Five trends affecting Supply Chains – and the life of your company
May 19, 2011
Globalization
Initially globalization was introduced as an ‘add on’ for low cost sources of manufacturing supply. It’s eventually evolved from a vertically integrated domestic supply chain to one dependent upon global sources of supply which drove significant adoption of supply chain execution technologies and strategies. The warehouse became a distribution centre responsible for managing thousands of containers of imported product, and enabling these goods to flow to the appropriate outbound shipment.
Now, where countries such as China, India, Brazil and Russia were once low cost sources of demand, they are now emerging as strong consumer markets themselves – and new sources of demand (to compete with your needs and raw material supplies.) More complex, global markets are also burdening the factory, warehouse, import/export and logistics areas. Conversely, manufacturers are dealing with ensuring product consistency and adapting (and complying) with differing configurations and standards required by various global markets for the same products. Regulator practices for compliance initiatives demands a massive collection of requirements from dozens of worldwide regulatory agencies, in order to compete globally. And let’s not forget emerging safety and environmental requirements that differ globally.
Risk Management
Previously it was operational efficiency and cost reductions, while today, the focus is on risk management. Risk management is becoming an issue not only for business continuity, but survival as well. Critical points of risk are quite diverse these days and include safety, environmental, and meeting (or better exceeding) regulatory requirements. The audit or identification of these various risks are a vital first step. Supplier and transportation disruptions…plant failure, recall management, employee retention, IT continuity and/or failure, and let’s not forget (in global markets) natural disasters.
Once completed, identifying root causes and the probability of risk occurring. Next, simulating alternative sources, logistical change management and other ‘what if’ scenarios and simulations are mapped. Finally, the ability to monitor and become aware of execution level activities (or failures) and respond immediately in a defensive manner. Traceability of shipments, supply, ingredients for product recalls, tracking inbound supply chains, dealing with disruptions and ensuring manufacturing and quality assurance procedures are followed.
Sustainability
This is increasing becoming critical business issues along with the environment and how your purchasing practices are affecting the global carbon footprint. Typically the leadership of the supply chain organization are called upon to address sustainability via transportation, manufacturing, and various product design issues. Where initially it was seen as a legal ‘compliance’ issue, sustainability progressively revolves around cost savings, strategic marketing, and now ‘corporate responsibility’ to ‘do the right thing.’
Innovation
A flexible supply chain that can react and meet the needs of new products and requirements is growing in urgency. Progressive and evolving techniques and emerging best practices to help manage your supply chain are coming to the forefront. Supply chain leaders should play a critical role in the launch of new products. The design of both the product AND THE SUPPLY CHAIN are equally important nowadays. (We recently offered a supply chain position requiring a professional versed in New Product Introduction (NPI).
Customer Focus
Visibility and a stronger Customer focus are taking shape too. In the past, you would run material requirements planning, buy from a supplier, and simply satisfy a customer’s order. How or even ‘if’ the end product was being consumed or disposed of properly, was not considered. Now, a supplier’s supply, capacity, and other ‘more transparent’ and open issues have created a need for more dialogue and sharing of information – right from the very top to bottom in the supply chain. Wholesalers are sharing demand information with suppliers, service is being measured multiple ways from ‘perfect order performance, percentage of on time shipments, levels of product quality, etc.
The Supply sector continues to be quite dynamic and is becoming more and more complex as global influences exert their effect on it, and your company. Having a comprehensive plan on how to best deal with emerging influences, and having a full compliment of properly trained Supply staff to effectively react to them, is your best ongoing defense strategy.
If your company is experiencing dynamic change and has a new (or upcoming) Supply job requirement for professionally trained and qualified supply chain professionals, please call Tim Moore Associates (905) 201-6515.
The market is quickly changing and the demand for qualified Supply professionals increasing.
