The challenges facing the supply chain industry are greater than ever.
From resource scarcity to global warming, the industry’s landscape is changing rapidly. It’s unsurprising that companies are looking for more effective, innovative ways to manage challenges. The vast complexity of the issues facing the industry can leave professionals not knowing where to start. In order to make this task more achievable, it is crucial to categorise the issues, for a more structured approach to managing the risk.
We have outlined the top three megatrends set to dominate the industry:
In the past two decades, world trade has increased dramatically. Unpredictable demand patterns now have ramifications across regions. As a result, the complexity of individual supply chains has intensified. Forecasting and planning has become increasingly difficult as companies struggle to predict pricing and availability of raw materials.
In an attempt to mitigate these risks, companies often look to increase inventory levels. However, this can result in higher inventory costs, as well as the accumulation of dead stock. To be effective, supply chains must demonstrate clear value against customer buying behaviour.
Sustainable supply chains
As many companies look to benefit from the costs savings offered by emerging markets, they face the question of how to deal with substandard social and environmental conditions. This increased focus was reflected in a recent survey which revealed that over 70 per cent of executives regarded sustainability as a goal for their company, an increase of over 50 per cent from 2003.
The associated challenges are wide-ranging. As organisations look to reduce emissions - for example through alternative transportation methods - they also run the risk of having a slower supply chain. A complete re-think is required if companies are to ensure that their supply chains are sustainable, without sacrificing on cost or efficiency.
The geographic spread of supply chains is greater than ever before. Adverse weather, transport network disruption and natural disasters all have ramifications.
Global threats require global solutions. A recent survey revealed 82 per cent of executives noted supply chain risk management as a key priority for their organisation, almost twice the number reported in 2003. Companies are recognising the challenge before them. Within this new strategy must be a focus on contingency plans. Careful calendar planning, for example in the case of promotional campaigns, can prove crucial in offsetting currency fluctuations and other local market issues.
As organisations recognise the changing nature of the supply chain, the investment in these key megatrends is crucial if they are to survive and thrive.
☛ Klaus Rüth is senior director of analytics & supply chain services at HAVI Global Solutions.