I interviewed Bill Michels who discussed Megatrends in Supply Chain.
Bill, I’m looking forward today to hearing your views on megatrends in supply chain. It wil be interesting to hear your views on what will happen to the supply chain in the future. Can you first provide a brief background of yourself?
Sure. My name is Bill Michels, and currently I’m the CEO of Airpark Consulting. Prior to that, I was the President of ISM Services, ADR North America and ADRSM China, and prior to that I
ran ADR North America for a number of years and had a full career in supply chain and purchasing and several corporations.
Thank you. And my first question is, what are the industry changes that are taking place currently?
Well, from my perspective, there’s been quite an evolution in purchasing over the last ten years. And I think, you know, if I look at the 1990’s, I saw really a focus on price management. Around 1995, I think people really started focusing on material, labor, overhead and the cost components. And then as we hit 2000, we started thinking about how are we going to move into some strategic sources, and how are we really going to get strategic and look at global sourcing and low cost country sourcing or in-country sourcing and outsourcing? So it really started to get strategic around it. And then in 2010, we started to move into how can we manage whole categories of programs and category management?
And as I look to the future, I think that we’ve identified the cost management side and the price management side, and we’re getting transparency with our suppliers, and at some point we still need sustainable suppliers so we know what their margins are. And we’ve got to look beyond the price and the cost and really start to look for what value are the suppliers going to bring in the supply chain? So I think we’re moving away a focus on cost to more of a focus on value. Speed to the market, R&D and new product development and innovation, integration in business systems and transparency. So I think there’s going to be a change. So I’ve seen it move from really a focus on price and cost and now a focus on incremental value from the supply chain.
And can you talk about some of the trends and what will the impacts be?
Oh, sure. You know, one of the things, I was looking at the megatrends from Ernst & Young. And one of the things that was really interesting is that there’s really a lot of disruption in the industry based on the digital age. So we’re seeing things like Internet of Things, and that Internet of Things is really kind of driving transparency and automation across the supply chain. In fact, in that survey, E&Y said that more and more, humans will be displaced by software and hardware. And as I start to look at some of the business systems we’re seeing, we’re starting to see systems evolve with artificial intelligence. I was talking to Joe Yukur about this the other day, and there are systems that are going to be able to go out, scan the internet, find suppliers, do an RFI, sort the RFI’s out, do an RFP and then hand a recommendation to a person, and a lot of that work will be automated.
The other thing that I think is happening is we’re seeing a change in demographics. So we’re now looking at a workforce where Millennials are 50 percent of the workforce. So that’s a major change and a different way of working. Customers are demanding more value, sustainability and corporate, social responsibility are becoming more and more important. And we’ve moved to a global economy. It’s no longer regional, local or domestic, it’s global. And what I think is going to happen as we look to the future is that we’re going to have exclusive tied supply chains. And when I think about those supply chains, if I look now, Apple has a very good, exclusive tied supply chain that brings it value, innovation.
The suppliers are all integrated, they work together. If I look at the automotive industry in the U.S., we get to see there’s really a Japanese supply chain, a Korean supply chain, a European supply chain and a domestic supply chain starting to form. So I’m starting to see people move into more and more exclusive tied supply chains, which will impact us. Industries are consolidating, and that’s forcing more and more of the opportunities for integrated tied supply chains. We’re seeing increased regulation across the globe, and we’re also seeing increased demand for sustainability. So we’re seeing all those things occur.
What is the most critical change coming?
I think the most critical change is the one where the supply chains are starting to integrate. So more and more people are going into a rapid, integrated supply chain with business information passed along the supply chain and then value points identified across the supply chain as well. So we will have a supply chain that distributes value and the suppliers along that supply chain will get paid on that value. And it’ll operate as a competing unit against other supply chains.
Well thanks, Bill, for sharing your views on these megatrends.
Oh, great. Nice talking to you, Dustin.
Phone Number: 866-221-38433
About Bill Michels
CEO at Aripart Consulting