Finding Balance
Juggling the demands of customers and understanding and predicting trends can be a challenge. The supply chain is sensitive to global trends fueling the economy and transforming society. Executives are under pressure to cut costs, improve efficiency and boost performance. How can they innovate, keep pace with trends, drive efficiency and meet customer demands? Supply chain executives need to identify the global trends that are most likely to impact their business.
At least six trends will dictate the future macro-economic environment, each impacting how organizations structure and operate supply chains:
1) Globalization
Globalization has made the supply chain much more complex to manage, increasing risk and cost. Natural disasters have emphasized the need for effective risk management and contingency planning to reduce disruptions and address outages quickly. As more manufacturing work is outsourced and the supplier ecosystem gets more complex, it will become more difficult to supervise and track production and ensure safe, reliable and continuous supply.
2) The rise of the consumer
New technologies – social media, mobile and cloud-based applications – have empowered customers and consumers and offered new, direct access to brands. There is greater need to understand and anticipate customer requirements.
3) Sustainability
There is increased regulation, a greater focus on corporate and social responsibility and demand from consumers for higher environmental standards. Most of the social and environmental impact made by companies happens in the supply chain where shipments are dispatched, materials consumed and labor employed. Accountability for a company’s sustainability performance will fall almost entirely on supply chain.
4) Technology convergence
Technology that enhances information processing and decision making allows organizations to gain deeper insights into trends, consumer behaviors and process efficiency. Collating unstructured and disparate data sets together provides new frontiers in supply chain transparency and process automation. However, dependency on data sources does necessitate careful integration of systems to deliver end-to-end visibility.
5) Regulation
Global and local policy makers are imposing stricter regulations. With more rules and regulations being introduced, organizations have to be prepared to divulge information about sourcing and supply chain practices. If non-compliant, they can expect expensive penalties and expose themselves to legal risks. Technology can provide the visibility required to ensure full compliance.
6) The commercial supply chain
Better working capital performance has become a top priority for CFOs. Major levers like finished goods inventory, raw materials inventory and accounts payable/receivable are influenced by supply chain decisions and activities. Pressure to deliver profitability requires measuring the true cost-to-serve for all orders, allowing for better negation and value. Supply chain executives on the front line must spot the early warning signs of supply-demand issues and how they will impact profit and revenue targets.
Often, a number of these forces will collide at once and push business and supply chain leaders into action. Understanding the implications that these forces could have on the business will help exploit the opportunities that can be found, and help maintain long-term competitiveness for the business.
To help organizations shape their future supply chain around these trends and to balance the often conflicting priorities they face, focus on:
- + Collaboration: Internal and external collaboration with customers and suppliers is imperative to identify and efficiently fulfill demand.
- + Visibility: Effective measurement of supply chain performance across the value chain is critical.
- + Efficiency: Continue the drive to reduce supply chain costs to maximize profit and competitiveness.
- + Agility: Increased agility allows you to respond quickly to sudden changes in supply or demand.
Supply chain executives will likely always need to practice juggling to keep these pieces in the air. By following these steps, it is possible to carve out a successful supply chain future.