The Future of Supply Chain Management, Part 7

Stephen DeAngelis

January 4, 2013

The consulting firm IDC offers an array of predictions for the coming year as can be seen from the following list of webinar subjects drawn from the company’s website. Some of the webinars have already taken place and some are still scheduled to take place.

IDC Insights

IDC Predictions 2013: Competing on the 3rd Platform
IDC Insights Predictions 2013: Cross-Industry Overview
IDC Insights Predictions 2013: Cross-Industry Overview
IDC Insights Predictions 2013: CIO Agenda

Energy

IDC Energy Insights Predictions 2013: Oil & Gas
IDC Energy Insights Predictions 2013: Utilities
IDC Energy Insights Predictions 2013: EMEA Utilities

Financial

IDC Financial Insights Predictions 2013: Financial Services
IDC Financial Insights Predictions 2013: EMEA Financial Services

Government

IDC Government Insights Predictions 2013: Government
IDC Government Insights Predictions 2013: EMEA Government

Healthcare

IDC Health Insights Predictions 2013: Health
IDC Health Insights Predictions 2013: EMEA Health

Manufacturing

IDC Manufacturing Insights Predictions 2013: Manufacturing
IDC Manufacturing Insights Predictions 2013: Smart Services and Aftermarket Strategies
IDC Manufacturing Insights Predictions 2013: Supply Chain
IDC Manufacturing Insights Predictions 2013: Product Lifecycle Strategies
IDC Manufacturing Insights Predictions 2013: EMEA Manufacturing
IDC Manufacturing Insights Predictions 2012: Manufacturing Operations Technologies

Retail

IDC Retail Insights Predictions 2013: Retail
IDC Retail Insights Predictions 2012: EMEA Retail

During the webinar on the Supply Chain webinar, IDC identified the following Top 10 predictions for 2013:

 

  • Prediction 1 – Resiliency Becomes a Priority for End Users Looking to Master ‘Massive Multidimensionality’
  • Prediction 2 – On the Supply Side of the Supply Chain, Recognizing the Inherent Cost of Long Lead-Times, Manufacturers Continue to Look at Global Networks Through the Lens of both Regional and Country-Level Sourcing
  • Prediction 3 – On the Demand Side of the Supply Chain, Recognizing the Need for Better Service Levels and Mass Customization, Manufacturers Look Again to Postponement Techniques and Data Analytics to Drive More Effective Customer Insights and ‘Smarter’ Fulfillment
  • Prediction 4 – End User IT Organizations will have to Support a More Productive Supply Chain Ecosystem
  • Prediction 5 – Service Excellence Becomes a Strategic Priority
  • Prediction 6 – Supply Chains will Optimize Omnichannel Customer Service and Cost by Enabling Trustworthy, Efficient and Effective Supply Chains (TEE)
  • Prediction 7 – End Users Will Focus Efforts to Improve Collaboration Both Upstream with Suppliers and Downstream with Customers to Better Compete in a Faster World
  • Prediction 8 – Supply Chains will Invest in Technologies that Enable Visibility, Visualization and Virtualization
  • Prediction 9 – The ‘Modern’ Supply Chain Gets ‘Smarter’
  • Prediction 10 – The Big Data ‘Era’ Dawns for Supply Chain Organizations

 

Some of the predictions coincide with predictions that other prognosticators have commented on in previous posts in this series. IDC’s first prediction is a good example.

Prediction 1 – Resiliency Becomes a Priority for End Users Looking to Master ‘Massive Multidimensionality’

In Part 5 of this series, supply chain analyst Bob Ferrari also addressed the subject of resiliency. It doesn’t take a crystal ball to understand why resiliency is likely to rise on many corporate priority lists. In a post entitled Supply Chain Disruptions Are Growing More Serious but Risk Management isn’t Keeping Pace, I cited an article by Sean Kilcarr who reported that “economic losses due to supply chain disruptions increased by 465% over the last three years.” Achieving resiliency won’t be easy because companies are still looking for cost savings from supply chains. The fact of the matter is that resiliency doesn’t come cheap. That means there is likely to be increased internal tension between executives concerned about resiliency and those seeking cost reductions.

Prediction 2 – On the Supply Side of the Supply Chain, Recognizing the Inherent Cost of Long Lead-Times, Manufacturers Continue to Look at Global Networks Through the Lens of both Regional and Country-Level Sourcing.

I have argued in a number of past posts that regionalization within the larger context of globalization is likely to occur. Regionalization makes sense in a lot of areas; especially in light of rising fuel/transportation costs. Because of the increasing number and cost of supply chain disruptions mentioned in prediction 1 above, manufacturers are taking a serious look at locating factories closer to the consumers who buy their products. Another benefit of dispersing manufacturing is that cultural differences can be better addressed by plants located closer to consumers.

