Happy Holidays to all! I always enjoyed reading predictions for industries and technologies this time of the year, some times it is even more entertaining to read them years later when we can gasp in awe at our predictions or wonder what were we thinking…so here are some predictions for the supply chain space for 2012. I started writing these as a top 10 which became a top 12, a nice number for the year 2012.I really did not intend to have that many, I guess I was just feeling very “predictive.”
Here are my predictions for supply chain in 2012, if you are interested in the more detailed article feel free to drop me a note:
- Planning is dead. Long live planning. Even with the sophisticated planning tools available today, the best supply chain plans yield less than 50% accuracy. While the advances in planning brought the industry some remarkable promises it also proved how difficult it was to predict the future by simply relying on historical data. However, without going through the planning exercise, businesses and their supply chains cannot determine an end goal and path to get them there. So planning is not dead, but organisations should use it for the purpose it serves – setting the end goals and determining the direction in which to head.
- Bidirectional elasticity a must. For many years the supply chain world has been ‘flat’ and materials are sourced from all corners of the world as organisations chase low cost manufacturing. However, some sacrifice lower costs to be closer to their customers and reduce time to market – for example, manufacturers moving plants from Asia to Mexico to speed the time from the production floor to the shelf in the North American market. Additionally, many of these “low cost” countries have themselves become the end client. To accommodate these changes, supply chains will have to demonstrate a level of bidirectional elasticity to address both the wide reach of production, as well as the growing mix of customers.
- Floods, earthquakes and war force companies to rethink their supplier strategy, but at what cost? The Thai floods and tsunami in Japan have made organisations recognise the sensitivity and level of risk exposure supply chains have when reliant on a small number of vendors, especially those located in volatile environments. Organisations will attempt to avert risk by on-boarding new suppliers, however this will be a challenge as relationships and business trust are not developed overnight.
- Predictive time horizons will shorten. With leaner supply chains, being able to understand and react to changing circumstances quickly is vital. Organisations will try to add short window predictive analytics for real-time event processing. Business Intelligence solutions promised the ability to take data, analyse it, understand correlations and provide the user with a deeper understanding of the cause and effect within the business, all that is important, however the speed at which it is done is crucial.
- Desperately seeking centralised command and control. The ability to have a seamless view of what is happening across the entire supply chain network will determine the success of organisations, and in 2012 supply chains will continue to seek a centralised system of command and control. Although technology is evolving to make a single view of the supply chain possible, the challenge of disparate parts and siloed systems remains.
- Successful Companies will build a ‘Touchless’ supply chain. Rather than actually touch the product, large brands will simply orchestrate all the moving parts that comprise their supply chain. Apple is a great example, the company manages all the moving parts of its supply chain without actually “touching” the product at every stage. Companies will continue to gravitate towards this model, with some even outsourcing the management of the supply chain itself.
- Logistics providers will evolve into information and management hubs. As supply chain managers continue to feel the pressure of a leaner supply chain, they will rely on logistics firms to do more with the information they hold. Logistics providers will be seen as the perfect outsourcer for the supply chain, as they are able to see the movement of inventory at every stage of the supply chain.
- Finance will become increasingly involved in the supply chain. With the uncertain economic climate it is no surprise that the CFO’s office will become increasingly interested in the day-to-day activities of the supply chain function and interactions between these departments will intensify. Supply chains, at their core, are manipulating and managing inventory or better said – working capital. In many cases they have their foot on the accelerator, and the brake, that controls the velocity of free cash flows.
- Discrete manufacturers will tackle the service side of the supply chain. Parties in the supply chain network will continue to clear out carrying costs and leverage service as a competitive advantage. More and more companies, especially high technology manufacturers, are recognising the importance of better managing their services. Organisations will maximise the opportunity by managing inventory and human capital while orchestrating the service level agreements held with the client base. Smart companies will continue to push the knowledge they gain from this end of their supply chain all the way back to the beginning – and enable better forethought and planning.
- Businesses will be able to tackle the ‘C-A’ in ‘P-D-C-A’ (Plan, Do, Check, Act). The success of enterprises and their partners across an extended supply chain will depend even more on a manager’s ability to gain even more visibility across their supply chain. In the iterative four-step ‘PDCA’ (plan-do-check-act) management process used in business for the control andcontinuous improvement of process and products, this enhanced visibility is only useful if these managers can act instantly on events as they occur. The ability to tackle the ‘checking’ – both on the events themselves and the correlating impact these events have across the supply chain – and to act almost simultaneously on these events will become even more important in 2012.You can read more about my thoughts on the evolution of PDCA in a prior post.
Two more predictions to make it a dozen!
11. Greater usage of unstructured data, think of social media will act as one of your leading indicators. Much like what AMR Research coined a few years ago – the Demand Driven Supply Chain will creep closer to reality as supply chains leverage increased access to unstructured data coupled with their existing understanding of how to maximize information from structured data. This combination will allow companies such as Best Buy to monitor in real time and anticipate which products will sell, allowing demand to drive their supply chain. The obvious first movers will be retail and CPG companies, but others like Dell and Verizon will continue to leverage these signals to manage the service side of their supply chain. Even life science companies will gravitate to usage of unstructured data as they can look to anticipate where flu breakouts or colds or rashes of sun burn will rise through unstructured data mining. Of course this will only increase the wave of Big Data that will only continue to grow.
12. Finally, that iPad, iPhone, Droid or even yes Blackberry are not just for Angry Bird, eMail and Netflix but will integrate into supply chain. We are all mobile now, whether you choose to embrace it or not. A September report from Forrester Research states that over 50% of all workers today are working either at multiple locations or only remotely. This spills over into the supply chain space. Mobility will impact supply chains in two ways. First the growth of tablets and smartphones will make the number of nodes where decisions can be made and executed that much greater. The person loading a truck at the receiving dock can instantly update via a tablet, the factory worker can monitor the through put of her assembly line via a smart phone, the person doing inventory in the hospital will be able to scan with an QR code reader from their smart phone and the list goes on. Second, the explosion of mobility will add to the glut of data that can be had. Whether it is communicating directly with clients or positional data, the rise of mobile devices will continue to infuse more data into our systems.
What do you think? What do you see for the supply chain space in 2012?
If you like reading these, look for an upcoming podcast series where I sit down with Bruce Richardson, former AMR Research Chief Research Officer, to discuss his views on supply chain trends for 2012 and beyond.