Current Articles | RSS Feed RSS Feed

Supply Chain Megatrends: Looking Ahead to 2025

  
  
  

describe the imageBlogger Jeff Elliott is Vice President of Americas Sales at ModusLink

How fitting that one of the final sessions at the 2012 CSCMP Global Conference would be a session that looked forward to 2025, and explored the mega trends predicted to shape our global supply chains over the coming years. For those of you were fortunate enough as I was to find a seat in this standing room only crowd, you were able to join a session that really needed a bigger room to accommodate the obvious interest in the topic. The panelists certainly didn’t disappoint, as I heard many people comment that this was their personal favorite session – quite the compliment given the number of quality sessions at this event.

The sessions panelists were selected not only to provide a depth of supply chain expertise, but also to provide a breadth of experience that ensured a variety of different perspectives.  Kevin O’Marah (Senior Research Fellow, Stanford Global Supply Chain Forum) did an excellent job moderating and providing his own insights into the topic.  The three panelists were Beth Ford (Executive Vice President, Chief Supply Chain and Operations Officer, Land O’Lakes), Frank B. Jones (Vice President, Technology and Manufacturing Group, General Manager, Customer Fulfillment Planning and Logistics Group, Intel Corporation), and John Lund (Senior Vice President, Disney Parks Supply Chain Management, Disney Destinations, LLC); and they were able to provide commentary from very divergent perspectives that somehow managed to converge on alignment on the issues that we face.

The session started with a thought-provoking video—a graphical perspective on individual health (lifespan) and wealth (income) in each of the world’s countries. It started with a rear-view mirror perspective, depicting the data from 1860 to the present, and then projected forward to predict how the various countries around the world would progress. Particularly interesting was the breakout of China into the individual provinces, showing the disparity between those that have benefited from their coastal position, versus those further inland that have not progressed at the same pace. Those of us that have spent time in China were not at all surprised by the data we saw, but it definitely helps to partially understand the dichotomy that exists in China today. The look forward was based largely on an extrapolation of the current improvement, and showed China catching the US within the next decade. However, it also recognized the reality of opposing forces that would slow this development. While none of us can definitively predict how China will react when their growth inevitably stalls, there does appear to be a view that this represents a risk to many of our existing supply chains.

I know that this introduction really set the stage for what was to come, as the panelists discussed a number of different topics that would influence our global supply chains. The discussion of environmental responsibility went beyond simple discussion around corporate responsibility to reduce green-house gas emissions, as Beth Ford presented data around the reality of water availability and how it would influence supply chains in the future. This was a bit sobering for the closing session, but framed this topic with more urgency than I have seen in the past. Having spent 14 years in environmental engineering consulting, I am not usually surprised in this area.

Probably my greatest take-away though was around the subject of automation. As a supply chain professional with a leading global provider of supply chain management solutions, I am well aware of the many factors that influence our decision-making regarding the optimal location for executing manufacturing and distribution activities. We are well aware of the trends in labor rates, raw material availability and costs, fuel prices, location of consumer demand, degree of localization, etc.; and we routinely consider these variables as we make recommendations regarding the optimal location for execution of these services for our clients’ supply chains.  The trends affecting costs provide an objective metric that is already beginning to point towards more manufacturing near the consumer. Risk management and requirements for increased differentiation in final product configuration are contributing to this trend as well, although in a less easily defined way (from a pure economic perspective). The increasing consumer demand in locations that were previously viewed as simply low-cost labor locations is a competing influence in this analysis. While we currently employ some automation in our sites, I had not previously seen the significance of this megatrend. 

I learned during this session that compared to the 5 billion mobile phones that have been sold globally, there have been only 700,000 robots. However, the capabilities and utilization of robots is expected to grow significantly, as they become more economically attractive solutions to manufacturing. The implications of this trend to our supply chains will be undoubtedly significant, as it shifts the impact of labor costs, and makes manufacturing closer to the point of consumption a much more attractive solution. 

I don’t think anyone is ready to predict an immediate shift, as major shifts in points for manufacturing do not generally occur overnight. However, it was interesting timing to return to my home outside of Raleigh, North Carolina and read that Lenovo had announced that they were planning to begin manufacturing computers in their fulfillment site down the road in Whitsett.  Maybe these panelists really do have a crystal ball?

 

Tags: ,

Comments

Sounds like an interesting conference. I too have been seeing scary indications of water shortages around the world affecting more than food supplies. The chain reaction is very concerning. I also wanted to point out a great article in the New York Times on automation ('Skilled Work, Without the Worker' Aug 18, 2012) - how manufacturing and distribution centers can compete with low cost workers using automation.
Posted @ Thursday, October 04, 2012 3:35 PM by Karla
Post Comment
Name
 *
Email
 *
Website (optional)
Comment
 *

Allowed tags: <a> link, <b> bold, <i> italics