Are You Ready for the Supply Chains of the Future?

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Supply chain management (SCM) isn’t just about supply chain operations. Manufacturers must understand the relationship between their company’s supply chains and larger considerations. First, companies need to determine how their supply chains interact with other aspects of their business, including post-sales service.  Supply chain managers must also recognize the importance of macroeconomic trends that will affect operations in the next decade and beyond. Even the best supply chain mangers can’t predict the future, but there are 10+ trends to consider if you want to minimize risks and maximize rewards.

Preparing for the Future

Three summers ago, SupplyChain247 published an on-line article by Sumantra Sengupta called 10 Supply Chain Trends for the Next 10 Years. The author, a supply chain analyst who validated his assertions with senior executives in multiple industries, made the following predictions.

  1. Service chains will become more important than product chains. Buyers will demand greater levels of pre-sales and post-sales service.
  2. Companies will begin to track supply chain externalities. This includes not just pollution control and sustainability, but also labor and transportation requirements.
  3. Supply chains will shift from a cost-plus model to a not-to-exceed cost model. Many potential consumers live in the developing world, and products and services must be priced accordingly.
  4. Knowledge-based work will become more global in nature. Supply chains must provide multi-language support while accounting for the complexities of local markets.
  5. SCM will develop a standard certification process that requires national examinations and continuing professional education.
  6. Shorter product lifecycles will multiply the number of supply chains for a single manufacturer. At the same time, product customization will make standard product catalogs obsolete.
  7. Successful businesses will use micro-segmentation to satisfy the needs of underserved markets. Even B2B companies will adopt a B2C approach in order to satisfy buyer preferences.
  8. SCM technology will adopt a software as a service model (SaaS) so that companies can reduce fixed costs and instead pay for access to capabilities.
  9. Successful businesses will listen to their customers on social media, analyze feedback, and then act upon this data across the entire operation.
  10. Artificial intelligence will become embedded in the supply chain to help automate activities.

Since the summer of 2013, some of the trends that Sumantra Sengupta foresaw – namely the shortage of skilled supply chain professionals – have become problematic. Paul Myerson, a supply chain analyst for Industry Week, recently recommended developing supply chain talent as early as middle school. Myerson, a Professor of Practice in Supply Chain Management at Lehigh University, cites an SCM World survey and writes that “43% of supply chain executives believe it is more difficult to hire supply chain talent in 2014, compared with 37% in 2013 and 22% in 2011.”

Other Trends to Watch

Other supply chain trends have emerged that present business opportunities. 3D printing and additive manufacturing aren’t new, but they’re starting to disrupt business models. That’s why UPS has partnered with a company called Cloud DDM to establish digital direct manufacturing (DDM) manufacturing centers near transportation hubs such as airports. In addition to delivering parts quickly and cost-effectively, Big Brown will be involved in making them.
Reshoring and the emergence of local and regional supply chains are also providing new opportunities for manufacturers of all sizes. For example, in New York State, small-to-medium manufacturers are preparing to do business with the large semiconductor companies that will build fabrication facilities at the Marcy Nanotechnology Center. By supporting the development of these supply chains, Manufacturing Extension Partnership (MEP) centers will play an important role in more than just supply chain operations.
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