Futuristic Supply Chains

Futuristic Supply Chains




Worried about the future? Then know that everyone is in the same boat. You have been working hard to create a perfect supply chain but think that something is wrong somewhere? Well, you are not the problem. The fact is that the design of your supply chain is regularly being influenced by a large number of ever-changing developments. Familiarising yourself with some of these would be a good start to solving your problem. To begin with, you have to believe that every company, including yours will have rare supply chain design challenges and that you cannot provide to make the mistake of developing a one size fits all design.

One of the developments that stands out has to be the sudden rise in logistics costs in recent times. Transportation continues to be a major portion of the total supply chain cost at 63% of the total costs as stated in CSCMP’s (Council of Supply Chain Management Professionals) latest annual report. This rise in prices could be largely credited to rise in energy costs. Then there are the effects of globalization. It challenges supply chains by creating the problems of extended rule times, enlarged cost gaps, varying needs of customer base, management of talent spread far and wide and political, economic, social issues, to name a few. Then come, the challenges posed by the risks of adopting logistics strategies of lean manufacturing, outsourcing and offshoring. Yes you may surprise as to how these strategies could not be advantageous in every sense. The problem is that they make the companies unprotected to miscellaneous global pressures and disruptions.

Instability in commodity prices has not made things any easier. Domestic governments and the international community have tried to stabilize prices by quota systems, commodity agreements, compensatory funds and price hedging. However, not much has changed and this affects the procurement course of action of companies. Another factor that plays a enormous role in supply chain design is the cost of labour.

Unfortunately, it has been increasing at an upsetting rate in developing nations in addition. The slowdown in the global economy has not deterred Chinese labour costs to go up by an average of 22 % in minimum wages alone this year. A non-traditional challenge would be the increase of regulations especially in Europe due to the growing drift towards and faith in green supply chains.

The only way to confront these challenges head on is to have a holistic approach towards the various needs of your supply chain. You have to let in that value to your customers has multiple dimensions and they are not easy to please. But then again, you may ask; how can I give them everything? The answer to this question would be to design a supply chain that can sustain your dominant customer value driver. In fact, it should be one that makes you an ace in that particular size and enables you to have a good or reasonably decent performance in the other value drivers that matter. No need to be jack of all trades. Makes things a bit simpler, doesn’t it?

However, there are certain other measures and processes you must invest your energy, time and money in. Having an efficient and aware risk management team and system should be of utmost importance. Risk management should not only be regarded as a insignificant course of action but it also should be an integral part of the organisation right from the grass-root level. You have to also believe in going ‘Glocal’ and not just global. Globalisation is slowly but steadily giving way to Glocalisation. It is important that we understand the value of creating a supply chain that caters to the requirements of local regional practices and expectations with a global perspective. You should try and merge local and global practices depending on the specifications of the business. McDonald’s followed this same rule and look where it is now!

In today’s dynamic corporate ecosystem, one of the biggest blunders would be to ignore the component of flexibility in your supply chain. Flexible supply chains can be defined as those which have the resources needed to adapt to any sudden or possible changes in supplier base, customer base, costs, need etc. It can also be described as the capability to respond promptly to need and opportunities. Visibility will also aid you in making your supply chain a dynamic one. It makes an enterprise much more responsive. It is a form of increasing the obtainable data and information needed to be analysed for the strengthening of your supply chain. The essence of this course of action is implementation of tracking and tracing products from the manufacturer to the ultimate destination.

You can be rest assured that these processes will make a huge difference to your supply chains. These are all weapons and not just strategies and can be adopted by all organisations. This is only the operational side of things. Hence, long term thinking has to be a vital part of our lives. We need to think futuristically and open-mindedly to be truly successful.

Author:

Adishree Bhattacharyya

http://www.LogisticsBureau.com




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