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A New Era in Supply Chain Operations

Date posted: February 11, 2015

SCM World’s “Chief Supply Chain Officer Report 2014” points decidedly to changes in how supply chain operations are unfolding. The report’s main message: “Supply chain strategists need to raise their sights from traditional cost-cutting, process-standardizing principles and prepare for a new era.” What is driving this?

  • Growing volatility in customer demand
  • Greater complexity in customer expectations
  • Deeper operational integration throughout value chains

The inclination to outsource supply chain activities as a means of cutting costs is giving way as the above drivers take hold. As the authors note, “Manufacturing is growing more vertically integrated, route to market is now a two-way street, and suppliers are increasingly consolidated and powerful with capacity and technology that customers cannot find elsewhere. Efficiency alone no longer wins the game.”

What does win the game is agility. While operating cost reduction remains top of mind among supply chain practitioners, agility in meeting customers’ needs is fast rising to rival it. The top three areas SCOs find high-performing supply chains impacting business:

  • Enhanced customer service and loyalty
  • Accelerated new product introduction
  • Stronger supplier relationships

All these areas can be seen as key contributors to an agile supply chain. The report notes:

Agility appeals now because it means winning many different battles. Process standardization will wane in importance as a new generation of opportunistic supply chain professionals masters the deeply interdependent networks they are building to consistently say “yes” to profitable orders and “no” to the impossible.

Since the survey’s data shows an explosion in the complexity, volume, and urgency of demand, it’s understandable that big data analytics has emerged as the most disruptive technology for supply chain strategy. The importance of volatile demand—coupled with the hope that better visibility may come from drilling into huge new data sources—makes big data a big winner in the new era of supply chain operations.

This is an important study, the substance of which goes far beyond the brief points above. You can download it here.