applications. Overall, the scenario states mixed developments with strong support from technological advancements. This also enables sustainable and ecological production technologies that support development and climate protection.

Table 4 describes the future projections within the scenario DiThEr.

The ‘UNEasE’ scenario comprises growing political and economic instability in the EU. The lack of stability helps BRICS and MINT countries to develop and become significant economic players with China playing a significant leading role. Besides, Chinese investments on economy and export markets further help China to overtake Europe as the world’s net investor. Relations between countries become increasingly tough. Several trade relations suffer due to the political developments and lead to trade issues, which could potentially lead to trade wars. At the same time, increased protectionism as well as local and individualistic consumption patterns incentivise start-ups and SMEs. This, combined with the fact that society strives to promote DIY characteristics, enables small businesses to flourish. However, the rise of SMEs and start-ups leads to legal and political concerns due to the innate characteristic of dynamic markets created by the introduction of new business models. The political instability within the EU hinders legislative developments, however, and increases the development of heterogeneous regulations.

The focus on emerging countries leads to concern about legislation within increasingly dynamic markets, including a lack of heterogeneous environmental regulations, and low confidentiality of data and market participants. Lagging legislation also affects regulations and consumer protection laws in the EU. The lack of liability regulations in case of infringements mean core data and business secrets can be exposed. Challenges of data ownership and data management must be addressed in order to make use of the business potential inherent in digital transformation endeavours, which are often faced with lack of acceptance on the part of consumers, due to privacy or data security concerns. Only a few multinational companies are able to improve their performance through digital transformation, since only they can cope with the high costs and risks it involves.

The shift of economic dominance to emerging markets, combined with such heterogeneous regulations, sees economic priorities being placed before ecological ones, which in turn supports a steady increase in natural resources depletion. Highly populated countries face severe issues related to water and resource scarcity. A constant development towards megacities and the focus on emerging countries contribute to negative environmental impacts such as depletion of natural resources and atmospheric pollution. These environmental developments support pandemic outbreaks and lead to political denunciations. This further promotes the trade issues mentioned above and increases the probability of trade wars. Table 5 describes the future projections inherent in the UNEaSE scenario.

The slow adoption of new technologies impedes digital transformation. Thus, the traditional exchange of data dominates supply chain processes that restrain further network developments. For supply chains, SMEs and start-ups such as Fintech act as intermediaries in facilitating transactions and facilitate both the supplier and the contracting company to improve their working capital, which means greater liquidity in scheduling and disbursing payments.

ENDANGEr describes an unstable political environment that causes social and economic issues. This incorporates a change in trade and hence a shift of gross domestic product from advanced economies towards emerging market economies. Political instability leads to stagnating and non-homogeneous legislation limiting the development of emerging technologies. Moreover, only a few big companies can take a leading role in managing and processing high volumes of data; thus, there are obstacles to achieving smooth digital transformation. In the financial sector, however, smart contracting with distributed ledgers enables customers’ transactions to be carried out without any intermediary; hence, classic banking services are becoming obsolete. Instead, cryptocurrencies support the traditional exchange of goods.

Companies adapt their business structures with autonomous technologies and processes. In the EU, manual tasks are taken over by technical developments such as automatisation, which makes reemployment more difficult as it demands skilled workers. Since whole industries are affected by autonomisation, the overall rate of unemployment rises. Automated and partly autonomous factories are progressively becoming the standard in EU. This contributes to employees fearing for their jobs, eventually adopting a negative attitude towards emerging advanced technologies. Since complete industrial sectors are affected by automatisation, there is an increase in income disparities. Despite all efforts, high associated costs and unclear regulations hinder the proliferation of e-mobility, particularly in rural areas. Ambiguous regulations hinder common ecological agreements and as policy neglects environmental issues, pollution and the scarcity of resources increases. Table 6 states the different future projections, most of them regressive, for the scenario of ENDANGEr.

The changes to supply chain processes lead to a rise in the complexity of managing processes and resources. The scenario settings here induce more bureaucracy and movements of goods become slower as handling steps are duplicated. Future economic developments require re-organisation as international supply chains face difficulties in maintaining relationships with suppliers. Accordingly, access to resources and commodities are affected and resource scarcity remains an issue. A fast development of autonomous systems provides a solution to efficient process design in distribution. As customers focus on cheap products, lean processes dominate as they can achieve corresponding cost reductions. New business models are required to handle the steering of autonomous systems and the increasing complexity within local markets. The setup of fragmented, local markets reduces possibilities for economies of scale and thus decreases efficiency. This is partly balanced out as economic and political developments create additional market barriers, which diminishes competition.