Supply Chain Trend Alert!
Take heed at these supply chain trends that will revamp, rethink and rejuvenate the way you do business.
Spotting trends is difficult, and nowhere is this truer than when it comes to the supply chain. This is due to the fact that the supply chain represents an intersection of a multitude of varied domains. So how do you become good at spotting them? Some people will turn to stats and produce forecasts without providing any real insight. Other people will make announcements of grand trends on a whim without any evidence to back them up.
The approach in this article is to examine three economic and business trends that have been growing over the last number of years. Following this, we’ll think about how the supply chain will be effected if these trends come to fruition.
1. Software is Consuming the Supply Chain. Businesses around the globe are becoming more and more dependent on IT. The number of transactions taking place via software is growing. Within this there is a pronounced fundamental change taking place. What where once products are now services. Even the IT industry is profoundly changed by this, with software that was previously packaged and sold with a one-off license now accessed via the cloud with monthly rolling subscriptions.
2. Say Goodbye to Lean and Hello to Agile. Companies who went crazy stripping back their redundancy, waste and other types of cushioning are extremely exposed to any problems arising in the supply chain. All of these processes have their place in an efficient supply chain, but overdoing it makes them brittle. Overly optimized supply chains leave no margin for error and aren’t resilient. They’re great when things go well, but this depends upon unwavering demand. In place of “lean” comes “agile,” and this also has its basis in software, allowing for shorter cycles and incremental changes on the go.
3. The BRIC Countries are Now Buyers as Well. Everyone is wondering how much longer offshoring will last? The cost advantages seem to be on the downward trend, and they were always finely balanced between lower wages and increased shipping costs. As living standards increase in the BRIC’s (Brazil, Russia, India, China) so does pay, and the balance is tipped back in some cases. Near-shoring is the alternative, with US companies outsourcing to Mexico, for example. The best answer is to focus on customer satisfaction and increasing profits in other areas of the business, as outsourcing to anywhere can be unreliable.