What is the future of Supply Chain? That’s the question Dan Gilmore asked in a recent First Thoughts column, in preparation for a presentation he has to make on the topic in a few weeks.
We received a number of letters in response, including our Feedback of the Week from John Mariano of Fellowes, who says that although we will get much more automated, technology will never allow us to go on “auto pilot.”
Find that letter and much more below.
Feedback of the Week – On The Supply Chain of the Future
Back to the future of Supply Chain.
Meat and potatoes, blocking and tackling, back to basics, and back to the future in supply chain. What I see in the supply chain crystal ball is that we all will still be reliant for some time to come on the fundamentals, namely sourcing and purchase order management, global transportation, compliance and regulatory management, visibility, event and total cost of ownership management. Above all, the requirement to successfully manage relationships will remain a critical factor in managing the S.C., not only of the present, but of the future as well.
What will change according to this sage of S.C?
We will, as a discipline, achieve a much greater degree of how much we will be able to integrate all the members of the S.C. We will, via technology advances, be able to pull the supply chain knot much tighter and that will enable the entire chain to be more effective and efficient. I.T. will drive this and make it all possible; however, I.T. advances alone are not, and never will be, a panacea for supply chain execution. Rather, I.T. is a key enabler of a comprehensive, integrated supply chain solution, and work on this front will be ongoing as we move into the future.
The long-term fundamentals noted above will now need to incorporate sustainability considerations. The S.C. is greening and this will change how we do business in the future. We will all need to ensure we are on top of this segment and become conversant on this subject matter. The realization and recognition that oil will not stay cheap needs to be considered, as most of us have built our S.C. based on cheap oil. Now is the time to become more efficient, and plan for this reality.
Will the Supply chain ever go on auto-pilot? I do not think so. By definition, the S.C. is way too dynamic of an activity, heavily reliant on integral relationships. No surrogate for relationships indigenous to the S.C. has yet been devised, nor is it very likely in the future. Segments may become more refined and better managed, etc., by various means; however, until Cray builds a super-duper computer that can read body language, facial expressions, discern the pitch of a voice, or until demand for all industries becomes linear, or when they raise the Titanic, I think that we can all rest assured that our jobs will entail a bit more than hitting the auto-pilot switch.
More On the Future of Supply Chain:
I find this topic very interesting.
My 2 cents will go back to a topic that you mentioned already in the article and it is the world of the future.
One of the trends that I think will impact the supply chain of the future is the digital divide. There is very little or null efforts from the corporate sector to tackle this problem that I think will strike the supply chain very hard.
Just think of this. The European population is rapidly aging, so somewhere in the future, the emerging economies will not be emerging, but simply the largest in the world and, in those countries (like mine), the technological infrastructure will not allow the big corporations' supply chains to operate like in the western economies today.
This is just a thought and I look forward to reading your comments in September.
Industrial Engineering Europe
Certainly continuous supply chain visibility of more granular data supported by robust rules engines will yield many more situational/localized optimization opportunities. Look for a wider application of rules based pricing that adjusts dynamically to both supply and demand at the point of purchase.
I would have to say that Wal-Mart's retail link replenishment system is pretty close to the state-of-the-art that you are going to get today. I can see what I sold yesterday in the store. I can tell what I have in the store, the DC. I can see it all. Having this information does allow us to service the business at maybe a higher lever than a customer that we don’t see this level of detail. When the market place is stable, things run smoothly. Today a competitor drops a hot price at going from $3.80 a unit to $2.25. I can see tomorrow that my sales may have slowed a little or drastically. With a call to the field, I know what is going on and make my adjustment to the supply chain. I did not see that coming! Still have to react!
I think that the bottom line is that no mater the supply chain, you will not have control of all of the variables. There is always going to be a level of the unknown. The key is to be able to identify the anomaly as quickly as possible, make a decision, and set motions in action.
Forecasting would be easy if it wasn’t for promotions and merchandizing!
Thanks for your great insight.
Name withheld by request
Supply Chain Manager
I believe that cash will still be king and efforts to create efficiencies will reign. Not all companies are able to pursue newer technologies to advance their supply chain performance, however, most companies are driving cost and complexity out of their processes as a way to improve their financial performance.
A company’s business model will dictate whether or not a supply chain strategy can support an increased lead time as a trade-off for increased financial performance – we are in the process of rationalizing our service portfolio and comparing proposed models against cost to serve data with the hope of providing differentiated services, as well as decreased costs.
Customer Logistics Manager, Americas
In my 16-year career and number of educational degrees in different disciplines, I think we are making supply chain more complex than what it is.
Two things we always have to remember while thinking about the future of the supply chain: financial aspect and Human aspect. If you honestly think about how any organization implements new technology or software system, it is mostly dominated by financial and manufacturing views.
I agree somewhat with that too, but truly, how many organizations have used cross-functional across the organization and outside organization, i.e., vendor and customer while developing the tool?
It is always simple math - each of role players, whether inside or outside of organization, have to perfom their part absolutely 100% and understand the immediate upstream and down-stream effect - better communication can solve at least 50% of our problems or risk in supply chain management.
For this, we need to educate people, because the supply chain is the only area which is highly dependent on others with too much responsibIlity, with too little authority or voice than anyone.
Mehul S. Pandya