Shaping the Future of Supply Chains

These are exciting times for supply chain professionals. Not since the late 1990’s (when many would argue that the discipline of supply chain management finally came of age) have we seen such a confluence of forces that all foretell radical change. Pundits, analysts and practitioners are all pondering the opportunities and challenges ahead. In a recent post on Supply Chain Insights’ Global Summit blog, I wrote about my key takeaways from the Supply Chain Insights Global Summit on imagining the future of supply chains. Shifts in consumer behavior, the rise of emerging markets, breakthroughs in disruptive technologies and growth of sharing economies all lead me to believe that we are now at an inflection point. Supply chains of the future will be fundamentally different from supply chains today.

Changes ahead

While I believe there are many profound changes on the horizon, here are three predictions to get the conversation started:

Innovation focus will shift to information flows

Much of supply chain innovation and value creation to-date has been through re-engineering and optimizing product flow. By and large, information flows are still an indirect consequence of product flows today. In the digital supply chains of the future, tremendous value will be created by rethinking information flows.  Product flows will still be important, but information flows will drive them.

– The field is ripe for innovations in deriving customer insights. Customer insights will drive changes in offers and positioning of product, which will in turn drive the product flow across supply chains. Look for an upcoming post by me for more on this topic.

– Co-creation of designs with customers combined with technologies such as social networks, 3D printing and robotics will create opportunities to transform the supply chain. An example would be delivering product platforms to the customer and enabling configuration and personalization locally through cloud based access to design libraries and live contact with expert service providers.

Reverse logistics will no longer be in a silo

One side effect of omni-channel commerce is significant increase in returns. We will no longer be able to look at forward and reverse product flows in silos. It is time to start looking at both flows together as a cycle touching the customer forward and back. Furthermore, there is significant inventory moving around in return flows that could be resold if curated and managed appropriately.

Agility will tame uncertainty

With only a few exceptions, such as in the determination of safety stocks, supply chain plans are driven by best estimate forecasts with little regard to the uncertainty around them. Today we look at uncertainty as a disruption and strive to minimize forecast error. Tomorrow, we will be more interested in characterizing uncertainties and understanding their underlying drivers so we may collaboratively shape demand and drive supply considering the full range of uncertainty across the entire supply chain.  Optimization work will shift towards developing plans with contingencies that are robust against known risks.  Furthermore, as I have discussed in a previous post, planning and execution will converge to enable greater agility and superior performance.

After changes upon changes, we are more or less the same

After some reflection, the challenges before us, as well as the solution approaches we are likely to employ, are not actually that new. For instance, SCM World’s Chief Supply Chain Officer Report from September 2014 indicates an explosion of complexity, volume and urgency of demand. Supply chain professionals have been reporting increasing complexity and rising customer expectations for many years now. We have been on this same trajectory –just the scale and scope is greatly amplified.

As in the past, customer satisfaction will remain a dominant raison d’être for the supply chain. It is just the scope will now span from  anticipating the need even before customers place orders all the way through the entire cycle of delivery, customer experience and after-market support.

Operational efficiency will still be created by removing latency and synchronizing end-to-end. It is just that the ends will now expand to include a geographically distributed, but digitally connected, collaborative community of supply chain partners.

Finally, the best performers will still be those that are able to translate business strategy into smart plans and local execution to drive profitable trade-offs. It is just that strategy, planning and execution will now be coordinated across marketing and merchandizing as well as sales and operations. Be it a retailer, a manufacturer selling directly, or an individual in a sharing economy model – the winners will be those that can deliver superior customer value while simultaneously managing cost-to-serve trade-offs profitably.

What do you think? Do you have predictions about the future of supply chains that you want to share? We would love to have that discussion.

 

 

  4 Comments   Comment

  1. Right on, Adeel! These are indeed exciting times for supply chain professionals!

    Supply Chains are becoming exponentially complex and enormous pressure is being placed on global supply chain leaders’ capability to optimize performance, manage supply chain costs, and mitigate inherent risks.

    Some of these themes you touched upon above were highlighted at the CSCMP Beijing conference earlier this year. Check it out — What do you think?

    View Presentation > Five Major Changes Impacting Global Supply Chain Leaders

    Reply
  2. “It is time to start looking at both flows together as a cycle touching the customer forward and back. ”

    Couldn’t agree more. That reverse product flow impacts your back-end business and adds a layer of complexity to the entire customer experience. For instance, if someone sends back a product and expects an updated version back (new size, fixed product, etc) within a set time frame your supply chain has to account for that. And if that product was sent back because it was faulty you need to put that product on its own path to be resolved.

    Reply
  3. Alex Bhattacharya

    Mr. Najmi,

    I enjoyed reading your post regarding the future of supply chains, especially when you mentioned how 3D printers will transform operations management. The advancements in 3D printing over the years presents a tremendous opportunity for large companies, especially retailers. Do you think we will see companies investing in 3D printing technology? Mass producing products via 3D printers could significantly help forecasting as well as shorten the supply chain. Or perhaps companies would be able to sell designs for products rather than the product itself and consumers would be able to print their product on their own. 3D printers could significantly alter supply chain strategies, and I would be interested in your opinion on the matter.

    Reply
    • Adeel Najmi

      MR Bhattacharya,
      First of all, please accept my apologies for the belated reply.
      I do think 3D printing will have significant impact on supply chains strategies. One area where I anticipate immediate impact is in the aftermarket spares area. Rather than stocking up with last time buys, parts that can be 3D printed may be produced as needed in “intelligent” warehouses. This will likely impact stocking of parts in reverse logistics and refurbish facilities as well.
      Another area that I expect to grow is how products are personalized to the individual consumer (as mentioned in the blog). The manufacturer may have a core design or platfrom that is personalized on order by the customer. This may eventually require some ways of capturing personalized measurements and preferences of the shopper in the field.
      Finally, as sharing economies take hold,one can indeed imagine online marketplaces where people share and sell designs.

      Reply

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