Trends I am Watching

by Lora Cecere on November 28, 2011 · 6 comments

It is that time again:  ring out the old and ring in the new.  The end of the year is a good time to reflect on the most significant trends of the past year and launch research into new areas.  Here I share both:

Significant Trends of 2011

  • Supply Chain Disruptions:  With the floods in Thailand, the tsunami in Japan, and the Arab spring in the mid-east, there are few supply chain leaders  NOT talking about supply chain resiliency and the design of the shock absorbing supply chain.  Supply chain sensing, control tower analytics and what-if analysis are growing in importance. 65% of companies that I am working with experienced a major supply chain disruption in 2011.
  • Supply Chain needs to be more than a Game of Labor Arbitrage:  As labor rates in China increase, companies are rethinking supply chain design for flexibility.  Labor, taxes, and raw material benefits are ever-changing and the supply chain needs to be able to adapt and flex with global conditions.  It is no longer a game of labor arbitrage.  Companies are waking up.  It is more about value and learning the hard way that supply chains can no longer foolishly chase the lowest labor costs.
  • Chief Supply Chain Officer.  With the growing importance of the supply chain on operations reliability, resilience and strategic alignment, 2011 is the first year that I have met professionals with Chief Supply Chain Officer in their title.  While they are still few and far between, I feel that the evolution of the title is significant.

Trends I am Watching for 2012

  1. Big Data Supply Chains.  The concept of the big data supply chain is the evolution of technologies to harness the explosion of data and  new data sources–sensor data, unstructured text, demand and supply sensing, transactional data forms– to drive a near real-time response.  In this research, I will be writing about the evolution of Map Reduce models to harness new types of data with a keen interest in the use of unstructured data types.  I will also be closely following the expanding capabilities of in-memory processing and the growing capabilities for reporting and analytics.
  2. Definition of Outside-in Supply Chain Processes. Today’s supply chain processes are designed from the inside-out (from the enterprise processes of procure to pay and order to cash).  Tomorrow’s processes will be designed from the outside-in (from the external environment to internal processes).  The focus will be on sensing, shaping and driving an intelligent response.  This evolution will take many years and will require the redefinition of current supply chain architectures.  I will be following these trends.
  3. Digital Path to Purchase and Social Commerce.  I am currently writing a short report on social commerce.  Last year in October 2011, Altimeter hosted an event–Rise of Social Commerce– to focus on the evolution of social processes to drive commerce.  A year later, I find that the goals are still aspirational, but following one of four paths: extension enrichment of eCommerce, social as a new channel, social convergence of mobile/social and digital in the digital path to purchase and open innovation.  The intersection of the open and social graph is still largely an untapped opportunity for the customer-centric supply chain.
  4. Evolution of Supply Chain Adaptors. To connect the end-to-end supply chain, companies need adaptors for both demand and supply relationships.  These adaptors cleanse, harmonize, translate and normalize disparate data types to improve demand and supply sensing.   Demand signal repositories (DSR) were an early form of this technology category.  Companies are learning the hard way that building the end-to-end supply chain is not as easy as connecting ERP and APS building blocks.
  5. Safe and Secure Supply Chains. With changing legislation for serialization in pharmaceuticals and food safety in global supply chains, I will be following the impact on supply chain execution and the extended supply chain.
  6. Supply Chain Sensing.  Today, supply chains respond.  They do a poor job of sensing.  While latency in the extended supply chain is weeks (and the concepts of the bullwhip effect are understood academically), the impact is largely ignored in the extended supply chain system design.  In this research theme, I will focus on understanding the benefit to companies to reduce supply chain latency.
  7. Redefinition of Supply Chain Benchmarking.  Software as a Service (SaaS) offers companies the opportunity to redefine benchmarking practices to represent the near real-time supply chain potential of peer groups.  I will be closely following this trend as SaaS offerings embrace content and global supply chains align to near real time performance signals.

Interested in your thoughts.  What trends do you think are significant?  Any trends that you would like for me to watch?

{ 3 comments… read them below or add one }

Scott Welty November 30, 2011 at 1:52 pm

I believe Lora has hit on several key trends to focus on in 2012. Big data, unstructured data driven by the omniscient technology-driven customer is a huge factor. She is also spot on in saying that supply chains are no longer about labor. I would take it a step further and replace the word labor with costs. Companies have worked very hard to drive every dime they can out of the cost of the supply chain.

It’s now open operational efficiency and collaborative partnerships between retailers and suppliers that will change the game. Evolving from reaction to sensing is also a core tenant of, and again is a an outcome of, the new customer and their digital path to purchase as Lora points out.

Critical topics I think are not on Lora’s radar and may deserve a nod include:
• Personalization – The ever expanding evolution of assortments and offers from “one-size-fits-all” > “localized” > to now “personalized” assortments.
• Engagement methodologies and the relationship with the customer – How will retailers continue to “engage” with their customers in stores, on line and mobile devices?
• Sourcing – The migration of sourcing back to the western hemisphere and what impact this will have on lead times, collaboration and benchmarking for the future.
• The growth of customers in Asia – What will it mean to companies that have a new customer, with new buying power in the largest land mass on the globe?

Scott Welty
Vice President, Retail
JDA Software

Reply

Lora Cecere Lora Cecere November 30, 2011 at 11:46 pm

Thanks Scott. Great feedback.
Localized store assortments, sensing shopper needs and defining the true cross-channel experience are definately on my radar. Thanks for reading my blog and giving me comments
Have a great weekend.

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Abby Mayer December 3, 2011 at 7:08 pm

As a current graduate student in Supply Chain Management, I have seen significant discussion of a “supply chain talent shortage” including a white paper out of MIT. Is this a trend with all of the baby boomers retiring in the upcoming years? I was wondering if you could speak to this and also offer advice as to what young people can do to develop their skills to better fit what employers are looking for? I stumbled across your blog several months ago and have really enjoyed your perspective on the challenges and opportunities within supply chain roles. It helps to add some real world (read non academia) perspective to my understanding.

Thanks!
Abby

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