At the Prime Advantage Fall 2016 Conference, professor Steven A. Melnyk of Michigan State University presented on the new type of leader required for the supply chain of the future. According to Melnyk, today’s supply chain is a result of investments made in the past. However, tomorrow’s supply chain will be a result of investments made today. And to make sound investments, we must be able to improve on our ability to forecast and project.
Seven macro developments have paved the way for the emerging supply chain:
- Aging of developed countries
- Energy volatility
- Shift of purchasing power to the East
- Internet of Things (IoT)
- Experiential supply chains
- Autonomous and digital technology
These evolutions have brought on new expectations, new challenges and most importantly – new opportunities. Everything is getting more complex. By 2020, over 201 billion devices and objects will be embedded with software, sensors, and network connectivity that enable the IoT to collect, exchange, and analyze data. Supply chains are also becoming more personalized. The level of customization and service at which the customer feels that he or she is an exclusive or preferred customer of the firm is growing. And customers are becoming increasingly concerned about the provenance of the products that they consume.
Supply chains are information-rich systems which makes cybersecurity the next big threat. Sensitive and critical information such as schedules, consumer data, designs, and strategic plans are all being stored on company systems. It is estimated that 93% of large organizations and 87% of small businesses have experienced some type of security breach. This is a 50% increase from as recent as 2012. It’s crucial that the supply chain not have any weak links in protecting this data.
Technological advances rooted in the supply chain are ever-increasing so we must accept complexity as a business driver. This creates new competitive pressures and requires new methods for dealing with customers. Cost is no longer enough. Customers demand responsiveness, sustainability, resilience, security, innovation, quality, and greater supply chain visibility. Thus this new supply chain necessitates a new type of supply chain manager; one that is more forward-looking than ever before and isn’t sidetracked by the past. The new supply chain leader needs to know how to minimize costs, simplify complexity and ask the right questions. He or she needs to be a “problem master” by defining the issues that the rest of the supply chain will focus on.
This also calls for more cross-boundary coordination within organizations. The barriers between the supply chain and marketing, engineering, strategy and finance must disappear. The supply chain is progressively more outcome-driven and every measure must be taken to see the world through the customers’ eyes. Performance will be measured on the ability to communicate goals, expectations, and consequences, along with the ability to get commitments, educate on what is important and what is not, direct resources to any gaps, and to continually measure and correct. Elevated complexity means additional hidden costs and impacts need to be fished out. To be a true supply chain leader of tomorrow, one cannot just work within a culture but must work on the culture. The ones who can do this the best will bring the most successes to their organizations.
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