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Managing Your Supply Chain

Written by Ken Kinlock
Published on Monday, 30 November 2015
StabilizeEveryone is suggesting what the trends in Supply Chain Management (SCM) are for 2016. Most of the writers agree on a “core” of important trends (sort of like the  “motherhood and apple pie” thing. Then there are even some new ones that pop up too. I am going to bring out as many as I find. Where they are not as common, I will provide a link to more information. Read on and tell me if you agree or disagree.


Everyone agrees that Globalization is important and changes the way SCM operates. Likewise, increased Competition and a push on prices is here to stay. Along with competition, Product Life Cycles are getting shorter and requiring more complex solutions. Throughout the year we saw a continuing trend for Collaboration with suppliers. The move towards Lean manufacturing and supply chain means an increase in Demand Planning. We have, of course, see the rise of Outsourcing, but keep an eye on Insourcing too. The growing number of SKUs (because of changing customer preferences) for consumer-facing businesses will impact the SCM operation.  Consumer products folks are pushing to open Direct-to-Consumer Channels. Last, but not least, is Social Media.

 

Not necessarily major "trends", but never-the-less "issues" are important too. An on-going reduction of operating costs, remains the primary mission for supply chain managers. Along with this, companies must keep SCM on the same page as business strategy, for example, concentrating on enhancing customer service and loyalty. SCM continues to play an important role in supplier relationships, faster product-development cycles, and business expansion. E-Commerce will continue to be highly important, especially if the end-user is in near proximity. 

Now, on the “wild side”, what about WebSites are dead, long live digital presence. Something else that should become more of a trend is Managing SCM in Risk/Disaster. We just have had a reminder on the East Coast and previously Japan automakers had one the year before.

The biggest question mark is Social Media. Yes, it is going to happen. Yes, it is happening, but it is a big change and will it continue in 2016? Remember, it is revolutionary and revolutions take time. Everyone knows it is time to stop talking and put social tools into action and get some business value. It is as big a change as the transformation from bricks-and-mortar to e-business: with its own risks and benefits.

It is hard to define “social business”; it is really a “socially enabled process”. It combines people-centric and task-centric activities into a business process.

The integration of social platforms and traditional business systems is one of the biggest challenges to hurdle.  Ever hear of the “OpenSocial 2.0” specification? It addresses standards for Social Media interoperability. But the biggest hurdles are cultural ones. Some business leaders still think of  social networking as a frivolous time-wasting. At the time, others see Facebook as a business success.

WebSites as we know them are DEAD! We just needed to put good content and maybe readers (customers) would look at it and like it. Now companies must engage and interact with customers (and suppliers and service providers). Can't even pump out a video and expect it to work wonders. You have to have a “digital presence” and not just a single channel. Years ago, companies just wanted to get online and put up a WebSite. They only did it because the competition was doing it. All they had was an electronic brochure. Marketing provided the content and IT published it. Now the customers got involved and messed up this “perfect world”. Customers got into things like tablets, smart phones, Facebook, Twitter, LinkedIn, you name it. And all these channels demand immediate interaction and engagement. Where ever customers get online and interacts with you, they want the engagement to be bi-directional. They want to respond to your tweets, comment on your Facebook page, et al.

Unfortunately, you probably built your digital presence piecemeal. First a WebSite, then a blog, then Facebook, and on and on. Your digital channels might have different graphics and be sending different messages. The Marketing Department might not always be the right group for all the channels. Got to breakdown those “silos”! Can no longer be just marketing. Everyone must be involved!

So now we end up with several crucial issues: (1) control of the tools and the workflow; (2) need to be dynamic (change message frequently and keep the message unified across all the digital channels); (3) recognize the differences in the channels like how table and smartphone people interact with “swipes” which means complicated menus are a “no no”. For remote users, excessive content is also a “no no” because they are usually multi tasking.

Now let's take a look at  Managing SCM in Risk/Disaster. Toyota and Nissan are implementing steps to avoid the losses they recently experienced should a similar disaster happen in the future. As a reminder, when the quake and tsunami hit Japan, Toyota and Nissan were forced to halt vehicle projection for over a month. Once they started up, however, production was significantly hampered due to supply bottlenecks. Add to this mess the floods in Thailand, and supply chain issues are still top of mind for automotive executives.

Yes, companies are Insourcing too! Let's use General Electric's historic Appliance Park in Louisville, Kentucky — a plant that was on the verge of shutting down just four years ago. They are "re-shoreing" electric water heaters and when you look at the total system costs (including the supply chain), they will be cheaper than "made in China". They depend on the LEAN idea of "pull " demand. The whole company is using it's expertise  as a world-class manufacturer to introduce advanced manufacturing software solutions that drive lower costs, faster production and tighter control on quality. All developed with AGILE technology.

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