Top 5 Supply Chain Facts of 2014
SCM World has released its 4th annual Chief Supply Chain Officer Report. Highlighting new trends in demand volatility, complex customer expectations, and deeper operational integration in value chains, the report sheds light on a variety of shifting directions in the supply chain world.
The research features 1,068 executive’s answers to 129 questions, offering insight into the perspectives and experiences of supply chain leaders across the globe. SCM World is a talent development partner for the world’s leading senior supply chain professionals, with members including General Mills, Samsung, Nike, Nestle, P&G, and Microsoft. The knowledge gained through this study highlights the ongoing transitions across various supply chain industries, while also creating a dialogue about the common challenges being faced by supply chain managers. The following points are a just a few of the report’s findings:
1. Supply chain practitioners are slow to embrace cloud computing.53% of surveyed industry participants think of cloud computing as “interesting, but unclear [in] usefulness.” Cloud computing is taking other industries by storm, and it’s somewhat surprising to see supply chain managers opt for pre-existing methodologies rather than exploring this new technology. It’s possible that supply chain practitioners’ needs are not as easily solved by the cloud, whereas managers operating in Enterprise Resource Planning (ERP) and B2B companies find cloud computing easier to apply to their immediate infrastructural needs.
In another report by SCM World titled, Supply Chain and the Future of Applications, SCM describes how cloud computing and other applications are beneficially transforming supply chain performance. However, the report notes that the adoption of cloud computing was largely dependant on the legacy ERP systems that a business currently has in place. Companies attempting to employ cloud computing have to adapt in layers or stages in line with their other technology stacks.
What about the other 47%? What is their stance towards cloud computing? The Supply Chain and the Future of Applications report notes that the top four supply chain strategies best poised to benefit from cloud computing are Sales and Operations Planning (S&OP), Transportation Management Systems (TMS), Spare Parts Management, and Store Shelf Optimization. Those who are best served by cloud computing are those who benefit from large numbers of suppliers and/or customers having rapid access to information. Cloud computing may be increasingly useful, but the question for many companies is whether it’s worth the hassle.
2. 10% of survey respondents say they are supporting a smaller number of Stock Keeping Units (SKUs) in response to digital demand. Although this percentage by no means represents the majority, it’s worth noting because the larger trends point towards more SKU complexity. In fact, 37% surveyed reported some SKU expansion, while 23% reported much larger SKU expansions. However, supporting a smaller number of SKU’s could be indicative of a few things, one being the the new frontier of product personalization post-sale. This is a sector expected to see greater growth in the next few years. This includes apps or other mobile software that are accessible to those already in possession of a mobile device. Another option might be that SKU complexity needs to be simplified in order to streamline supply chain logistics. Simplifying your portfolio of SKU’s could actually be beneficial for supply chain management and consumer growth. Apple offers a good example of this by limiting the number of SKU’s available in stores while offering product personalization post sale with apps. Needless to say, their model has been quite successful.
3. The second highest rated “disruptive and important” technology among respondents is digital supply chain. The potential of a digital supply chain is hugely transformative as it revolutionizes the traditional material supply chain. Adding value to services that can be digitized offers great potential for future profit margins. Imagine purely digital production and distribution with no need to physically transport anything. A variety of businesses already employ this technique, with software and digitized artwork or services as just a few examples.
4. 31% of survey respondents deem sales an “essential” skill for supply chain professionals. Whether this means that supply chain professionals need experience in sales or simply the ability to sell a product, sales are becoming increasingly important in post-recession supply chains. Part of the reason for this push in sales skills is that sales forecasting can help mediate risks in market demands, while also meeting changing customer needs. Reducing sales times by understanding the sales process can also aid supply chain professionals in their overarching sales goals.
5. Finding a skilled supply chain workforce has become increasingly difficult over the past few years, and it is now considered the number one people management problem. 26% of respondents say that finding supply chain talent is “extremely challenging.” Globalization, market uncertainty, and shifting demographics are putting heavier demands on supply chains, just as chains are facing a severe shortage of talent. The skills and abilities that companies were highlighting and rewarding 5 years ago are already changing due to new market trends. Millennials can fulfill these emerging needs, as they are in search of valuable learning environments and meaningful work. Supply chain management companies need to capitalize on the skills millennials can offer by becoming more proactive in recruiting and training new talent.
The world is changing quickly, and supply chains need to adapt to meet increasing demands. Practicing vigilance about new supply chain trends will help your organization successfully navigate the necessary changes.