Supply chain predictions for 2014

Posted on 12 Feb 2014 by The Manufacturer

Boris Felgendreher, marketing manager Europe at supply chain specialist GT Nexus, predicts the key trends affecting supply chains this year.

Boris Felgendreher, marketing manager for Europe, GT Nexus

Supply chain is no longer an afterthought for CFOs, CEOs, investors and board members. An integrated and flexible supply chain can reduce costs, increase operational efficiency and mitigate risk. As the supply chain rises to be one key concern for businesses this year, GT Nexus has identified a number of trends that can be expected this year:

1. Networked companies come out ahead

Collaboration is a critical element of a supply chain and we expect to see more companies fully integrate their supply chains throughout their network of suppliers and customers. Organizations need to work as an integrated network of companies, with access to the same latest information, working towards a shared mission to deliver results and be ahead of their competitors. Strategies need to be planned and implemented via the various groups in order to achieve the desired results. A business network will allow companies to be agile, responsive, flexible, yet efficient.

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2. Siloed companies are falling behind

Companies which break down silos by focusing on transforming the efficiency, transparency and risk exposure will gain advantage over siloed companies. Overall net savings can be measured through reduced routing delays and faster reactions to changing trends.

3. Responsibility – Traceability

As businesses begin to expand globally, organizations are realizing the need for transparent and traceable supply chains. In 2014, businesses will continue to put their global supply chains in the hands of a safe and secure IT platform.

4. Sustainability

Major food and drink retailers have found themselves under the critical eye of government policies and customer pressure. With consumers becoming increasingly aware of issues around sustainability and expectant of companies to have policies in this area, supply chains need to sit up and listen.

5. Acceleration

Acceleration of the supply chain can be best achieved through partnerships and collaboration. 2014 will be the year when solution providers offer strategic, tailored and easily deployed packages to help businesses accelerate their supply chain.

6. Digitization of the Supply Chain

Supply chain analytics will allow businesses to create useful key performance indicators and incubate innovative ideas to successfully manage service levels. Daily monitoring, sharing, and interpretation of supply chain analytics will help businesses plan.

7. Big Data

The potentials of big data are becoming evident in all areas of business and this is the case for the supply chain. Businesses that capture and analyze the huge amounts of data generated around shipment and transport will continue to improve efficiency. Companies that take advantage of collaborative solutions to process and analyse this data will reap the benefits of cost reduction, capacity control and risk management.

8. Disruptions in the Supply Chain

With increasingly erratic weather across the globe in the past few years with the effects of climate change being felt, the supply chain has felt many disruptions. Recently the freezing conditions in the US and the disastrous flooding in the UK have caused disruptions. Before that we’ve experienced volcanic ash disrupting air travel. The Supply Chain Resilience 2013 survey report highlighted 62 per cent of business continuity professionals felt “top management commitment to managing the supply chain is inconsistent or totally lacking”. Proactively assessing the risk of disruption and developing a risk management strategy is crucial to meet supply and demand challenges in the next 12months.

9. Supply Chain Gains Prominence at the C-Level

The recognized importance of supply chain has blossomed in recent years. It’s not just a line of business initiative anymore. Today, CFOs, CEOs, investors and board members recognize the value of a well humming supply chain. Just as important, they recognize the significant forms of risk. This will continue in 2014 as more consumers become conscious of global production. The supply chain is being placed under a microscope and in 2014, businesses must balance between growth, profitability, responsibility and customer service within the supply chain. Supply chain will be a leading topic on earnings calls in 2014.

10. Companies Move Beyond ERP and Portals to Work with Trading Partners

Social media changed the way we communicate and collaborate with our personal networks. The “one-to-many” approach means information is delivered in real-time to hundreds or thousands of contacts. Businesses have taken notice. The Social Enterprise has been an evolving theme in recent years as businesses breakdown internal silos in a social environment. The Social Supply Chain is the next wave of innovation. Businesses are recognizing that traditional ERP and portals have gone the way of the fax or written letter when it comes to communicating with an entire network.

11. Interest Rate Volatility Will Send “Shocks” Throughout Global Trade

On January 28, 2014 the Turkish central bank raised the overnight lending rates to 12% from 7.75. Rapid shifts like this have a huge impact on both businesses there and trading partners sourcing there. The same volatility exists in places such as China. As the global economic recovery continues with uneven results, countries seek to regain their footing but balancing economic stimulation and devalued currencies will continue to be a struggle. The result is occasional interest rate shocks.