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  First Thoughts

    Dan Gilmore

    Editor

    Supply Chain Digest



 
Feb. 2, 2017

The Gurus Are Back! 2017 Supply Chain Predictions II


Dr. Chris Gopal, David Schneider, Rich Sherman, Art Mesher, and David MacLeod Offer their Prognostications

 

Last week, we ran part I of our supply chain guru supply chains predictions for 2017, highlighting key elements of the prognostications from Mike Regan of TranzAct Technologies, Gene Tyndall of Tompkins International, Dr. Michael Watson of OpEx Analytics and Northwestern University, and Jim Barnes of enVista.

You can find my summary column on their predictions here: The Gurus Are Back! 2017 Supply Chain Predictions.

Then earlier this week, we published the full text versions of those predictions, which you can find here: Predictions from Supply Chain Gurus for 2017 - Full Text Version Part I.


Gilmore Says....

I think Gopal is right on, not only in that supply chain network design decisions now must accommodate many more variables than not long ago, but that many of them are very difficult to quantify.

What do you say?

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It was all very good stuff. Take a look.

I am back this week with predictions from the second half of our virtual panel, so let's get right to it.

Dr. Chris Gopal has been a long-time consultant in the supply chain, and a keen observer of supply chain trends.

Among his interesting predictions is this one: "Global trade uncertainties, national pressures, risk mitigation and the need for vendor compliance will lead to increased complexity in sourcing, network design and location decisions."

As we are seeing, the economic world is getting less global and more national, Gopal says, leading to increased tariffs, trade regulations, protectionist measures, and a focus on local jobs across the globe.

Gopal observes that "We now have a supply chain environment where sourcing and the location of facilities must consider far more than the traditional cost elements."

This is requiring new methods and approaches - not optimization, but trade-offs. "Many of the parameters will be subjective, and include quality, risks and costs of disruption, loss of IP, local jobs, public perception, the element of National Security in some cases, and, naturally, total costs in all its complicated dimensions," Gopal says.

I think Gopal is right on, not only in that supply chain network design decisions now must accommodate many more variables than not long ago, but that many of them are very difficult to quantify, meaning a linear programming engine won't be of much help to supply chain managers.

In addition, we are in a period of huge dynamics, even worse than recent years. What is the economic, geo-political, and supply chain climate likely to be three or five years from now? Who knows - yet we have to make decisions today.

My advice: put a premium on flexibility in the face of uncertainty.

Former supply chain executive and now consultant David Schneider of David K. Schneider & Associates says we can expect Amazon to get still more aggressive in building out its own logistics network and capabilities in 2017.

Schneider says Amazon will grow its use of aircraft chartering to control airfreight systems - though stopping just short of becoming its own airline. He expects Amazon's fleet of over the road trailers to grow, all of which will be moved through dedicated and contract drop and hook line haul carriers. Lastly, Schneider says Amazon will achieve final mile delivery of time-sensitive and perishable goods that will be executed through a dedicated fleet.

We'll note word broke last week that Amazon has indeed begun operating a global freight forwarding service, having managed the movement of 150 containers from China to the US since October, and is advertising the service on its website. It appears not just retailers but now freight forwarders and global 3PLs are at risked of being "Amazoned."

Amazon also announce plans for a huge new Prime Air hub in Cincinnati last week.

Long time supply chain observer Rich Sherman, now of Tata Consulting, says that in a period of disruptive change, many companies with traditional linear thinking somehow believe that change can be resisted and that a "wait and see" strategy is safest.

They are wrong, Sherman says, noting that "in a digital, connected age, change is systemic, with many small repercussions building over time, like placing dominoes in a line, building towards a single, catastrophic fall.

Yikes - that's an interesting analogy for sure. Sherman adds that to compete in 2017 and beyond, all industries, not just retail, have to think "omnichannel, omnidirectional, and eco-systems."

Keys to success will be market and product segmentation strategies, new collaborative partnerships, and adoption of digital technologies, and in the end those decisions will determine who the falling dominoes knock off - either your competitor or you.

Art Mesher, CSCMP Distinguished Service Award winner a few years ago and former Gartner analyst and later CEO of Descartes Systems, predicts 2017 will see the start of a new dimension in supply chain - up!

What does that mean? He says soon drones and their sourcing facilities and delivery mechanisms will use space in the air to attempt to "uncongest the congested." That will mean "that air waves and air rights will have value, and we will see the rise of licensing of these rights to more things in spaces. Who owns what space and what rights of passage will become new and real issues with monies to be made and positions in markets maybe gained or lost," Mesher says.

Very smart - wish I had thought of that. Who owns the air space above your property, and how high if at all does that private airspace go? I have no idea. Can Amazon someday just fly a delivery drone over my neighborhood or factory? If anyone knows the answer to this, send me a note.

Mesher also added that "Drones and autonomous trucking are happening exponentially and are way more real than most people expect, and I believe that is going to become much more clear in the year to come."

I agree on the technology side, but the regulatory side is still way behind and likely to stay that way, though in the US a Trump administration may be more aggressive on allowing these technologies than we saw under a very cautious Obama White House.

David MacLeod of Learn Logistics Limited, a UK organization focused on supply chain education, took a very different tack, citing insights stemming from a paper delivered by Professor Helen Haste of Bath University in the UK to an audience at Harvard seven years ago. It focused on new competencies that businesses and individuals will need to attain to survive and thrive.

He thinks they are still very relevant for 2017 and I agree. Here is one of these new competencies, as adapted by MacLeod, that I especially liked: "Agency and responsibility: in a supply chain world or more correctly a network of demand chains no one achieves anything on their own. The ability to work effectively and efficiently through others whilst not having direct responsibility is critical."

MacLeod added that despite many challenges, he remains very optimistic about the ability of supply chain managers to get the job done, noting that "Logistics and supply chain practitioners are light on their feet and punch above their weight on a daily basis. They are used to solving problems and keeping stuff on the move, but one prediction I can have real confidence in making is that they are going to have to up their games in 2017."

Amen to that. Are you punching above your weight? I know many surely do. If not, time to hit the supply chain gym!

Again, really good stuff. Thanks again to all of our panel members, who really put some effort into this, exclusively for SCDigest readers.
I am not aware of any other publications doing anything like this.

 

Look for the full text predictions on Monday at www.scdigest.com, and in our OnTarget newsletter next Wednesday. Predictions from the analyst community next week to wrap this up.

Any reaction to the guru predictions? What resonates with you? What are some of your 2017 supply chain predictions? Let us know your thought at the Feedback section below.


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