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I asked the followng question on LinkedIn, and obtained the answers added below. Please feel free to share your views…
After the integration of Supply Chain Network, WHAT NEXT?
Buying and Selling started with Barter System, followed by producing and consuming locally.
Then came the age of Producing Locally and selling Globally; the Mass production approach in Henry Ford Style.
This approach was challenged by the current mantra (producing Globally and selling Globally) achieving success globally by Integration of Global Supply Chain Network (as exploited by Wall-Mart, Dell, Toyota et al).
Now, What Next?
Filed under: General | Tagged: Barter, Integration, Network, Products, SCN, Supply, Supply Chain Network
My Answer to this question:
I am no expert and cannot predict the future. This is purely based on my understanding of the macro economic trends…
I believe there are three ways from here…
1. Companies that started from retailing and moved forward to Cash-n-Carry Business have no other avenues than manufacturing. Having said that, it is a gigantic task to produce and manage such large manufacturing units. Such Vertical Integration is extremely difficult but is a monopolistic approach. In my opinion, this is very unlikely.
2. Integration of Services: After the consolidation of supply-chain networks, Services will start adding on to them. Not only services like Insurance, Credit Card but also Health Services, Tax Consultants, House Maintenance Services etc. will start consolidating. The entity with a superior network of services will then dominate the market.
3. Customization: Now when products and services have become generic, services and products will now start being customized. Custom Designs of clothes, Tooth Brush, Soap Case, Coffee Mugs etc shall be a norm.
What are the Odds of this happening?
Regards
Pankaj
Answer by Jan Simpson:
speak with Steve, and Dave
Jan Simpson also suggests these experts on this topic:
Steven Bonacorsi
Dave Halker
Answer by Shuki Weiss:
There is nothing bigger or more challenging in Logistics.
The change that comes is in products. Insted of buying a product – you buy a small factory.
Machines that produce for you a single copy of the very personal product you yuorself designed. But attantion, delivery of this novell service is still hanging on SCM.
Please refer to chris anderson futurist to read more on that.
Shuki Weiss
Answer by Bob Grebe:
If I told you, I wouldn’t make any money.
Answer by Michael Campbell:
In short- value chain convergence. The convergence of 1) Supply / Service and 2) Procurement / Logistics value chains.
-Supply / Service networks come together to drive spares inventory out of the warehouse into a (Postponement) pool of generic, configurable parts pushed to WIP or Service, depending on real-time business conditions. This tactic addresses Demand swings and Spare Parts write downs- providing better execution on both ends of the chain and overall, a more nimble supply network.
-In the case of Procurement / Logistics value chains, marterial costs have been beat down to the point where the only quantifiable opportunity to improve is visibility to logistics cost in the context of a specific negotiation on an item, for a specific delivery. The price of fuel has only added to the importance of this capability.
My 9 cents worth.
Answer by Steven Bonacorsi:
After Supply Chain Integration comes Supply Chain Optimization. Using techniques like Value Chain Transformation with methodologies like SCOR. Focusing the customer needs, built on stable processes, that are low in inventory and units pulled through the supply chain fast (lean) with low defects (six sigma) and low costs (lean six sigma) across the entire supply chain. Balanced scorecards can be setup for critical metrics throughout the process and controlled using SPC.
Customers will always be seeking your supply chain product and services to be better, faster, and cheaper, as well as safe and regulatory compliant. Thus, the phase of continued process improvement follows the optimization phase.
Warm Regards,
Steven Bonacorsi
Links:
http://www.theaitgroup.com/00_value_chain.asp
Answer by Dave Halker:
Hi Pankaj,
I’m with Steve here as far as “Value Chain” and Optimization.
Cleary, reducing waste through “Lean”, though my Toyota Avalon must have not been included and employing 6-Sigma practices, though my old Motorolla flip phone was one of the 3.4 rejects in 10,000, are all very good initiatives, I truly believe it’s all about Gross Margin.
Companies do not really compete with each other in the same manner as they did several years ago. If you look at Wal-Mart versus Tesco for example, it’s really about “my supply chain’ versus ‘your supply chain.’ The winner gets the highest gross margins. They sell the same box of Rice Krispies, right? It’s who performs the best in managing their Supply Chain and optimizing their Logistics techniques are the companies that will be at the finish line holding the highest Gross Margins.
Of course, the biggest change in the US over the ;last 30 years evolved from when the Trucking industry became de-regulated several years ago. From then ‘Truckers’ to now ‘Logistics’ providers. I can remember not too long ago that most equated the term Logistics with Transportation. Fancy name change or change in the whole business model? The other part to making Supply Chain and Logistics such broadly used terms was the fact in parallel, manufacturing operations in the US steadily moved offshore chasing cheaper labor. How cheap can you get?
It was easy when we made everything here. The Automobile Supply Chain for example, started in the iron ore fields to the steel mills, to the foundry, to the auto plant, to the showroom. Now, it’s a tightly integrated, complicated and very global process much the same as a chess match. Toyota versus Ford. Lean Manufacturing, Kanban, 6 Sigma, blah, blah. Raw Materials, parts and labor coming from every direction, arriving JIT.
Thus, with the Import Supply Chain we have in the US today, ‘Logistics’ not only involved Trucking but it rapidly included Ocean, Air Freight, Rail and Distribution Center operations.
Okay fast forward: What’s next?
The current challenge facing all of us is the oil crisis. We’ve modeled everything around oil. Seemed like a good idea at the time. Endless supply, cheap commodity. That’s how things are put into motion.Oil. So, is there a Solar powered Ocean freighter? Hydrogen powered rail. What’s the answer? We’re all in this together and need to collectively derive a solution.
Fuel surcharges are being passed on through the supply chain from ocean freight to local delivery causing an inflationary spiral not seen since the early 80’s. Higher prices for fuel and groceries are causing consumers to spend less on discretionary items such as fine fashion apparel, which of course hurts our traditiional retail clients in the short term. On the flip side, if the glass is half full, this crisis presents new opportunites for optimization. Building new Distribution Centers closer to the marketplace to reduce rising transportation costs and streamling existing operations represent some of the ways for retailers to hold onto their gross margins.
So, we all have the same challenges. The companies that innovate and optimize will be the winners.
Cheers !
Dave