Supply chains today have been going through a lot of changes, some of which are:- Improved demand planning- wherein the demands of all the geographies are forecasted through not only current orders or industry experience but also with simulation tools providing "what-if analysis". Also the reliance on historical data is being reduced and new forecasting models take care of seasonalities, promotions and events in the global markets.
- Inventory optimization- While earlier due to lack of collaboration between suppliers and distributors, a manufacturing / cpg company had to ensure ample stock of inventory. Nowadays through increased collaboration and visibility on account of complex sophisticated applications, manufacturing / cpg companies are able to reduce their inventories to the level that it does not hurt their pockets and neither the customer has to wait for several days for order fulfillment. Companies are focussing on lean but not mean supply chain to ensure least inventories and informed supply chain partners to enable streamlined operations.
- Product lifecycle management- Increased competition has led to various changes in PLM area and companies are thriving for improvements for reduced time to market, prototyping costs, and saving through complete integration of engineering workflows. Present PLM has extended beyond traditional PLM and integrates even real time 'lifecycle event data' along with sharing this information with different players in the lifecycle of product.
- Green initiatives- This is one of the recent developments which picked up focus in last couple of years and has reduced the impact on pockets along with reducing impact on environment. Manufacturers are finding ways to reduce carbon footprint while creating a sustainable supply chain via either looking at water usage reduction, improving transportation routes, reducing power usage by plants or using economical packaging. Even consumer's perception has tilted towards greener products making companies to adopt and adapt to the changing environment. For some manufacturers the green initiatives are direct result of public outrage / environmental agencies investigations, such as one against Mattel by Greenpeace, while for others it is a preventive measure to avoid such instances. Some may find that "Green Initiatives" are nothing but cost saving initiatives, which have just been re-branded and repackaged to show consumers the contribution to the environment. Most companies have derived benefits and created value through changing focus on Grean SCM initiatives. Dell saves over $20MN annually, Texas instruments $8MN, Pepsi $44 MN to name a few.
Outsourcing supply chain activities- There was a time when vision of the manufacturing companies was to execute all parts of supply chain by themselves. For instance, Ford in early 1990s (under Henry Ford) began to expand into a company encompassing several suppliers, distributors, logistics apart from usual manufacturing operations. But later they evolved outsource most of these areas and began focus on core competencies.
More recently, many CPG companies and Manufacturing giants have began outsourcing their operations to low cost / efficient destination / specialists in the world.
- For Logistics, 3PL has been there for some time and while 4PL is becoming a new trend wherein all the responsibility of transportation (delivery, customs, multi channel) is managed by a 4th Party Logistics company who in turn manages several 3rd party vendors for individual activities.
- Some big companies have even started to outsource their manufacturing to small time vendors but have tightened quality and product integrity procedures to ensure defect free products.
- IT outsourcing is nothing new to mention, but it has evolved to the extent that virtualization has become a new buzzword. Managed services are the things of past and Cloud computing & SaaS are the latest trends in this area.
All being said and done, the end motives for evolution are still the same and will remain the same, which are increased Revenue and reduced Cost (profit). And the companies which successfully adapt and evolve their supply chain are now not the survivors but the leaders in this competitive economy.
Posted in: Supply Chain
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