The Inovis Blog

SCDigest recently posted an article about 10 trends that are expected to impact supply chain thinking as companies rebuild their strategies. These supply chain “game changers” are detailed in a new report from the University of Tennessee and are highly recommended in order for supply chains to succeed in the “new normal” that most companies are now facing.

The report is quick to point out that those who go right back to business as usual without altering or at least updating their supply chain strategy are going to have a much harder time and are taking quite a risk. The research, however, finds that only about 15% of firms are actually revamping their supply chains. The key trends that companies should consider when developing post-recession supply chain strategies, according to this report, include:

1. The Mandate for Measurement. Supply Chain performance metrics are critical for the new business environment. Supply chain metrics must be established from overall company goals and objectives, and then be built on three “pillars” of supply chain management: process orientation, balance, and a culture that focuses on continuous improvement within a company. Metrics should be balanaced, customer-focused, and aligned with the overall business.
2. Supply Chain Collaboration. Somewhere, Jim Cantrell is applauding. The report seems to be finding the same things he is, as collaboration seems to be showing up higher on the radar for supply chains. In fact, one of the data points that supports this view is the statistic of a 500% increase in books “Collaboration” in the title over the past two years. Motorola recently worked hard on getting their Collaborating Planning, Forecasting and Replenishment (CPFR) right, and were rewarded with a 30% decrease in retailer inventory (compared to non-CFPR retailers), transportation costs cut in half, improved production capacity, strengthened retailer relationships, and increased overall sales.
3. Lean/Six Sigma Applied to the Supply Chain. Lean eleminates waste and reduces time while Six Sigma reduces process variability. While both concepts have historically been applied in the manufacturing environment, they are now being used to revolutionize the way that the entire supply chain operates.”
4. Managing Complexity. Virtually every company is battling the challenges of supply chain complexity – more products, more channels, wider geographies, customized products or logistics services. While some of the complexity is unavoidable, companies still must recognize that “unnecessary complexity is an anchor on the firm and its supply chain performance,” say the authors of this report.
5. Supply Chain Technology. A combination of technologies such as RFID, Service Oriented Architectures (SOA), and Software as a Service (SaaS) will be key in the advancement of visibility tools.
6. Network Optimization. This is at the heart of rethinking supply chain strategies. Issues such as fuel costs that can significantly affect on-shore/near-shore/off-shore decisions cab be better understand and prepared for with network scenario planning.
7. Global Supply Chain Implications. Globalization has become the “catalyst of our ‘modern’ time,” the report notes, and whether good or bad for individual companies is here to stay. Firms who “go with the flow” in terms of globalization will find themselves missing the huge opportunity that a well-crafted global supply chain plan can deliver.
8. Sustainability. There are many pressures for supply chains to go green from customers, consumers, governments and more. Companies have plenty of opportunity to go Green and reduce costs at the same time.
9. Risk Management. Interest in risk management has peaked as globalization has increased and research has been released showing the impact of supply chain disruptions on shareholder value. The report covers supply and demand risks, operations risks, and security risks. There are an increasing array of process and technology solutions that can help companies reduce their risk profiles.
10. Managing out Costs and Working Capital. There is an increased focus on the supply chain’s role in improving a company’s free cash flow and working capital. Additionally, supply chains can directly impact their “economic value added,” or EVA, by driving inventory out of their supply chains. Increased use of outsourcing can also play an important role.

Are these tactics your company is starting to implement? How would you rate this list?

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