First Thoughts
  By Dan Gilmore - Editor-in-Chief  
  Jan. 14, 2011  

Supply Chain Guru Predictions for 2011


Ok, it's time again, our annual sampling of predictions for the Supply Chain 2011 from a carefully selected panel of gurus and two of the supply chain industry's top analyst firms.

We've been doing this for a number of years now, and I will note that it is a lot harder to make such predictions than you might think.  Each year, I ask a few of last year's participants back, add in some "new blood," and then we cajole and hector the group into finally sitting down and typing up their thoughts. We usually wind up with some true predictions, some thoughts on trends, some general ramblings... but it's all good.

As usual, in this column I am just picking out some of the highlights. The full text from each of the contributors will appear on our pages shortly.

Jim Barnes, president of consulting firm enVista, thinks on-demand or Software-as-a-Service (SaaS)-based solutions will continue to gain ground this year - and sees Microsoft as a growing force in supply chain software.

Gilmore Says:

As so many of our supply chain organizations have been "leaned out" - to put a nice term to it - during the recession that relooking at the skills we possess and require is more important than ever.

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"SaaS providers specifically in the area of TMS will continue to make traction in 2011. Companies are gaining confidence in their ability to utilize SaaS solutions to run mission critical business functionality," Barnes says. "We will continue to see evidence of this in 2011 for ERP, WMS and Labor Management Solutions. Supply Chain-centric, even Fortune 500 companies are effectively utilizing SaaS solutions that are hosted in the cloud… Look for major shifts in supply chain software company strategies. Case in point Microsoft is making major moves to move a number of solutions to a SaaS model. Microsoft will more than move the needle - it will shake up the space."

He also predicts companies will start to invest some of all that cash many of them have been building up in the past year.

"Supply Chain-centric organizations will increase their spending in 2011 and I predict supply chain software sales to be on par with 2007," Barness adds. " Many companies are coming to end of term or maintenance contracts with their software licenses. End of term (life cycle) and maintenance contracts plus renewed faith in the economy will motivate companies to replace legacy POS, ERP, WMS and TMS solutions."

My good friend Gene Tyndall took a more trend-like approach to his predictions, after first wondering if "we ready to accept that we really have no idea about a year ahead, and thus we should expect the unexpected, prepare for surprises, and try to somehow balance degrees of optimism and pessimism."

With that in mind, Tyndall mostly focused on key supply, chain trends, noting for example that companies are increasingly recognizing how the structure of a company's supply chain organization can have a huge impact on its effectiveness.

"More and more leaders have come to recognize that despite impressive strategies, clear processes, and powerful technologies, unless the organization, people, skill sets, and culture are all world-class, supply chain performance will be mediocre," Tyndall says. "Organizational alignment and excellence, and change leadership, are taking front seats now."

Clearly related to that, Tyndall believes companies are increasingly concerned about the skills their teams have and a "talent gap":

"Engineers, analytics, and software savvy skills are very important, but so are the abilities to interact with peers, those in other processes, executive, suppliers, and customers, on a business level," Tyndall says. "Watch how the Supply Chain universities and recruiting firms deal with this trend, because every company is concerned about its talent gaps."

I will add that as so many of our supply chain organizations have been "leaned out" - to put a nice term to it - during the recession that relooking at the skills we possess and require is more important than ever.

My friend Dr. John Langley, just recently of Penn State as some of you may know, sees the deepening intereference of government in business and supply chain as a key fact of life for 2011.

"I am tempted to be nice and refer to this as government “involvement,” but the truth is that governmental organizations at all levels are finding ways to increasingly impose themselves on the functioning of the business world, and thus to “interfere” with the ways that companies and markets conduct themselves on a continuing basis," Dr. Langley says.

He adds: "The natural result of this is that companies have no choice at times but to be as conservative as necessary, so as to protect financial and other types of assets that are essential to the future of the businesses," implying this has been a factor in tepid economic recovery.

"Only when business and government have a mutual respect for each other, and recognize that neither can succeed without some meaningful level of cooperation and working together, will there be a significant movement for companies to give a bright “green light” to investment and innovation," he notes.

He also thinks supply chain executives and managers must continue to improve their true global capabilities.

"Essentially, the globalization of business has created significant, new opportunities on the demand and supply sides of many businesses, but this has also created an imminent need for planning and control capabilities that span the globe," Dr. Langley says. "So, we are seeing great interest in achieving shipment visibility throughout increasingly complex supply chains, and this visibility is necessary to be a legitimate and profitable player in the global marketplace. Also, considering the global threats and conflicts of which we already well-aware, and those that are yet to declare themselves, supply chains are faced with very significant pressure to be able to transform themselves in very short periods of time. "

We also had the chance to review some of the predictions from Gartner, which offers five high level supply chain predictions:

• Supply chain leaders will focus on redesigning their demand management processes and technology to help drive stronger market insights.

• Determining how to manage supplier risk will become a key requirement for leading organizations.

• Supply chain management (SCM) technologies based on software as a service (SaaS) and the cloud will continue to gain traction, but mainly in process areas, with strong alignment to the unique characteristics of these delivery models.

• Although in the last couple years the pendulum has swung back to favoring best-of-breed (BOB) SCM applications over ERP, supply chain leaders have identified a successful hybrid model that leverages the power of both.

• Supply chain segmentation is gaining traction in the business, and leading companies are figuring out how to formalize the process to make it consistent and repeatable.

That's all we have room for this week, so I am making this a two-parter. Next week, we'll have predictions from Mike Regan of TranzAct Technologies, Steve Murray of Supply Chain Visions, Marc Wulfraat of MWPVL International, a little more from Gartner, and some interesting predictions from the analysts at IDC.

In two weeks, the full text comments of all our prognosticators will be in our On-Target e-magazine.

If you missed our 2010 Supply Chain Timeline earlier this week in On-Target, you will find it here: 2010 Supply Chain Timeline. It's a fast way to review the year that was month by month.


Any reactions to our contributors' supply chain predictions? What would you add? Please send us your predictions for 2011 at the Feedback button below.

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