What to expect in the 2016 Supply Chain
Convergence, Connectivity, Collaboration, and Info sharing
As the economy continues to churn and burn organizations are faced with growth challenges in some regions and slow-down challenges in others. One minute they are figuring out how to grow revenue and take advantage of expansion, the next minute they are furiously trying to save money and cut costs as they navigate through slow-downs and contractions. Sometimes in the same day. It’s like watching a performer juggle a running chainsaw, a flaming torch, and a bowling ball.
The good news is that these challenges can be systematically addressed by developing your supply chain capabilities and talent pool. With the right blend of people, process, and platform organizations can turn uncertainty into agility, and risk into reward. To that end the following supply chain trends can provide the tools and tactics to mitigate issues and improve performance in the short term, as well as lay the groundwork for more strategic product development efforts and new market expansion over the long term, all while keeping the customer happy.
Convergence
Survey after survey of supply chain management organizations have clearly established that there are difficulties in synchronizing end-to-end processes. The order capture system doesn’t talk to the order fulfillment system which doesn’t talk to the transportation routing system, which in turn doesn’t talk to the customer service system, on and on ad nauseam. The problem is only the really big, expensive ERP’s like Oracle and SAP have integrated single-source solutions. What does this mean? It creates a huge opportunity for best-in-class cloud services that can interface seamlessly across platforms and allow for managing processes in a holistic life-cycle manner, while allowing users to only pay for what they need. This will hold true not only for the small and mid-sized shipper, but for the bigger gorillas without the huge capital budgets required for global end-to-end systems. What can you do? Capture your process(es) and talk to SaaS vendors about how their platform can help. Maybe even consider holding a bid which can yield very aggressive pricing.
Connectivity (IoT)
It is estimated that by 2020 there will be over 25 billion web-connected devices, with the majority of these being embedded RFID sensors in the global supply chain. This will provide a level of inventory awareness that should make SI&OP a snap (haha), and allow smaller enterprises access to the same scaled efficiency as the big gorillas. What does this mean? Lower inventory carrying costs, more efficient distribution channels, and tighter transit times. What can you do? Become an SI&OP champion by pushing to acquire consumption and forecast data, and then sharing this with your suppliers to maximize efficiency and identify opportunities for improvement. Not only will this reduce risk by stabilizing the supply chain, it will also reduce inventory and transport waste. As sensors proliferate, more data will become available.
Collaboration
Even as the logistics industry continues to consolidate and produce ever-bigger vertically integrated behemoths that can “do it all”, they are also using advances in technology to share information and utilize one another’s capacity in an effort to optimize physical assets and lower costs. What does this mean? Lower rates, better performance, and improved visibility. What can you do? Ask your existing 3PL for routing/mode alternatives for a cost/service comparison, and don’t be afraid to vet this with an outside 3PL who may be able to offer options you haven’t considered (or your incumbent 3PL can’t).
Information sharing
Organizations are producing a lot of data. A LOT – especially when you look at all the unstructured data like online and social marketing, YouTube clips, twitter feeds, instagrams, etc. But other than keeping the IT folks and vendors busy, what is the benefit? The ability to identify patterns and trends that reduce forecasting errors, improve operational performance, and provide insight into service levels and by extension customer satisfaction. What can you do? Take a look at your existing key performance indicators (whether operational or financial) and come up with a wish list of everything you would like to see. Now work with your internal team, suppliers, and customers to identify and obtain the data to produce these metrics. Finally, share your output with your internal team, suppliers, and customers. Focus on moving the needle where everyone benefits. Rinse and repeat quarterly, possibly under the auspices of "continuous improvement" or Lean/Six Sigma event.
Now’s the time of year many supply chain professionals are expected to assemble their 2016 strategies. Use your knowledge of these emerging trends to identify tactics that will generate immediate value, improve the cohesiveness of your teams, and develop execution capabilities that give you a competitive advantage. Capture them all in a document and share this with EVERYONE using everyone’s feedback to sharpen the plan and gain buy-in.
Please feel free to reach out and contact me with your Supply Chain, Logistics, Procurement, Technology, and Talent challenges, and let's discuss solutions.