Supply Chain Future: Anticipating the unknown

New markets, rising energy prices, growing raw materials shortages and mass individualisation are all widespread trends which will change the world we live in. The question facing businesses is, how can they prepare for developments which are as yet unknown? Scenario planning is one way of gaining insight into what the future may hold. Closing supply chain loops and creating flexible and transparent chains which operate at the right speed are possible response strategies.

By Marcel te Lindert

Little can be said with certainty about the future, apart from that the future is by definition uncertain and that it is getting closer all the time. Never before have companies been so uncertain about the future of the supply chains in which they operate.

So it should come as no surprise that major corporations around the world are turning to science for help in preparing for a future full of uncertainty. In the USA, the Massachusetts Institute of Technology (MIT) launched the Supply Chain 2020 project back in 2004. In Europe, meanwhile, IMD in Lausanne joined forces with the likes of Philips, Shell, Lego, Nestlé, Grundfoss, AP Maersk and Ceva Logistics in 2011 to set up the Value Chain 2020 project. And in Germany, the national logistics association Bundesvereinigung Logistik (BVL) decided to conduct its latest triennial study of new trends from a global rather than a national perspective.

In addition to private enterprises and scientists, governments are also trying to anticipate future developments. In the Netherlands, the government initiative ‘Top Team Logistics’ has issued advice aimed at helping the Dutch logistics sector to regain its position of excellence by 2020. The Dutch Council for the Environment and Infrastructure (RLI), an independent strategic advisory council for government and parliament, is now working on a study to place this advice in a longer-term perspective up to 2040. That gives rise to the question of how far into the future companies should want to look. “That varies from one company to the next. A company like Vopak, which produces storage tanks which last for 30 years, has to look that far ahead. The same goes for infrastructure, for example. A number of developments call for renewed consideration, such as city logistics for instance. If we don’t plan ahead, our cities will soon grind to a halt,” says Marike van Lier Lels, chair of the advisory committee.

Value Chain 2020 project

Most studies conducted by scientists and consultants have a shorter horizon of around five to ten years. “Five years is too close, 20 years is too far off,” claims Arjan van Weele, professor of purchasing & supply management at the TU Eindhoven.

Van Weele heads up the Value Chain 2020 project together with Carlos Cordon, professor of supply chain management at IMD. He is particularly interested in the cultural sea change facing purchasers. Over the past 50 years, companies have been increasingly focusing on their core business, leading them to divest non-core activities. “As a result, companies have become increasingly dependent on each other, making supply chains extremely difficult to manage. At the same time, the importance of the purchasing function has grown tremendously. Purchasers have achieved impressive cost savings, but have one major disadvantage: their excessive cost focus, which does the world – and in the long term the company itself – no favours. Purchasers must learn to evaluate suppliers based on the amount of value they add. This paradigm shift is underway, although it is proving very difficult for companies to find ways of giving it shape.”

While most studies are focused on analysing global trends and researching their implications for supply chains, that does not go far enough for Roberto Perez-Franco from the Supply Chain 2020 project. “We can of course identify a number of global trends such as the growing population, rising energy prices, climate change and the increasing scarcity of water, food and other natural resources,” states Perez-Franco.

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