Future trends & issues in supply chain management

-By Deepak Baid, Director – Siddhi Vinayak Logistic Ltd.

Deepak Baid

Deepak Baid

Supply chain management is constantly evolving in India and there are new trends and issues that will be witnessed in the forthcoming years. The general observation in past one year is that logistics complexity in the form of fragmented channels, increased product variations, and consumer demands for customized solutions has increased. Several trends demonstrate that a number of major challenges lie ahead, as the world becomes a more complex place to operate logistically.

Customer expectations:
In essence, logistics and supply chain management should primarily enable a company to satisfy its customers’ needs. There has been a sudden increase in customer expectations and meeting customer requirements today is the number-one logistics objective. As customers are becoming more demanding and critical it is pivotal to do away with traditional measures and bring in pursuing strategies to satisfy customers.

Networked economy:
In the past, companies have typically considered themselves to be independent players in the market and, at best, managed interfaces to direct suppliers and customers. In today’s networked economies, this is just not enough anymore. Companies are often forced to collaborate with partners both vertically and horizontally in their extended supply chain network, and these partners expect them to integrate their processes and systems.

Cost pressure:
Customers continue to expect low costs. Although other requirements such as sustainability, social issues or risk-mitigation capabilities are increasing, cost pressure seems to remain the ultimate criterion for customers. Given the trend towards increased customer expectations, it has become ever more difficult to reduce costs any further. Logistics costs are playing an important role in reducing overall costs.

As global footprints expand, logistics performance as measured by delivery reliability has deteriorated, due to increasing customer requirements, greater volatility, and problems with infrastructure. Two out of three respondents stated that their company’s logistics capability is negatively influenced by poor transportation infrastructure, which is a problem particularly in emerging markets.

Talent shortfalls:
Across all regions and sectors, talent shortages in logistics are considered one of the most important challenges in the coming years. Shortages are being seen at both the operational level as well as the planning and controlling function.

Sustainability pressure:
This trend has emerged as a very serious topic. Corporate social responsibility has also emerged as a highlight for debate. However, there remains a great deal of uncertainty in the deployment of these strategies, especially relative to measurement systems, evaluation and setting goals and strategies for logistics sustainability.

Increased risk and disruption:
The majority of companies (irrespective of size, sector, country and position in the supply chain) consider the mitigation of internal and external risks essential.. Executives concur that strategic frameworks and tools are needed for engaging the entire network in the management of risk and disruptions. Solutions focused on improving transparency of tier two suppliers, inventory and demand impede mitigation and force companies into reactive strategies. Proactive strategies should include research and development, procurement, production and sales.

New technology:
The majority of companies are recognizing the growing need for investments in new technology. Those tools seek to develop capabilities around the comprehensive handling and intelligent connection of data to increase planning and control outcomes. The new wave of decentralized automated network technologies is in their infancy.

Supply chain management has become not just a question of efficient logistic process, but is related to the growth and survival of organizations. With customers becoming more demanding in their requirement of services from the suppliers, the construction of a efficient and integrated supply-chain has assumed paramount importance.

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