Our Perspectives

The definition of Supply Chain Management has evolved from mere outbound physical distribution to include activities that occur up until the product reaches the customer and even beyond. In addition to the physical distribution and transportation, we define Supply Chain Management to include key processes of planning (e.g., forecasting, S&OP, inventory management), transportation, warehousing and order fulfillment, as well as the enabling capabilities of supply chain IT, organization management (e.g., organization design, talent management), and performance management.

Supply Chain Pressures

Globalization, shifting demographics, fewer natural resources and continued technological innovation place ever increasing pressure on supply chains:

• Globalization shifts the traditional “local for local” strategies to “global for global.” Leading companies must transform their supply chains to optimize global resourcing capabilities to serve the needs of local customers. But there is no “best” model. The critical success factor is the ability to design a global supply chain that is unique and optimal to the individual business strategy and capability. And increasingly, supply chain collaboration amongst companies will be the key to success as different supply chain players try to look beyond their walls for capability, creativity, innovation, and value generation
• Shifting demographics (age, income and location) change the “what and where” that supply chains must deliver. The middle class in developing countries may already be the fastest-growing distinct group of the world’s population. While the world’s population is expected to grow by about 1 billion people by 2020, the global middle class will swell by as many as 1.8 billion, a third of them in China alone
• Pressure on natural resources results in increased focus on sustainability. The “total cost view” now factors in the sustainability cost—environmental, social, and economical—thereby key supply chain decisions will look different than otherwise possible using traditional “total cost views”
• Explosion in structured (e.g., point-of-sale) and unstructured (e.g., social media) information is forcing many supply chain organizations to become more “information nimble” and not just “physically nimble” to respond quickly to customer trends and shifts in demand. A single tweet about a product can become viral, and it can either create shortage or excess product on the shelf in the time that traditional information gathering and processing approaches can respond

Complex and large scale supply chain transformation begin with a thorough understanding of customer requirements and the company’s sources of competitive advantage. By combining these two, complex transformation efforts can be broken down into manageable steps, providing the path to tangible impact.