Predictions

Tell Me Something I Don’t Know: Five Supply Chain Predictions For 2017

I write about the supply chain industry.  

Because it’s no fun pondering the obvious, I focused my “Supply Chain Predictions for 2017” on insights from experts provoked with the statement, “tell me something I don’t already know.” So, with that spirit in mind, here are my top 5 supply chain and procurement predictions for 2017:

The supply chain will go bimodal.

How do organizations maintain processes and strategies that effectively manage the demands of today’s supply chain, while simultaneously innovating, via the integration of disruptive technologies? Say hello to the bimodal supply chain. We’ve entered an era where traditional ideas surrounding  “balance” may soon be discarded as suboptimal.

“There was a time when supply chains could settle for trade-offs…cost or speed, service or quality, flexibility or reliability. Those days are long gone,” predicted Paul Keel, Senior Vice President, 3M Supply Chain. “The equation has shifted from an imbalanced ‘or’ to an equilibrium centered on ‘and.’”

And research firm Gartner agrees, viewing the trend as a critical business driver in 2017. It says that innovative digital strategies must run in conjunction with the traditional analog business (i.e. a “bimodal approach”).

Earlier this year at Gartner’s Supply Chain Executive ConferenceDavid Willis, chief of research at Gartner, provided a nice summary:

“For decades, supply chain professionals have been rewarded for focusing on being operationally excellent, risk-averse and trained through continuous improvement techniques. However, that approach is evolving to include strategic thinking, change leadership and sophisticated finance and communications skills. It is crucial to be open to leveraging the wisdom of crowds and looking outside the company — and even outside the industry — for new ideas, and to bring those lessons back in practical ways. Learning how to explore through new means will drive bimodal adoption.”

Sue Welch, the CEO of Bamboo Rose, a PLM provider in the retail industry, shares a similar vision to Keel and Gartner. The supply chain is going through a period of rapid change, and the end game is more connectivity, digitization, customer-centricity and collaboration.

One example is product development. “Product co-creation will shift from being a nicety to a necessity, as the community collaborates and leverages the knowledge, expertise and experiences of those around them to inspire great products and bring them to fruition,” said Welch. In 2017, the product development process will “become less about buying physical items and more about buying and sharing ideas.”

Along similar lines, Welch also predicts that 2017 will see old-fashioned, back-room processes like procurement, product development and sourcing, fully modernize. “2017 will see a dramatic increase in the adoption of more visual, collaborative and social tools within connected B2B marketplaces.”

Excellence will be measured by adaptability.

Almost everyone I spoke with shared this same sentiment: change is in the air, and organizations must adapt or risk having the same view of the lead horse.

According to Jim Lawton, Chief Product and Marketing Officer at Rethink Roboticsthe ability to sense, think and act on real-time information – from production and equipment data to market variability and demand – will be a key differentiator for the top-performing supply chains next year. Lawton commented that truly adaptable, self-configuring and self-optimizing supply chains are made possible only “by the advancement of automation of both physical and cognitive tasks.”

One specific supply chain and manufacturing area where Lawton predicts this concept will manifest itself is in behavior-based robots. In 2017, “robots will use computation at vast scales, deep learning and other forms of AI and the cloud to process additional data and to share learning with robots in other operations. Ultimately, the information they glean will be used to modify the supply chain in real-time and build supply chains that are truly adaptive.”

High performing organizations will recognize supply chain and procurement operations as critical differentiators.

Okay, so maybe the idea here isn’t so novel, but I don’t mind putting it out there for as long as it takes. Supply chain management, including procurement, are organizationally critical, if not defining disciplines and deserve equal billing at the executive table. In 2017, more CEOs will formally recognize the significance of these core operations and fund them accordingly.

“We’re finding new ways that supply chain must lead,” said 3M’s Keel. “While historically organizations looked to their supply chains primarily for productivity and cost reduction, today’s high-performing companies count on us for much more – for developing new products, protecting our environment, serving our customers and driving meaningful value creation across the enterprise.”

Kristian O’Meara, senior vice president of value engineering at BravoSolution, a strategic procurement provider, predicted that the role of the chief procurement officer (CPO) will evolve substantially in 2017. “The CPO will be increasingly seen as a strategic player within the business and will get a seat at the table that allows procurement to contribute its expertise to new, different areas of the organization.”

Early collaboration is key to making a strategic impact. In 2017, O’Meara expects procurement staff to “collaborate with different teams more often and much earlier.” O’Meara noted that procurement holds a wealth of expertise, “such as insight into how product design impacts total cost, how material selection impacts quality and how competitive advantage can not only be gained, but will be definitively measured.”

A redefinition of supply chain risk

It’s impossible to fairly discuss what’s ahead without addressing a top of mind concern for most every organization: risk management. “While risk has always been a top priority for supply chain teams, the landscape will change in 2017,” according to Steven Minsky, CEO of LogicManager, a provider of enterprise risk management solutions.

Not just banks, but all organizations have a need to proactively reassess their policies, procedures, and processes for compliance with statutory and regulatory requirements for monitoring, detecting, and reporting suspicious activities. Said Minsky, “effective change management addresses the risks you already know about, while enabling strategic mitigation of future unknowns.”According to Simon Dadswell, Group Marketing Director at PROACTIS, risk mitigation still comes down to really knowing your supply base.  “How many organizations truly have the breadth, depth and quality supplier information they need to make effective decisions and mitigate risk,” questioned Dadswell. “In 2017, we expect to see organizations invest more heavily in strengthening their supplier data and relationships, with a focus on making smarter decisions, increasing collaboration and efficiencies, and taking uncertainty and risk out of the supply chain.”

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