|On Second Thought
president of sales and marketing, ModusLink Global Solutions
This month many of you will travel to the Council of Supply Chain Management Professionals’ annual global conference in Atlanta to network, explore new supply chain technologies and take advantage of the insight and knowledge of industry experts from around the world.
Central to the conference —
from the closing session to track presentations to the third annual “Lab” exhibit — is the often anxiety-inducing Supply Chain of the Future theme. It’s that word “future” that probably invokes the beginnings of an ulcer for most of us. But we’re all in the same boat with this one. We can’t predict exactly what the supply chain will look like years from now, but we can gain a better idea of some big-picture trends.
A few trends to consider:
Cloud connectivity —
Because of the supply chain’s growing dependence on flexible information technology solutions, the “cloud” will likely play a larger role.
Many global companies today have long and complex supply chains that involve a multitude of players including logistics and warehousing providers or contract manufacturers, to name a few. Each one likely has its own internal IT platform, leading to redundancies in data across the supply chain. So, something as simple as a bill of materials created by an original equipment manufacturer (OEM), for example, can create a domino effect of data replication as it’s shared with the contract manufacturer and any Tier II suppliers.
The question then becomes whether there will come a day when every link in the supply chain will subscribe to a central data source where any order status, materials or forecast changes are shared ubiquitously. With cloud computing, this environment is beginning to take shape today. Two years ago, information technology research and advisory company Gartner predicted that 20 percent of all businesses would own absolutely no IT assets by this year alone. Clearly more companies are realizing that the cloud will be essential in creating a hyper-sensitive and flexible IT platform with multifold benefits — from reducing inventory buffers and cycle times to enabling more effective use of capacity through the elimination of information lags.
Trade and customs simplification —
Securing international trade flow is becoming more of a priority as the globalization of the supply chain accelerates.
With the U.S. Customs-Trade Partnership Against Terrorism (C-TPAT), Canada Border Services Agency’s Partners in Protection (PIP), the Secure Export Scheme in New Zealand and Singapore’s Secure Trade Partnership, more countries around the world are introducing authorized economic operator (AEO) or similar programs. This number is expected to continue to grow as most members of the World Customs Organization have agreed to adopt the Framework of Standards to Secure and Facilitate global trade (SAFE).
Through these electronic customs systems and “green lanes,” the customs clearance process is both simplified and expedited. Just as cloud computing and data sharing will bring greater visibility and efficiency to each point in the supply chain, we may see customs and trade authorities begin to get on the same page.
The consumer of the future —
Consumers have been taking a multichannel approach to shopping today that ranges from bricks and mortar to call centers, catalogs and online.
But what happens when e-commerce outpaces all other channels? If the numbers continue as they are today, it could happen. According to a report from Forrester Analyst Sucharita Mulpuru, e-retail will account for 9 percent of total retail sales in 2016, up from 7 percent in both 2012 and 2011. That represents a compound annual growth rate of 10.1 percent over the five-year forecast period. The malls are already being referred to as “Amazon’s showroom.”
What will the world look like 10 or 15 years from now? Will carriers be able to handle that level of freight? It’s doubtful that consumers will approve of delivery trucks lining their driveways day after day. Perhaps consolidated delivery points will be in order. Additionally, how will companies innovate in the way they interact with customers on service? What about an increase in mass customization and the corresponding effects on postponement strategies? Finding ways to reduce the complexity, lead times and costs of supply chain procurement and factory feed processes will be essential, as will be determining new ways to serve customers and handle last-mile delivery.
Supply chain talent —
As the supply chain evolves into more of a collaborative environment, the talent necessary to manage it is also expected to shift.
In a 2010 white paper, MIT’s Center for Transportation & Logistics states that the industry is in for a “talent tsunami” — a shortage of individuals who can fill the much larger, strategic role of the future supply chain leader. It’s going to be increasingly difficult to find someone with the right mix of interdisciplinary skills, including problem-solving and analytical skills, creative thinking, technology knowledge, and the ability to communicate internally, externally and, well, globally. In other words, companies will need to hire a veritable superhero of the supply chain world.
We’re far from being able to beam people (and products) around the world as they did in Star Trek. Until then, the supply chain is yearning for cost and service efficiencies and a new way of thinking that will keep pace with the ever-increasing demands of the end consumer. Those once pie-in-the-sky ideas about the supply chain of the future aren’t quite so far-fetched anymore.
Nightingale is president of sales and marketing for ModusLink Global Solutions, a supply chain management firm. He can be reached by email.