FUTURE OF

SUPPLY CHAIN
MANAGEMENT
SUBMITTED TO: Prof. Chandan Tiwari
MADE BY: Shradha Ahuja
Shresht Kapur
Siddhant Thappar
Soumya Shankar
Tanya Arora

SUPPLY CHAIN MANAGEMENT:

A LOOK BACK

Businesses and supply chains have become

substantially more global over the last decade.
Between 1995 and 2007, the number of transnational
companies more than doubled and foreign subsidiaries
nearly tripled.
In addition to spreading geographically, supply chains
now involve more companies.
An ever-broader range of activities is being outsourced:
between 2007 and 2010, R&D outsourcing is forecast to
increase by 65 percent, and engineering services and
product-design projects by more than 80 percent.

9 SUPPLY CHAIN TRENDS IN

FUTURE
Key events in the past that
have made supply chain
management what it is today
are likely to shape what the
profession and discipline will
become in the future.

What trends will affect the next

generation of supply chains?

1. SERVICE CHAINS WILL

BECOME MORE IMPORTANT
THAN PRODUCT CHAINS
Increasingly, discerning consumers are demanding
more from pre- and post-sales service for the goods they
buy.
Accordingly, companies that effectively couple the preand post-sales service supply chain activities will
emerge as the winners over their solely product-centric
competitors.
This message is underscored byApples CEO, Tim
Cook in his recent apology to consumers in Chinafor
the companys perceived failure to listen to feedback
about post-sales service.

2. COMPANIES WILL NEED TO FULLY

REPORT SUPPLY CHAIN EXTERNALITIES.
Corporate externalities is the impact of an
organizations manufacturing and business processes
on other segments of society and the need to disclose
those externalities.
Companies will need to do a much better job of
disclosing the end-to-end impacts of their supply
chains.
Measuring and reporting on the effect of major supply
chain transactions.
The customer or consumer will begin to demand the
transparency into these impacts.

3. SUPPLY CHAINS MUST BE DESIGNED TO

SERVE THE BASE OF THE PYRAMID.3
Companies in the consumable and durable sectors, in
particular, will need to create products and associated
supply chains to support the products that will cater to
this market segment.
To tap into this enormous potential, supply chains
must go through a total utilitarian design philosophy
in order to deliver sustainable bottom-line
performance.
Current supply chain thinking, which is largely based
on a cost plus model, will need to shift to a not to
exceed cost model.

4. KNOWLEDGE WORK AND

WORKERS WILL BECOME GLOBAL
IN NATURE.
Supply Chain work deals with complex analytics,
planning, procurement processing, and provision of
services.
This nature of the work, the need for multi-language
support, and the associated local complexities of the
different geographies being served will necessitate the
seamless globalization of supply chain knowledge
work.
EXAMPLE

5. SCM WILL HAVE A STANDARD

CERTIFICATION PROCESS SIMILAR
TO THAT FOR CPAS.
Educational programs either focus on the basics of
SCM or on a specific activity such as import/export or
financial analysis.
A fundamental shift will occur in the normalized
delivery, content served, and certifications of supply
chain professionals.
Many other professions like accounting and
engineering require national board examinations.
A similar professional credentials program will be
required for supply chain professionals to normalize
the knowledge base of the incoming resources.

6. PRODUCT CLOCK SPEEDS WILL

DETERMINE THE NUMBER AND
NATURE OF THE SUPPLY CHAINS.

The fast clock speed lifecycle is becoming more the

norm than the exception.
The days of the steady and static product catalog is
past. However, companies will continue using a
single supply chain approach to service all segments
irrespective of the time constraints.
Also, supply chain organizations will need to be
aligned by product segments as well as functional
segments in a matrix fashion to serve the distinct
supply chain needs.

7. MICRO SEGMENTATION WILL BE

KEY TO SUCCESS.
A micro segment is defined as that exact part of the
general buying category that triggers the purchasing
decision and not the category itself.
Organizations will need to know their micro segments,
and their supply chains must be able to effectively
service them based on the business strategy.
It is always better encourage clients to adopt a B2C
mindset even if your operation is predominantly B2B.

8. TECHNOLOGY TO SUPPORT SCM

WILL PRIMARILY BE ON TAP.
SaaS (software as a service) is gaining mainstream
attention. I
Its contend that most if not all supply chain
technologies by 2020 will be delivered and consumed
via this method or on tap.
The user will pay for the ability to use the capability
and will not have to incur the large fixed costs of
ongoing maintenance, upgrades, and infrastructure
expenditures that can amount to almost 25 to 30
percent of the cost of ownership.

9. LEADERS WILL LEVERAGE SOCIAL MEDIA

IN A CLOSED LOOP FEEDBACK PROCESS.

Social media data is everywhere today.

Many companies do not have a systematic method to
study the data and disseminate the information to the
various supply chain constituencies.
This is necessary to provide closed loop feedback
processes that allow the company to proactively
respond to the feedback.
The winning companies will be able to receive, process
and act on the data that is being provided to them by
their constituents via social media.

