Monday, September 30, 2013

About the Future Collaborative Supply Chain

 This week’s article “2016 Future Supply Chain” systematically maps out the trends of supply chain industry in the next five years. It seems to me that the future supply chain will probably not encounter some breakthrough changes but instead the changes will be incremental and accumulative since a number of the primary concepts in this article sound familiar and intuitive.  For instance, with the competition escalating and customers becoming increasingly demanding, “on-shelf availability” should be greatly improved; Collaborative “everything”  (warehousing, transportation and Information Sharing) among “everyone” (among competitors, among retailers and manufacturers..); greener supply chain.

Since nothing is really “revolutionary” here, the key is then- Implementation. How companies can implement these not brand new but highly effective strategies innovatively and efficiently.

One key word of this article is “collaboration” . It is easy to understand the benefit of collaboration (reduce cost and save energies).  But according to a Nielsen report, although most CPG (consumer packaged goods) manufacturers believe that collaboration effort is important but only 50% of these respondents achieve modest outcome, 30% with no measureable results at all and only 20% reach full potential of collaboration. Then my question is what the obstacles and challenges that facing companies in succeeding with this strategy?  According to the recent report published by “SCM World” which surveyed 374 companies, the major problem is “Speed of issue resolution” instead of the commonly believed “Trust and Governance”.

The report first applauds the idea of collaboration, which turns out to be a steep learning curve within organizations. With true and effective collaboration, all the “operational metrics” can be expected to improve 1.5 times. “ The most prominent problem with collaboration is the need for fast problem solving capabilities.  About 50% of respondents claim that the speed of issue resolution between partners is a problem.  With collaboration, there will be more parties involved in one deal and if the information flow if fragmented and of poor quality, the overall quality of the collaboration will suffer.

One obstacle, although not a major one, is trust. Collaborative transportation and warehousing is carried out by “competitors” , either companies which produce similar products and thus have similar customers or manufacturers (upstream) and retailers (downstream) which cut from the same pie. The basis for collaboration is not solid even the parties agree to use a 3PL (Third-party logistics)..

The article mentions several concepts: Warehouse, distribution center and hub. How are they different from each other?
A related question is that the article says that “warehouses locations on the edge of cities will be reshaped to function as hubs where cross-docking will take place for final distribution” what does this change really mean to the whole supply chain?

How “revolutionary” “new” or “different” is the concept of “collaborative warehousing and collaborative transportation” are?


Emerging from the storm-how leading customer organization reignite growth.- GMA/Neilsen/McKinsey

Collaborative Supply Chain Begets Optimization and Benefits

Collaborative Distribution-Is it really a new concept?

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