Prediction 3 – On the Demand Side of the Supply Chain, Recognizing the Need for Better Service Levels and Mass Customization, Manufacturers Look Again to Postponement Techniques and Data Analytics to Drive More Effective Customer Insights and ‘Smarter’ Fulfillment

The coming era of mass customization has been predicted for some time. Trevor Miles asserted back in 2011 that supply chain portfolio complexity is increasing “due to mass customization and shortening product life cycles.” [“Visibility, the antidote to supply chain opacity,” The 21st Century Supply Chain, 2 May 2011]. The year before analysts at McKinsey and Company claimed, “Executives expect that the most powerful effects on their companies will be increased innovation, greater consumer awareness and knowledge, and increased product and service customization.” [“Five forces reshaping the global economy: McKinsey Global Survey results,” McKinsey Quarterly, May 2010]. Researchers from Supply Chain Digest‘s research organization, Chief Supply Chain Officer (CSCO) Insights, also insisted that “‘build to stock’ will ultimately give way to ‘build or customize to demand'” in most industry sectors [“Building Sense and Respond Supply Chain Networks,” by Editorial Staff, Supply Chain Digest, 17 June 2010]. As Miles noted, massive customization greatly increases the complexity with which manufacturers must deal. That is why IDC analysts predict that big data analytics will be employed to help sort through that complexity.

Prediction 4 – End User IT Organizations will have to Support a More Productive Supply Chain Ecosystem

Supply chains are no longer viewed in isolation by leading companies. They understand that supply chains aren’t “chains” at all, but complex networks that need to be understood if the challenges they face are to be appropriately addressed. The term “ecosystem” implies that the supply chain must be nurtured if it is to become more productive. I venture to say that most supply chain professionals would welcome such nurturing from the entire organization not just the supporting IT team.

Prediction 5 – Service Excellence Becomes a Strategic Priority

Anna Young insists, “A manufacturer without an efficient, flexible, and multi-dimensional supply chain will find itself quickly trailing rivals and in danger of losing market share as competition heats up in the global market. … Achieving this will require a different type of supply chain system in the year ahead. Manufacturers will focus on agility in their operations but will also double down on cost reduction even as they try to meet growing customer requirement for additional services.” [“Top 10 Supply Chain Predictions for 2013,” EBN, 21 December 2012] No company wants to lose market share. That is why service excellence must become a strategic priority in the years ahead.

Prediction 6 – Supply Chains will Optimize Omnichannel Customer Service and Cost by Enabling Trustworthy, Efficient and Effective Supply Chains (TEE)

Omnichannel operations are certainly becoming a necessity for survival. For most consumers, order fulfillment is the ultimate measure of customer service followed by closely by how manufacturers and retailers deal with complaints. Companies will be investing heavily to ensure that consumers’ expectations are met regardless of which channel they select to purchase products. In Part 6 of this series, Manish Bapna noted that empowering technologies are likely to emerge that allow “governments and companies to be more engaged with, and accountable to, citizens and consumers.”

Prediction 7 – End Users Will Focus Efforts to Improve Collaboration Both Upstream with Suppliers and Downstream with Customers to Better Compete in a Faster World

In Part 3 of this series, I discussed predictions made by Adrian Gonzalez. One of those predictions dealt with improved collaboration. Gonzalez predicted that social media capabilities will find their way into supply chain processes as companies try to collaborate better and increase visibility. He wrote, “The Holy Grail is a user interface that allows a person to access business intelligence information, execute transactions, and communicate/collaborate with others (via embedded email, chat, microblogging, video calls, and VOIP) all from a single screen.”

Prediction 8 – Supply Chains will Invest in Technologies that Enable Visibility, Visualization and Virtualization

This prediction is really an extension of the previous one. Collaboration and visibility go hand-in-hand. You simply can’t have one without the other. For more on this topic, read my post entitled Supply Chain Visibility and Complexity. In that post, I discuss an article by Naveen Polyamut who insists that “to achieve total visibility it is very important for all partners of the network to share their side of information on the proceedings. … Since different partners work on different systems, each of them may have their own data standards. The visibility system should collaborate and consume data in various forms from across all partners and use it in the best possible way.”

Prediction 9 – The ‘Modern’ Supply Chain Gets ‘Smarter’

The only way for supply chains to smarter is utilize artificial intelligence (AI). Gonzalez recommends using intelligent agents like Apple’s Siri, but there are a number of ways that AI technologies can be used to make supply chains smarter.

The next post in this series will discuss five predictions about the future of supply chains made by Mark Woodward, CEO of E2open.