What Should Be On The Supply Chain Radar? Predictions for 2014

2013 has evidently been a riveting year!

I’ve had the serendipity to be presented with opportunities of being in regular conversation with several leaders, senior executives in acquisition, planning, and technology management over this past year in supply chain from various companies across the breadth of industries for compelling discussions.

With the end of 2013 as we prepare for the coming year, it’s a good time to think about business trends that will affect not just how you do your job but also how the supply chain is managed. Here are some of my thoughts regarding the supply chain trends you may want to keep an eye on in 2014. Not surprisingly analytics have a profound impact and remains at the top of the list.

The Year of Futuristic Technologies
The current and the most profound technologies which are transforming the manufacturing are open source hardware designs and digital parts, 3-D printing and intelligent assembly robots. Incorporation of such technologies in the business flow will quickly reformulate manufacturing, shifting hardware-base productions to software dependent process.

This transition to a software defined supply chain has extensive aftermath for supply chain managers. It will for sure crimp the time period from product concept to finished goods thereby reducing the need for physical and inventory movement of parts and products. This may lead to drastic change

The Expansion of Global Supply Chain Imprint Will Outlast
Global Growth Strategies focusing on expansion into new regions are continuing to be perused by multifarious organizations. A new host of problems are anticipated, with the representation of focal BRIC (Brazil, Russia, India, and China) as the primary targets for expansion, where the enterprises have little to no experience in handling logistics capabilities. The factors directly proportional to major growth strategies are movement of currency, various government regulations, economic realities and access to logistic networks. With globalization, it becomes indispensable for organizations to partner with local logistic service providers. The partnership with such local service providers with good understanding of domestic transportation issues can provide dominant solution to complex local distribution challenges.

Closer to The Point of Consumption
2014 will likely see one in six manufacturing companies believing in “Reshoring”.  As organizations global footprint expands, increase in labor cost in Asian countries, rising fuel charges and regulatory shifts has a dramatic impact on sourcing, production and process complexity involved in selling the product. Labour issues at ports, larger ships, port capacity, and multiple other issues are driving executives to worry about the status of their shipments and whether they will reach their destinations in time to meet customer requirements

Numerous issues related to port capacity, larger ships and labour costs are becoming a reason of worry for executives to think about the status of their shipments and on time delivery to their customers.  Hence, shifting of overseas manufacturing closer to the point of consumption is seeing small but measurable growth and it will result in shrinking of lengthy and complex supply chains.

Cost Inflation Continues
2014 does not give any hopes of cost reduction but unfortunately predicts the cost pressures to be on stiff rise. The pressure will continue to prevail at all levels in the supply chain from supply of raw material, transportation, warehouses, distribution to manufacturing. Every organization, regardless of small or big, will seek ways to face the challenge of cost target, however the preeminent performers will identify the real opportunities lies in collective cost reductions initiatives. The new age will see more of fact based negotiation where a experienced practical supply chain manager will effectively work with a partner to drive down costs with increased investment in cost modelling and market intelligence. All alliances in supply chain should have a common set of mind to work collaboratively towards cost reduction through work capital management, improvement of quality, several value-added activities and increased productivity.

Supply chain Analytics – The Key Enabler
The key to performance in 2014 will be profoundly impacted by supply chain analytics. A need for better business analytics will be felt in processes like source, design, make, deliver and market.  As stated in one of the article on EBN online (Betting on Analytics as Supply Chain’s Next Big Thing), “Some industry experts claim that the day for real-time supply chain practices has come — and is on the verge of being more mainstream, thanks to a multitude of cloud data management tools and increased corporate adoption of new supply chain software platforms coming to market. However, there’s also acknowledgement that a necessary foundation for moving efficiently at real-time speed — supply chain analytics — is still very much at the beginning stages of development at many companies, and will take time to build out.” The article points out to the fact that there might be an increased interest in better forecasting and S&OP (Sales and Operation Planning), but tools upgrade and implementation takes time and requires accurate and accessible data in order to execute data analytics with its complex algorithm.

Organizations will deploy supply chain engineers for mapping the activities, for better understanding of the value chain and to work with various partners to understand the critical areas where data collection is required. An extensive initiative will be taken by large organizations to set a team of subject matter expert to identify the key business problems that exist in the major areas of supply chain. To find viable solutions, the analytics team needs to think about the sources of data and the type of decisions that will be made.

So as the New Year gets under way, keeping an eye on the above trends may help in getting an additional grip. Staying on the top of developments, and when the time ripe to act fast will help organizations to gear up the chart of top performers.

About the Author

Irfan A Khan - Senior Vice President, Global Field Operations
Irfan is the Senior Vice President, Global Field Operations, at Bristlecone. In this capacity he is responsible for all Global Customer Acquisition functions to include Field operations, Strategic Alliance, Market Enablement and Global Solutions Enablement, across the Americas, EMEA and Bristlecone Labs.