What's on the Minds of Supply Chain Teams- A Perspective Derived from this Past Conference Period
Guest Post by
Bob Ferrari is the Executive Editor of the Supply Chain Matters Blog and Managing Director of the Ferrari Consulting and Research Group LLC. Bob is a guest contributor to the Infosys SCM blog.
This spring's supply chain conference season is drawing to a close and it has been a rather busy one. With the economy and optimism slightly improving in the U.S., conferences dedicated to supply chain came back in a resurgence during this first part of 2011.
It seems that the topic of supply chains, along with their capabilities, challenges and shortcomings contrasted to a continued era of business volatility has once and for all become a common theme for discussion and discourse. In this Infosys guest commentary, I will summarize what I found to be common themes and topics of discussion among supply chain and procurement professionals these past weeks.
Clearly, one top-of-mind topic has been supply chain disruption and risk. The tragic earthquake and tsunami that impacted northern Japan has been yet another acute reminder of where vulnerabilities can lie across supply chains and that manifests itself in monetary impacts to business. A survey conducted by Japan's Nikkei business newspaper has pegged direct disaster-related costs for listed Japanese companies at $25 billion. That number could be higher when other global company impacts are quantified. While many companies are responding much quicker than originally expected, the topic of conversation revolves around how or can you prepare adequately for such a "black swan" event. Some take the position that you cannot, but quickly add that there needs be very responsive business continuity processes identified that can be activated in such occurrences. Other companies observe that at the very least, every organization needs to analyze where critical vulnerabilities such a sole supplier sourcing of an important component, or sole provider of a commodity exist. The one common theme, I believe, is that risk and disruption events are becoming all too frequent, and every organization needs to have a plan for identifying, responding and cost-effectively mitigating supply chain risks.
The IBM Impact 2011 conference brought reminders of the increasing adoption by consumers of sophisticated online buying tools, including the increasing use of smartphones and mobile technologies to secure buyer intelligence and ultimately make buying decisions. Multi-channel commerce and indeed the business models of large and smaller retailers will all be impacted by these trends in the coming months. Consumers now demand real-time information regarding product availability, in-stock inventory and status of their orders. Supply chain business processes and information technology will have to rise to the increasing need for finite information being provided on a real-time basis. As existing supply chain, product marketing and IT teams sort the required elements of a multi-channel fulfillment strategy, there is a need to prioritize which specific capabilities should be implemented first, and that often involves overcoming existing data management and process complexity.
Another similar and reinforcing theme for overcoming complexity came from the 2011 OpsInsight Forum where many of the speakers and attendees reinforced a message that technology and tools are often not the real challenge today, but rather overcoming business and organizational cultural challenges. Overcoming business cultural challenges involve active leadership and continual reinforcement from top management, the ability to balance many different aspects of business process capability, and that it's the recognizing that little things that can make a big difference for teams.
Other insightful signposts to current top-of-mind challenges came from Supply Chain World North America conference where I not only had the opportunity to speak with attendees, but also facilitate a panel discussion among key industry influencers. Three other current themes that resonated with attendees of this and other conferences included:
Current business cycles that continue to reflect constant product demand volatility, requiring an agile response capability, rather than a constant focus on achieving forecast accuracy. A new thinking is emerging to embrace demand volatility as a constant, with an emphasis on elements of scenario and what-if contingency planning as elements of a response management capability.
Strategic alignment of the supply chain with the company's changing business goals, and in some cases, requiring the need for segmentation of supply chains to properly match fulfillment capabilities with expected customer fulfillment metrics. Dell is a recent example of new emphasis on supply chain segmentation
A growing skills gap across supply chain management functions, particularly in the growing developing regions of the world where value and supply chains continue to be matured. This skills gap is often characterized as having broader cross-functional management awareness and general management skills, coupled with the abilities to formulate ideas, plans and initiatives that manifest both global governance but local execution uniqueness. It is also characterized as supply chain management teams possessing the skills to not only master their functional responsibilities, but more importantly, the soft skills required to constantly sell ideas and innovation.
Global supply chain teams have their plates full. Constant variability and more dynamic business cycles, a more demanding and sophisticated customer, continuing pressures for efficiency coupled with agility, and a growing management skills gap are all top-of-mind. While information technology has an important role in assisting teams to address such challenges, it is often the business cultural, change management and senior management communication obstacles that tend to provide the most challenge.