What Does the Future of Supply Chain Management Hold?

February 22, 2013

An interview with Carter McNabb, Partner GRA. This article was published prior to the Chief Logistics Officer's Summit in February 2013.

"Chief Logistics Officers (CLOs) need to be agile and adapt their supply chains to the latest trends," advised Carter McNabb.

"To respond to business opportunities and changing conditions, their supply chain strategy and structure have to continuously evolve," he went on to say.

Below is a transcript of the interview:

What developments in the supply chain landscape should CLOs focus on more?

There are several challenges and uncertainties that the industry has not responded well to yet. For example, the rise of online retailing, which is opening up new markets and routes, but also increasing logistics costs and complexity. Supply chains must be optimised for these.

China used to be the factory of the world, but now Vietnam, Thailand, India and the Philippines are increasing in prominence in certain areas. We used to see many consolidation centres in China, but that structure is also now shifting to geographies with broader regional coverage, such as Singapore.

My third point is on technology sophistication, this is now a requirement for competitiveness and survival, otherwise companies slip behind. There are some very powerful tools for optimisation, planning and execution, and automation tools, which are creating the need for a different type of skill set.

It is important to deploy the latest technologies, to extract every dollar possible out of every transaction.

The assumption of energy as a low-cost input is also changing. Energy costs and exchange rate increases have impacted the economic dynamic. Australia has also introduced a carbon tax. As a result, I expect to see more localisation and centres of excellence developing in different regions. So the way that supply chains are structured in the global market will change too.

The final area is disaster recovery. Whether it is extreme weather conditions or an airline going out of action, most businesses seem to be caught off guard. They need to build in some redundancy into the supply chain network to avoid operational disruptions that can damage the business’ marketplace position.

CLOs must pick up on the latest trends and be agile enough to respond to them.

What cost saving and profitability boosting opportunities could you recommend?

Analysing the supply chain using sophisticated modelling techniques can help companies achieve a minimum of 5 to 15 per cent savings in their supply chain costs. In addition, these tools can help them design a better supply chain, identify concealed risks, forecast demand, and optimise inventories. Optimising inventories creates free cash flow and improves stock availability, so there’s a compounding benefit that has a multiplier effect on financial ratios such as Return on Capital Employed.

This is more than an isolated cost reduction; it is about optimising structures and flows to increase cost efficiency, customer responsiveness, capacity and working capital across the end to end supply chain.

Any final thoughts?

Organisations need to look at their whole supply chain, the complete picture in terms of people, processes, systems and data, and figure out what the future supply chain will look like. They must continue to evolve in order to remain relevant.

GRA is a supply chain consulting firm that will be attending the upcoming marcus evans Chief Logistics Officer Summit 2013, in the Gold Coast, Queensland, Australia, 17 - 19 February. Ahead of the Summit, McNabb highlights the latest trends impacting supply chain management.

About the Chief Logistics Officer Summit 2013

This unique forum will take place at the RACV Royal Pines Resort, Gold Coast, Queensland, Australia, 17 - 19 February 2013. Offering much more than any conference, exhibition or trade show, this exclusive meeting will bring together esteemed industry thought leaders and solution providers to a highly focused and interactive networking event. The Summit includes presentations on enabling dynamic growth in the value chain, fostering innovation in logistics processes, and strategic planning and forecasting for industrial competitiveness.