simon ellis from idc manufacturing insights on ‘worldwide supply chain 2010 top 10 predictions:...

Trends for Global Supply Chains in 2010 June 23, 2010

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Agenda

1. Economic Conditions in 2010

2. The Survey Says!

3. Theme for Supply Chains in 2010

4. Trends for 2010

5. Essential Guidance


Asset Oriented Value Chain

Engineering Oriented Value Chain

Technology Oriented Value Chain

Brand Oriented Value Chain

Product Lifecycle Strategies

Supply Chain Strategies

Operations Technology Strategies

IT Strategies

Look at a domain

across segments

Look at a segment across

domains

Value Chain Segments

Automotive, Aerospace, Machinery, … High-tech,

Semiconductor,… Fashion, Food&Beverage,… Chemicals, Metals,

Pulp/Paper…

Emerging Agenda

Trends Palooza

Process Domains


Recovery Underway

2007 2008 2009 2010 (?)

DJIA on 10/9 14,279 8,579 9,865 Higher

Oil on 10/9 94.83/bbl 76.77/bbl 73.80/bbl Higher

$ to € on 10/9 .709 .732 .690 Lower

Michigan October Consumer Sentiment

80.9 57.6 70.6 Volatile (but probably

higher) ISM PMI for Mfg. - October

50.9 38.9 55.7 Higher


Key Points

Industrial capacity rationalized

Capital spending halted

Inventory down

R&D Shrinking


Key Points



Inventory down

R&D Shrinking

Big Cash Reserves

Manufacturing activity up

Volatile raw materials markets

Inflation in our future?

Jobless Recovery?


Key Points

Bottom Line: All the factors in place for a major transformation of the manufacturing industry.



Inventory down

R&D Shrinking

Big Cash Reserves

Manufacturing activity up

Volatile raw materials markets

Inflation in our future?

Jobless Recovery?


Asset Oriented Value Chain

Engineering Oriented Value Chain

Technology Oriented Value Chain

Brand Oriented Value Chain

Product Lifecycle Strategies

Operations Technology Strategies

IT Strategies

Look at a domain

across segments

Look at a segment across

domains

Process Domains

Value Chain Segments

Automotive, Aerospace, Machinery, …

High-tech, Semiconductor,…

Fashion, Food&Beverage,…

Chemicals, Metals, Pulp/Paper…

Emerging Agenda

Supply Chain Strategies


Supply Chain Survey Goals

Identify business objectives that influence IT spend as perceived by those familiar with an organization’s supply chain (SC) strategy and operations.

Identify top SC priorities and relate them to the business objectives.

Given that many SC initiatives are not classified as top priorities, understand the importance of SC initiatives, such as asset tracking with RFID, risk management, quality, environmental sustainability, and supplier management.

Recognize how IT can improve the SC from a more general perspective, such as data quality, information sharing, measuring KPIs, sense and respond, and collaboration. Responses will help identify the core issues IT needs to address within the supply chain and how advanced manufacturers and retailers are improving the supply chain with IT.

Identify top 3 IT application investments an organization expects to make in the next 12 months, considering its business objectives and supply chain priorities.


Business Objectives Driving IT Investments

Note: Respondents selected 3 out of 16 possible responses


Top Supply Chain Priorities

Note: Respondents picked 3 out of 15 possible responses Rating on a scale of 1 to 4


Top Supply Chain Initiatives

Note: Rated on a scale of 1 to 4 where 1 means not at all important and 4 means very important, across 13 supply chain initiatives


Top 3 Supply Chain Application Investments Over the Next 12 Months

Note: Respondents picked 3 out of 17 possible responses


Overall Supply Chain Theme for 2010

– IT proves itself in recession – Supply Chain modernization accelerates out of the recession – Uncertainty creates a need to hedge at a design level – What is the “new normal”? – Increasing customer segmentation will put focus on service levels – Reverse bullwhip – Cost versus Service – 2010 Style!

Manufacturing companies are fundamentally rethinking their supply chain structures, evolving from a fixed-cost-driven supply network to a variable-cost-driven value network.


Supply Chain Trends in 2010

“Dynamic Optimization” dominates Capability Investment to Support Redefining of the Supply Chain – Inventory optimization – Sales and operations planning – Integrated quality and financial information – Full network optimization

S&OP is Re-emerging as the Synchronizing Process for Reconciling Supply and Demand – Critical in unpredictable times – Collaborative, forward-looking process – Integrating multiple planning horizons – Clarity around benefits



Balancing Supply and Demand Across the Value Chain is Prompting a Strategic Redesign of the Supply Network – Profitable proximity sourcing – Emergence of the “globally fair wage” – Logistics versus Labor

Supply Chain and Product Life-Cycle Management Applications are Increasingly Converging as Manufacturing Companies Focus on Innovation Delivery – Pressure of private label growth – Improve innovation delivery – Maturity of PLM adoption across manufacturing segments – Inevitable interaction between PLM and SCM


Intelligent Supply Chains Put Broader Visibility Burden on Supply Chain Organizations, Both Owned and Outsourced – Unsurprisingly, outsourcing persists – Challenge of managing blended networks – Information capture and communication – Opportunity for network visibility and facilitating tools

Supply Chain Organizations are Investing in Capabilities That Facilitate Global Operations – Supply chain is key for global competition – Emergence of global trade tools to facilitate evolution – Cost management/cost awareness



Transportation Capacity is Tightening, Causing Supply Chain Organizations to Rethink Fulfillment Strategies – Cheap transportation? – Capacity glut – Return to traditional supply/demand balance – Sustainable practices

The Increasing Pace of Supply Chain Outsourcing/Offshoring Will Keep Risk Management High on the Strategic Agenda, But Investments Remain Focused on Building Risk Awareness – Cost versus risk – Risk functionality built into traditional applications – Leading manufacturers balance risk awareness, early detection, rapid

response – although minimal new IT investment, for now!



Essential Guidance

Consider supply chain as an extension of other business units: more functionally integrated processes between supply chain and manufacturing, product lifecycle, and customer-facing businesses.

Think "optimization" as well as just "management," and the ability to respond quickly and efficiently to the marketplace changes. The capability for efficient decision making is critical, both in terms of processes like S&OP and the ability to effectively balance supply and demand decisions.

You can’t escape the focus on cost efficiency – and a good justification for investment in strategic sourcing and spend management – from contract compliance to spend analytics.

If it’s truly a value chain, relationships need to be based on better supply visibility and operational flexibility. But don’t rely too much on visibility – it’s just an enabler.

Partner interaction can be enhanced through more effective global trade management tools, for example, or with capabilities like better risk awareness, a clear sustainability strategy, and/or well-defined fulfillment approach.

Retail supply chains are only getting more complex – more channels, wider variety of global sourcing and distribution requirements. Take the complexity out by reengineering processes, integrating and automating processes between functional areas of the business and supply chain partners, including everything from product design, sourcing, order management, compliance and quality control.

Thank You, Questions?

simon ellis from idc manufacturing insights on ‘worldwide supply chain 2010 top 10 predictions:...

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