Designing a New Strategy for a New Year
With the New Year upon us, retailers and manufacturers need to rethink their supply chains and find new ways to work together, according to the 2016 Future Supply Chain, a report from the Global Commerce Initiative and Capgemini.
Here's a look at some external and internal industry trends from a Lean perspective. It's not hard to see how important Lean philosophy is to a solid supply chain strategy.
Global economics. New markets such as Brazil, China, and India will evolve quickly, compared with the changes that occurred in North America and Western Europe, requiring a flexible, agile supply chain.
Ecology, sustainability, and a scarcity of natural resources. In the past, most companies concerned themselves primarily with forward logistics processes. Today, many companies also focus on reverse logistics issues on the demand side, as a result of environmental concerns, and an awareness of how the process can add value to both the customer and the bottom line. Moving forward, environmental considerations will have a greater impact on many logistics decisions.
Demographics. The distribution end of the supply chain now feels the impact of an aging population and increases in urban populations in Western countries. Companies will have to pay attention to wastes resulting from city congestion, and excess inventory from changing tastes.
New technology and the information explosion. Technologies such as RFID can be enablers for a Lean supply chain.
Regulations. Governments will continue to enact more environmental regulations. Management must get creative, and develop flexible work times and rules that allow facilities to be used to full capacity with less environmental stress.
Consumer behavior. E-commerce and mobile technology have created a demanding and empowered consumer. This omni-channel approach requires new thinking in terms of product development, delivery, and replenishment.
Product flow. Urbanization, energy prices, and regulation will impact transportation, and require creative supply chain solutions.
Information flow. More collaboration and information sharing will be required, and data will be increasingly managed with analytics tools.
Some key aspects of the 2016 Future Supply Chain report's glimpse into the future tie in nicely with Lean concepts. Both recommend that companies significantly reduce lead times end-to-end in the value chain, as opposed to sub-optimizing individual parts. Supply chain managers must improve the physical layout of their supply chains, and find better ways to match supply with demand, such as real-time sharing of data—starting with consumer demand.
Ultimately, the report's outlook for the supply chain dovetails nicely with Lean thinking, as it points out the importance of true collaboration by supply chain managers and executives who look not only at efficiency and cost, but innovation and collaboration as well. It will require additional training and more skills and tools to accomplish these goals.
Now might be a good time for you to start thinking about "the vision thing" (as George H.W. Bush once referred to it), as it is required to establish the guidelines for a Lean, sustainable supply chain.
Parts of this column are adapted from Lean Supply Chain & Logistics Management (McGraw-Hill; 2012) by Paul A. Myerson with permission from McGraw-Hill.