First Thoughts
  By Dan Gilmore - Editor-in-Chief  
  May 21, 2009  
  The Supply Chain of the Future?  

What will be the supply chain of the future?

I am asking myself that question for a very good reason – I will be presenting on that very topic at the Material Handling and Logistics Conference in September, which means I have a few months to come up with the answer. Would welcome your help.

There are actually quite a number of issues around this topic, it seems to me. For example, just what is the timeframe for pondering this supply chain future? 2015? 2020? 2025? I guess it has to be near enough that it has some meaning for most of us. My particular presentation is targeted at 2015, and somewhere between that and 2020 seems about right to me.

For example, if I understand the “Store of the Future” concept and showplace from Germany’s Metro Stores Group, I believe it uses a lot of cool technologies (RFID, powerful kiosks, interactive displays, etc.). However, these technologies are largely here now, almost by definition, since they are used in the model store. Since no one has really implemented most of these technologies, certainly all together, it does represent the “future,” but maybe the relatively near future. It’s just a matter of the adoption curve retailer by retailer.  

Gilmore Says:

When do we reach a point in the level of supply chain automation, both physical and informational, that there just is not a whole lot more we can do in terms of supply chain improvements?

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As most prognosticators acknowledge, and I better understand after thinking about this, predicting the “what” of future is relatively easy compared to getting the timing close to right.

What I am also struggling with is the temptation to paint a picture of a supply chain world in which simply everything is automated – though, indeed, that may very well be a huge component of the future vision. In fact, as I have pondered on this topic, I have at times become modestly depressed around this prospect. When do we reach a point in the level of supply chain automation, both physical and informational, that there just is not a whole lot more we can do in terms of supply chain improvements? Is that point likely to come fairly soon, or is it decades away? (More on this subject soon.) I hope, somewhat selfishly, that this day is still a long way off.

Ditto with regards to “integration.” It would also be relatively easy to simply paint a vision where we have virtually 100% integration both within the enterprise and across trading partners and networks. Much more dicey, of course, would be predicting the timing of this (remembering, for example, the lessons and history of EDI), but even beyond that, does foretelling a world of near perfect automation and integration really tell us much? I don’t really think so.

In the 1990s, there used to be an event called the “Warehouse of the Future.” I think it died off, in part, because in the end, it just showed whatever the latest advances in current automation were. Soon, it just didn’t seem very futuristic.

Of course, others have and will continue to take a stab at this. Perhaps the most well-known is MIT’s Supply Chain 2020 project, started I think in 2003 and initially led by my friend Dr. Larry Lapide. Here we are now just 10 years away from that end date that seemed quite distant back in 2003. Is it time for Supply Chain 2025?

I am not sure if that effort ever resulted in a definitive vision for what supply chain management would be like in 2020. Among the contributions the effort has made, however, is to well articulate that the future supply chain is inextricably linked to what happens in many other spheres, especially political, economic, and regulatory.

Consider just a few examples: Do democracy and economic freedom continue their generally steady march forward, leading to the developing economies also continuing to grow in economic might and importance, or do things take a step backward? What will China be like 10-15 years from now? Will the world’s biggest companies become larger and larger, and thus ever more dominant - and thus leading to a supply chain world of a few giants and many indentured suppliers - or will there be changing regulatory views on this? (Just plot out a 10% increase in sales each year for Wal-Mart and see where that takes it after another decade.)

What happens with free trade, nationalism, and protectionism? Do we have new energy sources, or will oil be the main fuel 10 years from now and be at $500 a barrel in a “peak oil” world?  What will be the demographics in 2025 in the US and around the globe?

You get the idea. My view right now is I can’t predict the supply chain of the future without some assumptions about the world of the future, which I thank MIT for pointing out.  

More recently, IBM released a study on "The Smarter Supply Chain of the Future." It suggested that the future supply chain would be “instrumented, interconnected and intelligent,” (which I liked, as I had written a research note as an industry analyst on the “intelligent supply chain” as far back as 1999), and the report provided some reasonable detail behind each. Though I enjoyed the report, I didn’t feel it really stretched our thinking too far. Maybe that’s just an impossible task.

The Global Commerce Initiative and Cap Gemini have also done work in this area, starting with a report on The Future Supply Chain 2016. There is a strong “sustainability” bent to the work, but I think their vision for more collaborative logistics (shared truck capacity across even competitors, hub locations outside of major cities from which local deliveries are made, for example) have a great deal of merit and likelihood of occurring.

All this also makes me wonder how far out companies themselves are thinking about this. What is the horizon of your company’s supply chain master planning? It is really just a timeline of advancing today’s basic strategies, or does it really encompass innovation? As my friend Gene Tyndall recently noted to me, today “strategic planning” often has a view of only about 18 months, since many think the world is too dynamic, especially right now, to consider a horizon much beyond that. It was partly an exaggeration, but a good one to make the point about the environment we operate in today.

So, in between everything else, this is one thing I will be working on over the next couple of months. I think it is a fun, if challenging, question. If you have some thoughts on this and would like to talk, I would be happy to listen. Send me a note at the Feedback button below.

Do you have any thoughts about what the “supply chain of the future” will look like? Is it more than just automation and integration of everything? How fast do you think that is likely to happen – and when it does, does it mean we will have to advance in supply chain?  Let us know your thoughts at the Feedback button below.

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