OVERALL RELEVANCE OF THE 9

TRENDS

SOME
MORE
TRENDS

Organizations will have to rethink their

mega centre supply chain model
Today most organisations have one or, at best, two types of supply chain:
urban and rural. By 2015, additional considerations will emerge, such as
labour availability (in light of the increasing cost and skill gap), space
availability( given the increasing demand for land), and traffic congestion.
These will require multiple supply chain solutions to cater to mega and
hyper cities:
1) Automation in manufacturing and material handling, as scale makes
this a sensible investment.
2) Verticalisation (that is high-rise warehousing an distribution centres) t
contain rental costs for depots and storage areas
3) Lean design, for example, using flow through distribution to manage the
movement of large lot sizes across the supply chain.
4) Cooperation with third-party logistis providers and competitors.

Supply chain infrastructure will facilitate faster,

multimodal and better operations
1) Faster. Introduction of the Dedicated Freight Corridor could see rail speeds rise to as much as
100 kilometers per hour. Road speeds will increase too, thanks to infrastructure investment
through public- private partnerships and technology advances such as electronic toll collection,
and fleet modernization.
2)Wider. Presently, road is the dominant transport mode, and rail has lost significant share over the
past two decades. The Dedicated Freight Corridor will enable modal shift to rail, along with
increased levels of containerization. Connectivity will improve further, with strong growth among
third-party logistics providers and the emergence of multimodal logistics parks11 of which Indian
Railways intends to develop along the Delhi-Mumbai corridor. Additionally, the last mile connectivity
is expected to improve with the introduction of more efficient small vehicles.
3) Better. With rising need for consolidation, distribution and logistics will be more efficient
through
standardization of pallets and trucks, higher containerization, use of semi-automated material
handling, improved storage facilities, and other modernization techniques. Further, the reliability
of service providers is expected to improve significantly.

Organizations will need to adapt to changing

regulations
Adaptation in four areas will be critical:1)Organizations will need to develop a scenario-based supply chain planning process
to optimize the benefits from changes in the fiscal landscape, as and when they are
implemented.
2)Supply chain flexibility and agility, especially in decision making and implementation, will be
the distinctive traits of leaders in their respective industries.
3) Organizations will have to incorporate sustainable supply chain practices in their long-term
supply planning and network design. All supply chain partners, including suppliers, distributors,
logistic service providers, and retailers, will also have to be trained adequately to adopt such
practices.
4)Capability building and retention will be essential, prompting organizations to improve the
work environment. Safety standards and employee policies will be important as organizations
become global and supply chains become more integrated.

Regional footprints will pose multi-country supply

chain challenges
With the rise in foreign trade, particularly with Southeast Asian and Pacific nations, organizations will
have to design their footprints at a regional rather than a country level. Among the challenges inherent
to a multi- country supply chain are uncertain lead times, geographic dispersion, and a larger number
of potential sources of disruptionall of which make planning and execution more difficult. Other
challenges include:
1)Traceability across the product life cycle to minimize wastage, achieve high service levels, and
ensure responsible social practices.
2)Quality and policy compliance in terms of operational practices, recycling, and social and
environmental guidelines.
3)Risk management to minimize the impact of political unrest, natural disasters, or sudden
economic downturns.
4) Responsivenessgrounded in better visibility, flexible manufacturing arrangements, and agile
logisticsto address the growing need for shorter product lead times.

Decisions will be supported by superior visualization

and analytics
1)Supply chains with superior data capture and visibility will have a strong advantage.
For example, they will be able to react quickly to real-time data on inventory levels at points of
sale, consumer buying behaviour, and fluctuations in freight and raw material prices. Or
technology solutions may analyse point-of-sale information in order to dynamically re-price
products to influence purchasing behaviour; craft differentiated advertising campaigns, and tailor
product development
efforts
to specific needs.
2)Access
to this data
is meaningless,
however, without the requisite
analytical capabilities. Organizations will have to build adequate capabilities to
draw meaningful conclusions from big data. And execution skills to adopt new
practices and experiment with different initiatives based on these conclusions will be
critical. This will be especially important as the capability to develop insights and act
on them, and not technology, will be the true differentiator.
3) Examples abound of organizations that have tangibly improved their supply
chains through data analytics. A large pharmaceutical retailer deployed big data analytics
with massively parallel processing to reduce inventories by 15 %, without impacting in-stock
rates. A large Indian conglomerate used
collaborative optimization to source across multiple manufacturing sites and brought down
primary freight
costs by 8 to 10 %. And by using RFID, an Indian cement company reduced vehicle congestion
by 75 % while lowering inbound and outbound transport costs by 5%.

Customization across the value chain

PLAN-

(1) handle more transitions

(2) reduce below the skin complexity
(3)shorter, frequent NPI cycle

SOURCE-

(1) flexible and agile sourcing

(2)use of intermediaries

MAKE-

(1)mix of focussed and flexible lines

(2) more changeovers
(3)shelf ready packing

DELIVERY- (1) Omni-channel servicing

(2) late customization(DC/POS value addition)

A BRIGHT BUT
CHALLENGING FUTURE:
CONCLUSION

In sum, supply chain professionals will have to face "the

good and the ugly" in the future.
The "good" is that SCM can provide significant benefits to
organizations and their customers, and a large number of
employees will have to be hired to fill all types of supply
chain positions.
The ugly" is that it will be more difficult to plan,
implement, and control supply chain operations because of
various risk and uncertainty factors
Thus, the future is bright, yet it is not without challenges.