Nearing the end of the year offers the opportunity to reflect on what might lie ahead for supply chain management in 2008. What will be the key trends?
One thing seems for certain, tighter credit conditions brought about through the sub-prime debacle will create a tougher trading environment in many markets. And under such conditions costs in the supply chain will inevitably come under closer examination by the CFO. But addressing cost issues sits well with one of the most significant trends both this year and next – greening the supply chain.
This crusade has developed its own unstoppable momentum. In 2007, ‘green speak’ has been largely marketing driven, with leading retailers proclaiming far reaching policies to cut carbon emissions and clean-up their act on excessive packaging. But next year, its quite possible that action may well follow rhetoric and it will, to a great extent, come down to the supply chain to deliver the results. Logistics service providers will be expected to be proactive in suggesting carbon saving initiatives and IT companies will be called upon to deliver systems that facilitate easy calculations on carbon footprints for products, their sourcing and distribution.
Retailers will be using the ‘green card’ to ask suppliers for information on product carbon footprints and will be using this information to ascertain just how efficient a supplier is – a high carbon footprint will be seen as an opportunity to cut costs and bring greater efficiencies.
The other major trend that also seems to have its own momentum is globalisation. But interestingly here, along with the off-shoring of manufacturing from Western economies to countries of low-cost sourcing – which we have seen happening for most of this decade – we can expect to see the rising influence of enterprises from these regions on the rest of the world. China and India both have enormous populations and a growing middle class that desires consumer goods. China, in particular, is just starting to spread its wings.
In terms of supply chain facilitators, information technology will, of course, remain a prerequisite to supply chain efficiency, especially with longer and longer supply chains, greater risks and a desire to optimise inventory despite the greater distances involved in shipping from distant locations. RFID too may creep a little closer to wider acceptance, probably through applications in the pharmaceutical sector and the grocery chain, but its time has yet to come. Ask me again next year.
Oh, and retailers, make sure multi-channel retailing is high on your agenda for next year. On-line sales are moving ahead rapidly, but not everyone has their supply chain properly aligned yet.