Looking ahead more intelligently

Will the world be different in 2050? Yes, definitely. And in 2020? Probably, although that’s only eight years away, so it will be here before we know it. Will the business world have changed radically by 2015? That will depend on the sector and the company. A significant event is required to bring about fundamental change. The crucial question is: what will that event be?

In the past year, supply chains around the world have been impacted by a couple of large-scale natural disasters, such as the Japanese earthquake and the floods in Thailand. These have resulted in some confusion about the difference between scenario planning and business continuity planning (BCP). Scenario planning entails companies mapping out a number of future scenarios in order to get a tighter grip on current areas of uncertainty. The self-proclaimed market leader among logistics service providers, DHL, has recently developed five future scenarios for 2050. While they are interesting and inspiring, they do not offer much practical use for individual companies. In that respect, the ongoing MIT Supply Chain 2020 project is more beneficial.

BCP, on the other hand, is intended to ensure that company employees know exactly what to do in the case of specific calamities. While most companies affected by the earthquake and tsunami in Japan had a business continuity plan in place, they were unprepared for the sheer scale of the 2011 disaster. They were like chess players who had thought merely one move ahead. Good chess players plan several moves ahead and, thanks to years of training and experience, true grandmasters can spot a pattern in a chess game at a glance and predict how the game will unfold. This ability to recognise patterns enables them to play several games on different boards against different opponents simultaneously.

Turning our attention back to the future, it will all depend on the strategy a company chooses and its associated supply chain designs (in plural). Writing in the Harvard Business Review back in October 1999, finance professor Timothy A. Luehrmann defined strategy as “a portfolio of real options”. In order to be able to accommodate calamities, it is necessary to build redundancy into the supply chain. Truly intelligent companies use this as an opportunity to create future options, just as retailer Ahold has done with its recent acquisition of Dutch e-tailer BOL.com.

Martijn Lofvers
Publishing Director & Editor-in-Chief
Supply Chain Movement