The Top 10 Thoughts for 2013 and The Supply Chain

Big Data or Real Time Data? Big data is everywhere. But is big data right for everyone?

Supply chains are hooked on the idea that nirvana is somewhere to be found in that mountain of information. Is nirvana in that big data or could it be captured elsewhere? What about fast data?

For example, do transportation companies need big data or fast data? It is more import to rapidly recognize patterns that might indicate a potential problem with a shipment rather than understanding 2 years worth of transaction data.

While others look to leverage big data to extract patterns and insights previously not available - such as retailers who want to compare historical sales trends with promotions coupled with other data such as weather trends. For 2013, supply chain players will determine what type of data is more important to them…some might come to the conclusion that they need both.

Supply chains will look to business process management - BPM has been well known in process oriented businesses such as insurance and healthcare. Supply chains are recognizing the importance of instituting some BPM to their own ecosystems.

Think of all the processes that take place within a supply chain - whether it involves the process associated with moving merchandise to bringing on a new supplier. Both vendors and users within supply chain will begin to seek or develop greater BPM suites and applications to bring some sanity to the myriad of processes needed to run a supply chain.

Who will have a greater role in running your supply chain? Think marketing. Okay I realize that might be blasphemy in some circles, that department that is suppose to create colorful ads and glossies will all of a sudden manage the supply chain?

It is already happening at some level - when a CPG runs a promotion it is driven from the marketing side of the business. When you think of what is taught in every marketing class it is about the 4 P’s - product, place, promotion and price. Decisions at this level get pushed back to the supply chain to fulfill a 5th P - produce.

Supply chains need to become more integrated with the marketing side of the house. Vendors will continue to find ways to provide solutions that tie together the supply chain and marketing sides of the house.

It is the consumer stupid. Related to the previous prediction, the consumer’s stature within the supply chain will continue to gain importance. A wise sage once said - “behind every B there is a C.

There really are no pure B2B or B2C companies, but really B2B2C.” Regardless of what line of business you are in or where you fit in the supply chain, at the end of that chain is a consumer. Companies will strive to get closer to the end consumer - with access to larger amounts of data coupled with more powerful analytics - this will become a reality.

Regardless of where you sit in the supply chain, you will have greater access to that end consumer. Those that recognize this and take advantage of the opportunity it affords them, will find greater success in 2013.

More vendor consolidation…and more players. One of the big stories of 2012 was the announced merger between JDA and Red Prairie. I suspect other supply chain vendors such as Manhattan will find themselves targeted by the likes of SAP or IBM to be acquired (SAP also acquired Ariba in 2013 which also greatly impacted the supply chain space).

As more of these “pure” supply chain vendors merge or get gobbled up the landscape looks thiner and thiner when it comes to solution providers. Or does it? While the landscape for pure players is thinning, in 2013 we will see solution providers emerging from unexpected places.

For example, as I mentioned above BPM vendors such as Pega could begin to offer solutions that address certain supply chain issues. Or even companies such as Amazon will become players when it comes to certain aspects of the supply chain. Think fulfillment, distribution, warehousing, order management and demand sensing.

Firms like Salesforce.com will continue to expand from their CRM stronghold and leverage their cloud acumen to become a player within the supply chain arena. As the players that defined supply chain in the late 1990s - i2 Technologies and Manugistics for example - become buried under the layers of consolidation, look for new players to emerge that will help manage your supply chain. And do not be nervous when they come from unexpected places.

Social remains an enigma but someone will solve that puzzle. Social has been seen as one of supply chains last great frontiers, an ability for companies to get closer to the consumer (because it is all about the consumer!).

Social has been seen as a way to get instant demand sensing, detecting issues before they become front page news and even provide customers with better after market assistance. Yet, I have not seen anyone truly take advantage of the social beast. But someone will.

Think about the data that could be found from services such as Groupon and LivingSocial as they provide promotions and demand shaping services for local vendors. What about all the social tagging services such as FourSquare, Gowalla and Facebook Places?

The data and ability for companies, such as retail and CPG, to access and take advantage of that information could have repercussions through out their supply chains. As companies look to gain competitive advantages, look for the company or companies within the supply chain that can take the most advantage of social to gain that little extra in market share.

Speaking of social, what about mobile? In last year’s predictions I spoke about the rise of mobility and the impact it will have on supply chains. This will only continue in 2013. Of course supply chains need to think of mobile from multiple angles.

Mobile is yet another data source. Mobile is also another manner of getting close to the consumer (see how we are tying in some of what was said above?). When a supply chain company mentions mobile, I always wonder what aspect they are speaking of. The smart supply chain players will determine what mobile means to their supply chain.

Is it a data source they want to leverage, is a manner to touch their consumer or is it a way to bring greater efficiencies to their processes? In 2013, the smart supply chain players will determine what mobile means to them - data source, customer interaction, unique user interface or something else? But just saying, “we have a mobile strategy” will not fly anymore in 2013.

And when we discuss mobile can we ignore eCommerce? eCommerce has become a part of our everyday transaction and retail experience since the late 1990s. The reality is, the actual percentage of retail that is done via eCommerce remains small.

Less than 6% of US retail was via eCommerce in Q3 of this year (numbers from the US Department of Commerce). But the influence that number has on our supply chains is much greater. As companies, such as Amazon, begin to push for same day delivery, there will be a greater pressure on supply chains to meet these demands created by an eCommerce world.

The genie is out to the bottle, 2013 will be a year when the logistical headache created by that genie will impact companies from Best Buy to Ryder - all scrambling to figure out how to meet this consumer expectation.

Governments’ role will become vital to supply chain risk management. Much like 2011, we witnessed some large supply chain disruptions in 2012 due to Mother Nature. Think Hurricane Sandy on the East Coast of the United States. We also saw how human events can have an impact on one’s supply chain.

Think the Olympics in London or the looming strike that could shut down the United States’ eastern port facilities. Supply chains have become global, complex and sensitive to disruptions…not a news bulletin. But because of this, governments are the only organizations that can truly ensure that the supply chains are kept up and running. Look for governments to begin to address how they can ensure supply chains are given the latitude to function properly. I might even suggest governments such as those of the United States consider cabinet level personnel to take on this task. Are you listening President Obama?

Public perception will drive supply chain decisions. Think about all the headlines that dogged Apple when the work practices at Foxconn were revealed. We all know that the “world is flat.” This flatness has allowed supply chains to find places and ways to gain efficiencies and lower cost.

The flip side of the flatness has been greater openness of communication. When your main outsourced manufacturer leverages questionable labor practices to guarantee your margins…that might not be as easy to keep out of the public eye.

The companies within the supply chain that have the greatest brand presence will also be the ones most sensitive to these issues. Look for companies such as Apple to turn a more PR savvy eye to some of their supply chain decisions.