As globalization continues to increase, today's supply chain leaders will face the challenge of continuing to drive operational improvements while meeting increasingly complex customer demand patterns.
In addition to the lengthy global supply chain and the inherent complexity of the offshore manufacturing business, executives must now respond to the higher customer expectations brought about by the "Amazon effect." As the e-commerce giant continues to dominate the retail industry, its influence has begun to extend to other industries as customers now start accepting Amazon's service levels as a standard status quo. In other words, consumers outside the retail industry have begun to ask this question: "Amazon can deliver this product to me in two days-why can't you?" Looking ahead, the success of corporate supply chains will depend on executives Can we reach a consensus on a delicate balance between managing increasingly demanding customer expectations and cost efficiency.
Hay Think conducts regular surveys of our customers in each of our core business areas to coordinate our future challenges. In addition to pointing out specific challenges for the coming year, respondents also highlighted the need to update business processes to reflect the adoption of new technologies. Although new software-based tools and IoT solutions offer huge opportunities for improvement, without changing basic operations, it can dilute the impact of IT and technology solutions and even cause productivity disruptions. Although there are many exciting new tools available to supply chain executives, the basic principles of complexity management, process speed and transparency will stand out in the new year.
Here are seven trends our respondents believe will have a significant impact in the near future:
Growing demand for data-driven logistics
For many years, supply chains have used statistical analysis and quantifiable performance indicators to measure success and drive improvement. However, defining a viable KPI and implementing basic data analysis tools is only the first step in leveraging customer data. Supply chain organizations must recognize that IT software solutions are no longer a tool for innovators trying to overtake corners, but a necessity for all organizations to remain competitive. For organizations that have taken steps to upgrade their management tools, leaders must now seek to change existing processes to take advantage of them. For a sales organization, this means integrating data obtained from customer portal use during the sales process. For R & D organizations, this means transitioning to the Voice of the Customer strategy. For supply chain organizations, this means faster processing and reduced response times so that the organization can respond faster to changes in customer demand. In 2018, we want to see companies start using geo-specific data to forecast demand for certain products in the region and ship early.
Increase customer expectations
Customers expect different levels of service from delivery than they did a few years ago. As mentioned earlier in this article, consumer-oriented supply chain superstars (such as Amazon and Zara) have caused changes in the status quo even outside the industries in which they operate. Amazon Prime subscribers (then 90 million B2B company decision makers in the U.S.) were able to accept another company's twelve-day delivery cycle when the entire Amazon marketplace could be delivered within two days (without additional shipping costs). The overwhelming majority of interviewees emphasized the importance of striking a balance between cost and target service levels-savvy organizations will take steps to ensure that customer expectations are met while ensuring that their efforts are paid for. In 2018, it is critical for supply chain organizations to develop strict customer segmentation standards so that they can appropriately segment delivery pricing options.
Fuel and inflation will drive higher logistics costs
Due to fuel costs and inflation, the overall cost of the logistics industry will be pushed up, especially after the implementation of higher emissions standards at home and abroad, the frequency of logistics fixed assets replacement will be faster, resulting in a substantial increase in logistics costs.
Companies will develop forecasting methods
After the 2008 financial crisis, supply chain organizations were forced to adapt to changing customer demand patterns. Drastic reductions in consumer spending have led to unpredictable buying behavior, so agility has become a major concern for major supply chain groups. The focus now is on finding that companies can more proactively anticipate changes in demand. One way for an organization to do this is by using installed base data as a predictive forecast. Industrial manufacturers and OEMs have begun to use this data to improve their aftermarket segment forecasts and have achieved significant results. Producers who use existing customer data (historical sales, geographic location, purchase history, etc.) will find their advantage in the 2018 forecast.
Inventory management visibility
Supply chain leaders are making visibility into their inventory management processes a top priority for 2018. Inventory control and item tracking are not new issues in inventory management, but in the current environment of increasing customer expectations, it has been refocused. A common situation caused by a lack of visibility is that purchasers will buy inventory that is already available in the warehouse, or (even worse) sales representatives will sell unavailable inventory. Such situations are usually caused by outdated inventory management infrastructure, lack of standardized processes, and poor communication channels. These inventory incidents may severely affect cash flow when the inventory is accumulated, and if the company encounters out-of-stock conditions, it may also seriously waste revenue opportunities. In the age of social media, an unsatisfactory customer post on Facebook will severely affect the company's sales, and in 2018 there will be savvy organizations investing resources and time to improve their inventory groups.
Supply chain inventory and network design
Multinational companies consider many factors when designing their supply chains, including total landing costs (TLC), regulatory issues, lead times, and supplier quality and reliability. A key aspect of TLC is tariffs or taxes on imports of foreign goods. The new political management system's position on global trade has prompted many companies to use costly situations to determine the impact of increased manufacturing costs on the Mexican or Chinese nodes. Although it currently appears that companies will adopt a "wait and see" attitude before making major adjustments to their footprint, some companies are more proactive. In a once-unbelievable shift in the automotive supply chain, Toyota recently announced a $ 1.6 investment in a plant in Huntsville, Alabama. In fact, foreign automakers are preparing to produce as many cars in Detroit as they do in US plants.
BLOCKCHAIN blockchain technology
Although many supply chain organizations will now be aware of IoT and artificial intelligence solutions, many vendors may lack a precise understanding of what blockchain technology is. Blockchain is a distributed ledger technology that enables more secure transactions between parties, and transactions can be conducted independently of intermediaries. Major logistics players have recognized the value of blockchain, Maersk has tested the blockchain application of transportation insurance, and UPS has announced its participation in the blockchain of the Transportation Alliance (BiTA). Although blockchain may not be able to gain mainstream adoption for several years in a row, a supply chain organization that understands the technology and how it affects the business will benefit slow-moving people.