Wednesday, October 8, 2014
Collaboration - The future of Supply Chains
The most important drivers for supply chain designs have been to improve cost efficiency and on-shelf availability with a strong focus on sound financial figures. The return on investments and the brand value were the major concerns. Studies by the Institute of Global Futures suggest that we are headed towards an era of greater complexity with more competition and faster change. While technology will continue to serve as a primary enabler of market growth and competitive advantage, its exponential growth into newer areas of the supply chain will demand an overall transformation of the supply chain itself.
Over the time, there has been a consistent convergence of the physical and digital infrastructures in the world. With the advent of sensor technologies, any activity or process can be measured. Different entities can collaborate without actual human intervention. Different supply chains, transportation systems, financial markets and other external systems can all be interconnected and work as one element. The next generation of supply chain will be more proactive and predictive. Hence, the key trend in the emerging supply chains will be collaboration.
A smart supply chain will take advantage of all forms of interaction – not just with customers, suppliers and IT systems but also among objects that are flowing through the supply chain. Besides the creation of a more holistic view of the of the supply chain, the extensive inter connectivity will also facilitate collaboration on a massive scale. These highly connected networks of the supply chain will be enable firms to make decisions collectively with other parties involved.
Some characteristics of future supply chains
- Smarter chains
With the emerging use of technologies like sensors, RFID tags, cloud based ERP systems, meters and GPS, the supply chains will be more transparent and visible. The supply chains will rely less on labor based tracking and will shift to a more self tracking system where objects like containers, trucks and products themselves provide real time updates of their location.
- Business intelligence and predictive forecasting
There will be shift in traditional forecasting methodologies to better real time forecasting techniques. The firms will prove more capable in anticipating customer demand and identify profitable markets. Customer and supplier data will serve as a weapon for competitive advantage.
- Collaborative IT infrastructure
Collaboration between all players in the supply chain will prove to be the ultimate competitive advantage. To realize its potential and enable business models lie Just in Time production, the firms will invest in robust interconnected IT systems.
To leverage resources optimally, the supply chain would have intelligent modeling capabilities. Simulations will allow supply chain managers to see the cost, service level, time and quality impacts of the alternatives being considered.
Supply chains that react to customer needs alone will find it difficult to survive in the long run. Only collaborative supply chains will shape the future success of the firms and their partners. But collaborative approach can mean that the overall cycle of decision making will be slower owing to the fact that a consensus should be reached between all the players involved. So will this impact a firms profit making strategies in the future or will they settle for a more publicly approved strategy?