Industry News

In a recent article in Supply Chain Digest, supply chain analysts at IDC’s Manufacturing Insights group,  presented their top 10 predictions in the supply chain for 2010.

The predictions come from IDC analysts Simon Ellis and Kimberly Knickle.  Here is an excerpt from the article and if you want to read the full story, click here.

1. “Dynamic Optimization,” will dominate capability investment to support redefining of the supply chain: Though it’s been projected before, IDC believes 2010 will really be the year of supply chain optimization technology to further drive out costs and waste. Key to this will also be the ability to respond to market and environmental changes rapidly and optimally.

2. S&OP will re-emerge as the synchronizing process for reconciling supply and demand: This one confuses us a little, as we didn’t see S&OP disappearing and thus requiring “re-emergence,” but IDC says that while always important, effective Sales and Operations Planning is even more so in dynamic times. “Manufacturing supply chains are not going to suddenly become simpler, as increasingly available data sets make business planning and execution more complex, not less,” IDC says.

3. Balancing supply and demand across the value chain will prompt a strategic redesign of supply networks: The need to penetrate emerging markets and increasing analysis of labor versus logistic costs will continue to drive changes to network strategies.

4. Supply chain and product lifecycle management (PLM) applications will increasingly converge as manufacturing companies focus on delivering innovation: Innovation today is critical to market success, but “the new product development and introduction process (NPDI) in many companies is poorly executed, with generally low levels of cross-functional involvement,” IDC says. Better integrating PLM tools into supply chain processes can help.

5. Intelligent supply chains will put broader supply chain visibility burdens on supply chain organizations, both owned and outsourced: “2010 will be the year that network visibility comes of age,” IDC says.  Essential for managing increasingly virtual supply chains.

6. Supply chain organizations will invest in capabilities that facilitate global operations: As we’ve noted before, the growth in globalization has in most cases outpaced corporate investment in global supply chain technology.  “While it remains to be seen how closely integrated global trade management needs to be with more traditional transportation management capabilities, we do think that this will be a hot application for manufacturers in 2010,” IDC says.

7. Transportation capacity will tighten, causing supply chain organizations to rethink fulfillment strategies: The current excess capacity in transportation markets, and by extension depressed lane rates, “are not sustainable and will not last,” according to IDC. “Shippers should prepare for higher rates as we move into 2010, and expect capacity shortfalls for next year’s holiday season.”

8. The increasing pace of supply chain outsourcing/offshoring will keep risk management high in the strategic agenda: Investment though will be focused on building risk awareness: Due to the economic crisis of 2009, most companies put supply chain risk management on the back burner, says IDC. “Leading manufacturers continue to find ways to develop the right combination — risk awareness and early detection, followed by rapid response, but for now, with minimal new IT investment,” it adds.

9. Smart services and the need for persistent assets will create the inflection point for RFID, sensors and M2M (machine-to-machine): Advances in technologies, experience, and operational need will lead to major advances in companies building “sensory networks.”

10. Armed with metrics, manufacturers will move from sustainability reporting to “intelligence”: While many companies have started carbon emissions reporting, “The next step is to create intelligence — to apply the information to make better decisions about their material selection, sourcing, use of limited resources, product life cycle, supply chain, and more. Companies are showing an increasing willingness to make changes to fundamental business processes, design for sustainability and cradle to cradle, or greening the supply chain.”

Richard Owens, CEO of DHL Asia Pacific had a featured article on Business Times commenting on the changing economy and the need for better integration throughout the supply chain.   The recession has forced many businesses to look for ways to lower costs and improve the customer delivery experience.

Supply chain management companies like Komar Distribution Services (KDS) have been called to executive round table discussions to map out how new technology and business processes can reduce the cost of delivered goods.  KDS has a 100 year history of working in partnership with manufacturers, suppliers and retailers to innovate the supply chain.

Richard Owens Excerpt

Richard Owens, tackles a piece of the challenges business supply chain partners are facing in his guest blog post.  Here is an excerpt from the Business Time article.

A customer walks into an electronics store to buy a new mobile phone. He has a brand in mind but it is not in stock. What does he do? Does he decide to go home and return when the brand he was looking for is available again? Unlikely. He will probably buy another model from a brand that offers similar features at the same price point.

In a world where the customer is increasingly informed and time-poor, convenience and efficiency can often drive a purchasing decision over brand loyalty. This means that companies must not only focus on marketing a product to create the demand, but equally importantly, businesses must ensure that the supply chain can deliver the product to store shelves around the world in an efficient and precise manner. Without the right supply chain, companies risk losing customers and ultimately market share.

The above example could just as easily have been a notebook PC, LCD TV or a non-consumer electronics product. Regardless of the market, businesses have to get their products to market and in front of customers on time, every time. And, to stay financially healthy, they have to do this without amassing large inventory levels. It’s a fine balance. It’s also one of the reasons that in recent times, I have witnessed the art of supply chain management moving from the warehouse into the boardroom.

So, has the current economic downturn elevated the importance of supply chain management in strategic business decision making? It would be an exaggeration to say that this recession is solely responsible for the increasing priority that businesses are giving to the supply chain. But what I hear from customers is that it has undoubtedly spurred on what has been a gradual evolution in that direction. Between the first half of 2008 and the same period of 2009, DHL Global Customer Solutions has seen a 133 per cent increase in consultancy for supply chain optimization projects.

Before the slump, our customers, especially those in the technology sector, had their supply chains designed around a high-demand scenario. They built up stock to meet insatiable customer demand. When the market slowed down suddenly without much warning, many companies were caught off guard and were left with over stocked shelves. Businesses cannot afford high inventory levels, least of all technology companies, who deal in products with extremely short lifecycles. The downturn has forced many businesses to immediately examine how they manage their supply chains and order-to-cash cycles.

A positive outcome we can see, partly due to the recession, has been an increase in true consultation and partnership between logistics providers and their customers. While this is part of the natural evolution of the industry, the recession has brought the need for closer engagement to the fore. Previously, the purchasing of supply chain services, including warehousing, freight and express services, was primarily driven by procurement groups and was very much focused on achieving the lowest transportation charges.   (Read full article)

Supply Chain Management

If you are a growing business looking to reduce the costs associated with your supply chain processes, contact the executive team at KDS.  If you are looking for a competent supply chain logistics partner with 100 years on experience with manufacturing, overseas transportation, warehousing and distribution of  retail goods across America, give us a call.

Komar Distribution Services
16 E. 34th Street, 10th Floor
New York, NY 10016
(918) 429-7779