Thursday, December 8, 2011

The Future of Supply Chain Management

"Supply chain management remains at the top of the agenda for many enterprises today as a way to reduce operating costs and be more responsive to customers," reports Jeff Woods, senior analyst at Gartner Inc., Stamford, Conn.”1. This statement, according to me sums up the criticality of Supply Chain in the industry today and that Supply Chain management is here to stay. While I strongly believe that Supply Chain Management and the innovations in the field would continue to transform the way business operate, It is also interesting that there are quite a few challenges that one has to overcome

The Supply Chain Management process consists not only includes tactical steps to execute the process but also a robust planning model that is strategic to the overall picture of the company. “The success of supply chain management at this strategic level requires considerably more integration with other enterprise systems. Since many business targets and performance indicators are established in the budgeting process, efficiency demands that the planning, budgeting, sales and marketing, and SCM systems talk with one another. Gisela Wilson, director of product lifecycle management solutions program at International Data Corp. (IDC), Framingham, Mass., reports that the ability to integrate with other back-end systems has become one of the most important features of SCM tools”1 . The critical take away from this is the fact that such a situation demands companies to consider Supply Chain Management in all its decision making process at the planning stages.

“Today's supply chains need to be bi-directional, with every link supporting the flow of not only goods but information as well. Silos must be broken down within and between trading partners if supply chain processes and costs are to be optimized. Companies should determine their core competencies, be prepared to effectively outsource where appropriate, and engage in benchmarking and best practices forums”2. Hence it is necessary to strive for supply chain excellence through visibility, collaboration, synthesis and velocity

The Critical Success factors for companies who wish to excel with a robust supply chain management process would involve multiple ways of looking at the supply chain management. Some of them would be

· “Optimization tools to help identify the realistic solutions that best fit the company's criteria

· Modeling capability to allow creation of realistic models of your business

· Collaboration tools to support business partner involvement

· Analytics to evaluate and report performance relative to key performance indicators

· Integration to other enterprise applications”1

The very fact that companies have started gaining SCM companies and are willing to gain traction in this field is a living testimony of the fact that supply chain management is here to stay. Strong integration of other technology with the Supply Chain is imperative. However, it is a given that technology is bound to fail at some stage and it will be interesting to know how companies would handle such failures when their entire Supply Chain management relies heavily on technology.

While technology challenges are some serious things to consider, one must also take into facts that gone are those days when companies invest heavily to transform their entire supply chain. “Today's executives, driven by the need to conserve cash and show results in the current fiscal year, have narrowed their focus to improving specific aspects of their supply chains.”1 In such cases It is pretty important the changes in supply chain does not interfere in the current processes of the company and the employees remain rooted to their original goals and vision. The system had its own share of criticism and was claimed by some, as the reason for the infamous Toyota recall in 2010 due to the sticking accelerator pedals issue. Many deemed the role of supply chain and Toyota’s obsession to optimize at all stages as the result of failure. However, the fact is that careful planning and execution would not result in such situations and supply chain would not be the reason for it. It will be interesting to understand how companies integrate the existing process with the Supply Chain angle into it.

Another important angle is the role of Supply Chain Management in the society at large. While companies tend to focus on profitability, it often comes at a cost. The fact that companies are committed to a greener planet is visible from initiatives where companies voluntarily involve in investment of software products to read their goods’ carbon footprint. I strongly believe that Supply Chain Management would make people think hard on how to reduce the carbon footprint and would pave way for a healthy environment. With a lot of positives in store, it will be critical to see how companies address the challenge of reliance on technology, how they integrate SCM practices with the current process and how SCM plays a role in the company at large.



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