The Future Supply Chain
September 3, 2011
What Does the Supply Chain of the Future Look Like?
Many of our clients are interested in moving to the ‘next-generation’ of supply chain, as a reaction to competitive pressures or changes in market dynamics. The salient question is – just how far in the future can we push a supply chain?
Evidently, the focus will include some form of advanced technology, like RFID and Electronic Ordering, and complete system integration. However, these technologies are largely here now, almost by definition, since they are used in isolated corners of most supply chains. Since no one has really implemented all of the technologies, certainly all together, it does represent the “future,” but maybe the relatively near future. It’s simply a matter of the adoption curve.
Every organization struggles with the temptation to paint a picture of a supply chain world in which simply everything is automated – though, indeed, that may very well be a huge component of the future vision. In fact, Trindent has pondered this topic – when do we reach a point in the level of supply chain automation, both physical and informational, that there just is not a whole lot more we can do in terms of supply chain improvements? Is that point likely to come fairly soon, or is it decades away?
System Integration is at a similar crossroads. It would also be relatively easy to simply paint a vision where we have virtually 100% integration both within the enterprise and across trading partners and networks. Much more unpredictable, of course, would be forecasting the timing of this (remembering, for example, the lessons and history of EDI), but even beyond that, does foretelling a world of near perfect automation and integration really tell us much? We don’t think so.
Processes are a part of the solution, and less is better. By less, we mean removal of unnecessary steps, paper processes, data entry, ordering, repackaging and returning. Most organizations have not approached supply chain redesign by asking, why are we doing this in the first place?
There is a Behavioral component as well. Even the most automated, sophisticated supply chains are susceptible to self-inflicted, surges and spikes in demand, poor sales force and customer ordering practices, and grossly-optimistic marketing and product development timelines and demand estimates. Trindent believes that the supply chain of the future will need to push the limits of human behavior and habit.
All this also makes us wonder how far out companies themselves are thinking about this. What is the horizon of your company’s supply chain master planning? It is really just a timeline of advancing today’s basic strategies, or does it really encompass innovation? As most of our present clients today view “strategic planning” often has a horizon of only about 18 months, since many think the world is too dynamic, especially right now, to consider a horizon much beyond that. It was partly an exaggeration, but a good one to make the point about the environment we operate in today.