Thursday, December 8, 2011

Future Challenged: How will Supply Chain Management enviornment look in the near future?

What will be the supply chain of the future? There are actually quite a number of issues around this topic. What is the timeframe for pondering this supply chain future? 2015? 2020? 2025? I guess it has to be near enough that it has some meaning for most of us. My particular presentation is targeted at 2015, and somewhere between that and 2020 seems about right to me.

For example, if I understand the “Store of the Future” concept and showplace from Germany’s Metro Stores Group, I believe it uses a lot of cool technologies (RFID, powerful kiosks, interactive displays, etc.). However, these technologies are largely here now, almost by definition, since they are used in the model store. Since no one has really implemented most of these technologies, certainly all together, it does represent the “future,” but maybe the relatively near future.

What I am also struggling with is 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, as I have pondered on this topic, I have at times become modestly depressed around this prospect. 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?

Ditto with regards to “integration.” 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 dicey, of course, would be predicting the timing of this, but even beyond that, does foretelling a world of near perfect automation and integration really tell us much? I, personally, don’t think so. [1]

With today's emphasize on cutting costs and streamlining expenses, many companies are looking to improve their bottom lines with more effective supply chains. Unfortunately, many people involved with companies don't have a clear understanding of what a supply chain is or how it fits into the company’s overall strategy.

Technology plays an important role in the success of supply chain management. Even though the supply chain concept pre-dates the Internet, only through the use of web-based software and communication can it truly reach its full potential. Using the Internet to handle most of the elements involved in supply change management, including procurement and communication, makes the exchange of data and the running of the supply chain faster.

One of the biggest benefits technology has given to the supply chain concept is the ability for companies to collaborate. These collaborations are designed for the mutual benefit of all parties. For example, a supplier of consumer goods may be linked up via the Internet to one of its distributors so that when the supply gets too low an order for more of those goods can be placed automatically. In this way, the distributor never has to worry about running out of a product and disappointing customers and the supplier doesn't have to worry about maintaining a large inventory in expectation of demand.

While the benefits of supply chain management are many, using technology to achieve those benefits does have two main drawbacks: one is resistance from vendors and the other is resistance from employees. Suppliers of goods are often hesitant to jump onboard because of the initial costs involved in setting up their own end of supply chain management system and because most vendors do not have a trusting relationship with their buyers. To overcome this obstacle, the strong relationship must be present and the seller needs to be able to see the profit potential on their end of the arrangement. Likewise, many employees have learned to develop a hate-hate relationship with new technology. After all, it costs them their jobs and often makes them feel that their work is more tedious or more complicated. Plus, software mistakes, which are inevitable at the beginning, may cause other employees to lose faith in the system altogether. Employees need to trust the system, the company, and their ability to use the program if they are going to adopt the supply chain management software. [2]

The questions that need to be asked are:

· Will the manufacturers and suppliers see the big picture and adopt technology as a part of their operations?

· Will the small businesses be able to survive in the wake of the technology revolution?

· Is there a limit to what can be achieved with total integration?

Only time will tell. Interesting times lie ahead and I will be looking at all the developments that happen in this field.




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