Planning ahead must inevitably include looking back. For supply chain professionals, strategies for the New Year will be shaped by lessons learnt in the past one.

SCM World’s chief content officer, Kevin O’Marah, recently released his “Top 10 Supply Chain Facts of 2014”, and, as a member of the global SCM World community, Imperial Logistics is proud to share these with South African supply chain professionals. The facts are based on the fourth annual Chief Supply Chain Officer Report, which is the result of data collected by SCM World from 1 068 respondents, who each answered 129 questions.

Topping the top 10 is the fact that 53% of supply chain practitioners surveyed across industry think of cloud computing as “interesting, but unclear usefulness”. O’Marah believes that this is a tepid view, considering the zeal that most in IT show for cloud. “My guess is that cloud is cool for those used to selling ERP, B2B or whatever craze happens to be in vogue. Supply chainers, it seems are in no rush to rip out what’s there already.”

Fact number two is that 10% say they are supporting a smallernumber of SKUs in response to digital demand. “This flies in the face of the macro trend towards more SKU complexity but hints at a key opportunity, which is delivering product personalisation post-sale,” he comments. “The obvious example is apps or other software enablement ‘shipped’ electronically to consumers already in possession of a mobile device.”

The third fact on O’Marah’s list is that the second highest rated “disruptive and important” technology among respondents is digital supply chain. “This is the light-speed version of production and distribution delivering any value-add that can be digitised. Software and content is obvious, but consider also digitised artwork and print-on-demand packaging, vehicle entertainment systems or anything else that customers will pay for, but that need not be made of atoms.”

Fact four is that 31% of SCM World’s respondents say they use social media to inform product innovation priorities, O’Marah reveals. “This number keeps rising, while the share of respondents who see ‘no effect’ of social media on their supply chain strategies keeps falling. No one is very good at this yet, but skipping it altogether is starting to look stupid.”

At number five, is the fact that fewer than 17% view emerging markets primarily as low-cost sourcing opportunities; 34% are looking mainly for new sales growth and 48% equally seek sourcing and sales in emerging markets. “It seems fair to say that the era of ‘low-cost country’ sourcing is close to over. Globalisation from here on out is very much a two-way street,” O’Marah contends.

The sixth fact of 2014 is that Mexico is the sixth highest rated growth opportunity among the 920 respondents who answered this question, trailing only the BRICs and the United States. “In total, 93 individuals chose it as one of their top three growth countries,” O’Marah expands.

Geopolitical instability is the subject of fact number seven. It jumped 20 percentage points as a risk concern between 2013 and 2014, he reveals. “This is by far the biggest jump, well ahead of natural disasters, which rose eight points. On the other hand, financial failure of a critical customer fell significantly. Economic risk is trending down while political risk is trending up. War in Ukraine and the Middle East certainly fits here, but so does political incompetence in both Washington and Brussels. And who isn’t at least a little bit worried about what Beijing will declare next?”

O’Marah’s eighth fact is that 35% of hi-tech companies say they have fully implemented social and environmental responsibility initiatives with key suppliers. “Compare this to healthcare and pharmaceuticals where only 9% have made such moves. This gap is too large,” he stresses.

The penultimate fact on his list is that 31% of respondents declare sales an “essential” skill for supply chain professionals. “This may mean direct experience in sales or just an ability to persuade. Considering how highly respondents rate change management (74% say it is essential), perhaps this is really about selling internally.”

In number 10 is the fact that 26% of those surveyed say that finding supply chain talent is “extremely challenging”. “This is well up on previous years and is now the number one people management problem,” says O’Marah. “We have to make supply chain cool or the kids won’t want to play,” he quips. “ Millennials demand meaningful work and we can give it to them.”

There was no methodology for choosing this top 10, O’Marah stresses, and states that his aim was just to offer a few “nuggets”. “Everyone has people to persuade, business cases to develop, and presentations to make. I hope some of this data helps.”

 

Thank you to Imperial logistics for the list