Impressions and Conversations Held at the Recent Sterling Commerce Customer Connection 2010 Conference - The State of Global Supply Chains
During the recently held Sterling Commerce Customer Connection 2010 Conference, I had the opportunity to speak and interchange with a number of various industry supply chain and IT executives. The good news was that unlike previous conferences, the mood among supply chain and IT teams is much more upbeat than 2009. There is a sense that the days of dark gloom are behind and teams can now focus on what really needs to get done across global supply chain business processes.
One highlight of my activity was the opportunity to sit with some members of the Infosys supply chain leadership team to discuss the state of global supply chain as companies approach a period of post-recessionary transition toward growth. My discussions included Gopi Krishnan, delivery manager and lead for SCM, Atul Pandey, Industry Head-Enterprise Application Integration and Services, and Jai Sankar, Vice President, Enterprise Solutions. Discussions also included other members of both Infosys and Sterling Commerce technology marketing and implementation teams.
My goal in these conversations was to seek consensus of the most important global supply chain business and IT challenges facing multi-industry supply chains. Often, when I facilitate such a discussion, I look for points of agreement, and I certainly found many. One of the most obvious conclusions is that overall business and supporting supply chain challenges remain extremely dynamic. Doing more with less, insuring more agility and speed across supply chain business processes and responding to challenges unknown remain top of mind. Many organizations have weathered the unprecedented challenges brought on by global recession by implementing dramatic cost reductions in most areas of supply chain processes. As businesses now turn their attention toward growing top-line revenue and customer growth, a dual challenge of continued cost reduction along with insuring business process agility are the new marching orders.
Easier said than done!
As Gopi pointed out in an earlier Infosys blog posting, static business process transformation roadmaps are no longer valid. The speed and rate of change presented in this new business environment require more dynamic planning, plans that will dynamically change with events. The bond between functional supply chain and IT requires seamless capability in managing changes. Who could have predicted a complete stoppage of all European air traffic because of the effects of a volcano, or the increasing frequency of so many supply chain disruptions?
Industry business models are also changing. Atul Pandey and Jai Sankar astutely noted that high tech and consumer electronics supply chains are transforming into models that once reflected fashion-oriented supply chains, where products change rapidly, time-to-volume is critical and the window of maximum profitability is narrower. Companies such as Apple, Cisco and Intel have all transformed their supply chain capabilities toward maximum agility and flexibility. We can all marvel at the layout of a typical Apple retail outlet, with so much of the floor space dedicated to the customer experience. Yet, many of these retail outlets are replenished multiple times per day, and volume levels of unit sales are staggering. In many cases, B2B centric is moving toward more mass-market centric supply chain models.
Within the retail industry, many retailers continue to emphasize that consumers are much more sophisticated in their buying patterns, and more and more of these consumers expect a multi-channel buying experience. Consumers want the flexibility to research product features, place orders directly online, and have various options for delivery, pick-up or return of merchandise. While many retailers seek multi-channel commerce (MCC) capabilities, the journey has to be undertaken in business process and IT capability segments. An important learning exchange brought out by Infosys consultants is that where the rubber really hits the road is in how companies plan for implementation planning.
One of the questions I posed across many of my interviews was the following- What is the singular most important capability that SCM professionals should be focusing upon in this rapidly changing post-recessionary environment? Some point to the need for manufacturers and retailers to be able to "think outside the box." Since most of the more easily identifiable supply chain cost savings have already been identified and implemented, companies have no choice but to continue to challenge traditional thinking. Increased interest in cloud computing alternatives, the trading-off of capital (Capex) vs. operating expense (Opex) on the balance sheet, and more innovative supply chain outsourcing alternatives all seem to be on-the-table. Important board discussions relate to what are the core supply chain capabilities that can differentiate a company from its competitors, and they invariably will include cost, assets, technology and agility considerations. Each business may well have different needs, but the conversation seems to be moving beyond traditional thinking.
Finally, if there is one capability that many agree will be the most important going forward, it is the ability to be able to sense and respond to the many changes that will occur over the coming months. More than any other time, change will be a constant across global supply chains.
About the author: Bob Ferrari is the creator and Executive Editor of the Supply Chain Matters Internet blog.