Tuesday, February 26, 2013

Supply Chain; 2020 & Beyond

As today's supply chains have become more global and interconnected, they’ve also become prone to
failures and disruptions. Owing to the prevalent socioeconomic factors i.e.  currency exchange rates, fluctuating oil prices, economic downturn etc. the current global market place has become more volatile than before. With the increase in speed and efficiency, the supply chains have also become more complex, costly and vulnerable. Even a minor mistake or miscalculations can lead to major consequences as their impacts can spread throughout complex supply chain networks within a short time frame. Due to this, the executives managing supply chain are under severe pressure as they are finding it very difficult to tackle theses challenges using conventional supply chain strategies and designs. It’s no longer enough to build supply chains that are efficient, demand-driven or transparent. Now, they must also be smart.

 IBM in their recent study has predicted that the supply chain of the future will be:
  • Instrumented: Information that was previously created and maintained by people will increasingly be handled by new technical innovations i.e. RFID tags,actuators, GPS, ERP and more. Inventory will count itself. Containers will detect their contents. Pallets will report in if they end up in the wrong place.
  • Interconnected: The entire supply chain network will connect not just customers, suppliers
    and IT systems, but also parts, products and other smart objects used to monitor the supply chain. Extensive connectivity will enable worldwide networks of supply chains to plan and make decisions together.
  • Intelligent: The Advanced analytics and modeling will help decision makers evaluate alternative against an incredibly complex and dynamic set of risks and constraints. And smarter systems will even make some decisions automatically increasing responsiveness and limiting the need for human intervention. 

Smarter supply chains will be inherently flexible and will be composed of an interconnected network of suppliers, contract manufacturers and service providers that could be tapped on demand as conditions change. It will have objects not people reporting and sharing information. Critical data will come from everywhere trucks, docks, store shelves and even products moving through the supply chain. In fact this sort of real time visibility will extend to the world in which the supply chain operates. Smarter supply chains will track soil conditions and rainfall to optimize irrigation, monitor traffic status to alter delivery routes or shipping methods, and follow financial markets and economic indicators to predict shifts in labor, energy and consumer buying.

To leverage resources optimally, the supply chain of the future will employ intelligent modeling capabilities and simulations that will allow supply chain managers to see the cost, service level, time and quality impacts of the alternatives being considered. Increasingly, visibility issues will not be about having too little information, but rather having too much. Supply chain executives would in turn have to make sense of it all. Apart from handling tactical concerns the executives would have to perform as strategic thinkers and collaborators to optimize complex networks of global capabilities.The future supply chain management would transform from decision support to decision delegation and, ultimately aquire a predictive capability. Going by the trend, the question that one needs to answer is, can the supply chain of future be smarter than you? If yes, how long would it take; if no, what would be the consequences?


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