While there were many advances over the last 30 years in the supply chain, I believe that the key advance has been the bar code. I would argue that the bar code begain the age of automation in the supply chain. I believe that much of the advances over the last 30 years can be derived from the bar code and the concepts of electronic tracking and the transactional scheduling and work queues that are the result of this advance. In addition, much of the current technologies including voice, pick-to-light and even RFID can trace their lineage back to the lowly bar code.
I think the second most important advance has been the electronic communications ushered in with EDI initially and advancing over the years with XML and even the HTML and internet technologies. These communications methods advanced the bar code communication technology to span the partners in the supply chain and extended supply chain. Starting with purchase order and shipment information and leading to the forecasting and vendor managed inventory techniques and technology and advancing now into the mobile network technologies to extend the network to the 'last mile' and the transport of product and information through the extended supply chain. I find that one of the interesting points relating to the electronic communications is that no matter how advanced the capabilities are, there are relatively large islands of limited and no communications within the supply chain. I guess this goes to show that there are always opportunities for improvement in the communications within the extended supply chain.
For the third key advancement in the supply chain I would nominate the social network. While this advancement has only recently surfaced in the last couple of years, this also provides what I believe could be the most far ranging advancement in the supply chain since the bar code. These capabilities are currently just in the early stages of investigation and implementation but I believe that based on the impact that social media and networks have had on the geopolitical and social frameworks that the impact on the supply chain will be equally as impactful. All this being said though the world and the supply chain is littered with advancements of great promise and opportunity that have crashed in the realization stages. While i believe that this will not be the case with the social network and media you can never be sure.
1. The Sustainable Supply Chain
Supply chain sustainability from a business point of view is about environmental stewardship, social well-being, economic prosperity and they relate to each other. It is not an esoteric thing or about altruism. Instead, it is very practical. Sustainability in the supply chain means making a good product with little waste and being able to recycle that product. This helps build your company's reputation and your company is rewarded when you benefit the community.
It isn't just about worrying about climate change, or just focusing on environmental sustainability. Everything matters. Everyone needs to get practical about supply chain sustainability and if you run your business very well you are probably doing sustainability.
There are also a number of things government initiatives which will require that your company report on the sustainability of the supply chain. The SEC is pushing US companies to report their carbon exposure. They want US companies to look at what their carbon exposure is, whether from carbon emissions, to how they use their products. The SEC would like to see that reported.
In California you will have the first mandatory carbon reduction program in the US. This will start in the year 2013. California when taken by itself is the fourth largest economy in the world. It has significant impact in the US in terms of the whole US economy.
Even though we don’t have a US mandatory program, the fact that we have California going forward with their program will affect many companies in the US today.
Supply chain collaboration went away but is now being re-invented. See Alan Bishop's interview. Alan discusses that in the 1970s in the US and Europe the industrial scene was challenging. There was raging inflation in the Western economies and the advent of competition coming from Japan, in particular. If you look at the data around that time you see Japan’s GDP grew from 1970 to 1980 by 420%, whereas in the US GDP grew by 170%.
Operations moved abroad and teams disbanded, forming more around training of other people in other regions, building working structures to define process operations and training offshore teams to work with the operational processes. When that journey was complete we found people starting to position themselves in and around supply chain activity as a much different environment than the one people were used to before having the manufacturing and operations close by.
Today, the need for the supply chain operations to optimally operate is greater. We also have rising fuel charges, a situation with rising costs for the workforce, in particular China. At some point we will find some manufacturing which migrated offshore will come back onshore, or at least closer to the point of consumption. With that we will see a big need to re-engineer. Labor costs have to be controlled so you will need to introduce automation. You will have to bring manufacturing into new regions. All of this will require self directed work teams.
Alan believes it goes back to the basics of what people have learned, or possibly unlearned, since the 1970s and 1980s. It is probably worth going through those steps to remind ourselves what business process re-engineering really meant for us at that time, and how self directed work teams were a key part of that process.
The Recession as a Catalyst for Collaboration
Richard Sherman in his interview on how the recession brings about more collaboration and innovative business intelligence discusses how he sees a renewed focus on inventory management as a positive consequence of the recession, and says it has led to more collaboration, increased emphasis on demand planning, and better use of business intelligence. Companies are looking for, and finding, new decision support tools and systems, as well as new ways to help their people make better, more informed, and more collaborative decisions.