Supply Chain 2020 will continue collapsing cycles, challenging Supply Chain professionals and taking advantage of exponential technology shifts.
What’s on your RADAR for the Supply Chain of 2020? What should be?
People, Process and Technology – some indicators and trends to watch out for in the coming years.
What picture comes to mind when I say “Supply Chain”? Is it a series of interconnected links that makes up a process? This is how we have seen it for the past several decades. The reason for visualizing and vocalizing the Supply Chain as a “Chain” was to illustrate the two competing realities of Supply Chains.
First that the Supply Chain is indeed made up of individual value added activities that have to be managed, each one to its own efficiency. Second, that all these links also have to be tied together to work in unity effectively towards the same end. This is the competing dynamic of the supply chain. How to be locally efficient while still being globally effective.
As technology improves and companies mature both aspects of the Supply Chain tend to collapse. The individual links in the chain each get faster and the overall coordination of the chain gets tighter.
Supply Chain 2020 will see a continued collapse of cycles as processes continue to get faster and smarter. Be prepared to reassess not only the individual processes but also the end-to-end supply chain with greater frequency.
In the old paradigm we could set up a process or flow and expect it to have a 5-10 year life before we had to rethink and retool.
We are hitting an inflection point. More adaptable demand and supply networks will be forced to flex quickly and more often. Capacity and inventory will constantly readjust to balance cost, risk, delivery, service level and margin.
I’m not telling you anything you aren’t already living – process change is getting more frequent and business cycles are collapsing. Supply Chains need to be flexible and adaptive as a result.
Is your process ready to respond competitively in this new fast-cycle world of supply chain? Can your processes adapt fast enough to stay in business?
Process improvement and technology improvement play leapfrog in the business world. Innovations in the process areas create fertile ground for new technologies and vice versa. Hardware will continue to follow Moore’s Law (smaller and faster) and will also become more accessible. Better data sensing will enable process optimization, thus contributing to the fast-cycle supply chain.
Tracking every pallet, vehicle, item and customer in the supply chain will continue to create a vast amount of data. In 2020, this rich ocean of detailed data, plus years of transaction-level data, will provide the perfect evolutionary conditions for a whole new generation of machine learning and optimization.
Do you have a plan to utilize this newly accessible sea of data about your supply chain? What will you be tracking and collecting in 2020? How will you use that new data to optimize the response of your business to the market?
There is another opportunity when this data becomes harvested and optimized. When information replaces inventory, slack and lag time will diminish. Supply chain cycles will move exponentially faster and the current systemic buffers will disappear, replaced by proactive, risk-based buffering.
This is critically important to you. Today, your Supply Chain would has current capacity and time buffers built into your models.
When those buffers are eliminated by optimization do you have the Supply Chain smarts to manage risk proactively?
Cycle collapse has a physical limit right now. Unless we invent replicators from Star Trek (that would be cool – think 3D printing), you still need to make and move things. The tug-of-war between cost and delivery time will continue.
In a perfect world no one wants to make stuff 2,000 miles from where it is consumed. Technology advances will continue to change the cost dynamics in this equation and production will move closer to market where it is not anchored to a raw material source.
Advances in automation, additive printing and a new generation of smart, flexible robotics will continue to remove labor cost from the Supply Chain. This removal of labor will make localized production less expensive and less risky. Due to the capital invested we won’t see major shifts in 2020, but like everything else in today’s Supply Chain things are changing faster than we ever thought possible.
Do you have a plan to take advantage of technology innovation that removes labor cost and enables the redeployment of production?
As with any other micro-economic shortage, our recent concerns about ‘the supply chain talent gap’ has sparked an increase in future capacity. The educational system has been adding programs and churning out Supply Chain graduates. It looks like by 2020 we will have enough freshly minted Supply Chain professionals to fill the ranks. The conversation will change from ‘number of people’ to rethinking the skill set required.
Supply Chain skills needed in 2020 will be different than today. As supply chain silos collapse into a seamless fast-cycle response, we’ll need managers who are more than technicians, who possess collaboration skills in addition to their operational domain expertise. Successful supply chains in 2020 won’t be driven from a desk but out in the open with presentation skills, interpersonal skills, collaboration with customers and suppliers, and sales skills to drive the consensus plan and help orchestrate the supply chain.
You can’t expect the university system to create these collaborative professionals. By 2020 the best in class Supply Chain organizations will have internal programs to teach what might be known as ‘soft skills’. This will become even more challenging (and more of a competitive opportunity) as the wired and tech-savvy millennials fill the ranks.
Does your supply chain organization have a way to recruit, train, mentor and lead the next generation of collaborative professionals?
Beyond the 2020 Horizon.
In summary, many of the things we see in 2020 will be the continuation of trends we’ve seen before. The Supply Chain will continue to get faster at both the process level and at the company response level. Change will continue to accelerate and we will be forced to plan faster and smarter.
We will be able to access innovations in technology to support our efforts to keep up. We are at a point in the supply chain where several collapsing cycles are converging fueled by exponential technology. It’s going to be fun if we’re smart enough to handle it!
For some companies these will be challenges. For others these will be the opportunities that help them emerge as best in class in the next generation.
Which will you be?