Understanding the past of Supply Chain: it was present before Industrial Revolution, but of course in a more simplified manner. When amazing advances occurred, like mass manufacturing, mechanisation, transportation, internal combustion engine, electrical power and communication technologies, all this gave birth to more effective Supply Chain processes.
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Supply Chain models were developed years later, mainly focused on unifying various activities around it. There was a need to integrate original suppliers to the end user, and in the middle, better process on row material, warehouses, inventory, distribution, transportation, and the end-customer demands, became relevant. Supply Chain Management was conceived and professionals in Logistics appeared to face those more elaborated demand processes. 3PL/4PL help Global businesses to become a more common practice.
The 90s brought Supply Chain disasters. Big companies came with the decision of starting an ambitious project that planned to renew both the IT systems and its distribution facilities. Those projects would require an Enterprise Resource Planning (ERP) system and highly automated distribution centres. Many negligent decisions were made, most of the times ignoring issues which didn’t work before the launching of these systems. Nothing worked as it was planned to. Hundreds of workers were deployed to solve countless problems, with frequent stops in the middle of extreme work-hours shifts.
Shipments/customer demands weren’t satisfied; companies’ partners and executives were reluctant to cover the substantial costs linked to the changing of new technologies, dramatically affecting sales growth; technology vendors had almost totally abandoned these initiatives, as they had invested millions of dollars in developing new technology and marketing to offer to those new risky projects. After it, bankruptcy and companies being acquired by larger competitors at a lower price than their real value was.
In today’s global economy, Supply Chain processes are well positioned as a vehicle to convert businesses into successful profitable growth. The introduction of new technologies achieved the actual Supply Chain Excellence, becoming much more robust, with new approaches in which the customer relationship is in the centre of all this, and giving a unique response to each client according to their specific requirements.
Thanks to internet and software technologies, companies currently have access to endless amounts of data and information, in which a collaborative partnership leads to a win-win process; visibility, collaboration, real-time information cross-functional integration, sharing same goals where cost reduction and increase benefits are pursued, not only seeking the individual success of each department but where accountability is shared and companies enable a fast and real-time data availability from one department to another. Agility and Flexibility new technologies bring, allow companies to act in front of new and unexpected issues.
Where does this leave us in the years to come? In today’s global economy and the fast evolution of the world, and with the overwhelming data availability, companies must constantly change to a new set of metrics not to become obsolete. Supply Chain executives are constantly left behind shortly after new technology is being implemented, and in which they have spent great amounts of money: Exchange rates fluctuations, fast wage inflation, low-cost labour markets, abrupt increase and decrease of commodity prices, bank and credit issues, outsourcing to insourcing shifts, are all examples of how organisation undergo these rapid changes.
Companies must realise that a successful integrated Supply Chain requires a high level of training and education of partners, company’s employers and employees. Your SC must be based on Talent Management Strategies and the need to hire, develop and put human skills ready to work on behalf of the goals of the organisation. The main competencies that a good supply chain leader must have are a) Leadership skills; b) Technical and analytics knowledge; c) Global orientation; d) Cross-functional, cross-company understanding. e) Superior business skills. f) Decision-making capability.
Best practices to consider in the future: The best supply chains of the future will be customer oriented. Customer will have to be involved throughout the whole product lifecycle. Make optimal use of new technologies. Use Advanced Analytics and modelling. Always keep an eye on the risk that represents cost, visibility, customer closeness, and globalisation. Metrics have to be consistent, clear, easy to understand, and aligned with the company’s strategy. 3PLs/4PLs will outsource activities your own company can’t cope with.
The Earth is suffering, Global Warming is not the future, it's happening right now. We are the witness of how the environment is rapidly changing under the action of human being. Governments and environmental organisation, enterprises, and the society, in general, are pursuing eco-friendly sustainable programs to implement in their Supply Chain. Their mission is to standardise practices, methods and decision making in terms of environmental, risk and waste requirements; the world has set specific regulations to restrict and constrain companies’ activities increase in terms of environmental care.
Partnership with direct competitors, Integration, collaboration, visibility, agility, flexibility, etc., collaborate to achieve a good level of SC sustainability; companies can identify the origin of the products and the conditions under which it was produced. Developing countries have been taking advantage of the significant reduction of labour costs, permissive laws or, in some cases, inexistent regulations in terms of emission and pollution in underdeveloping countries. This represents quite an unethical behaviour; insourcing is a process which will force big enterprises to produce in their own countries.
As we are talking about future events, it’s quite difficult to know for certain the outcome of these, but you have to be prepared by taking advantage of what new technologies have to offer. Synergy among parties in the implementation of new technologies will result in a successful Supply Chain Management.
Dave Food