What’s Missing?

2015 is in the rear view mirror and it’s time to look ahead. While you certainly want your supply chain planning to be as detailed as possible, it probably won’t contain everything and there will inevitably be some things you didn’t see coming. So it’s important to focus your efforts on the areas that are most likely to have a big impact on your business. Everybody’s talking about big data and sustainability, but what else should be on your 2016 supply chain plan?

1. Strategic Alignment

Plenty of smart companies understand that supply chain optimization is seen as a competitive advantage, but some go even further, incorporating supply chain leaders in the strategic planning process. Rather than reacting to strategic initiatives, and telling executive management whether or how something can be done, supply chains are helping guide strategic planning from the beginning.

2. Talent Development

Supply chain management is undergoing rapid change. Talent development is going to have to catch up. Tomorrow’s supply chain leaders need to be strategic thinkers with a strong understanding of technology and analytics.

However,  they also need to be supply chain experts with the background to be able to put mounds of data into context and derive all of the relevant insights from it. One of the most important skill sets to have will be the ability to sort through all of the big data and to be able to identify what’s important and what’s not, rather than getting distracted by findings that are interesting but don’t drive the business.

3. Collaboration

Many industry experts believe the supply chain of the future will be built on collaboration, not just with your own suppliers and distributors, but horizontally, as well. This collaborative model goes hand-in-hand with sustainability. Strategically located collaborative warehouse space – in other words, regional consolidation centers – that are shared by multiple manufacturers, for example, could reduce both emissions and urban traffic congestion. In rural areas, that collaboration could reduce the incidence of roads filled with under-utilized trucks. Instead of following your competitor’s half-empty truck down the highway, you might collaborate and share a truck. Collaboration on that level would also require sharing of information throughout the value chain.

4. Demand Fluctuation Management

Predictive analysis is critical to strategic sourcing, but it’s not enough. Your 2016 plan needs to address business flexibility – your capacity to adapt on the fly to changing customer demands and business conditions.

If you’re forward-thinking and engaged with your industry, your 2016 supply chain planning undoubtedly covers all of that, and more. But it’s equally important not to throw the proverbial baby out with the bathwater. Some “old-fashioned” metrics on strategic sourcing are just as important as they ever were: on-shelf availability, forecasting, sourcing alternative suppliers, expanding to accommodate new markets or products, production capacity, distribution capacity, lead times, contingency planning – and, of course, cost control.

Cost control is one of those metrics that’s been around forever, but it’s an area that’s still rich with unexploited opportunities. Most companies, from necessity, have done a great job of getting their arms around their direct costs, like raw materials and capital expenditures. Few, however, have given adequate attention to indirect costs. From rent to pencils to health care to toilet paper, those can add up. And because those expenses tend to have such restricted visibility, it can be tough to find and target them for cost reductions. To make this year’s supply chain planning process easier, try using a strategic sourcing software that helps identify those hidden costs and minimize everyday spend.