Boris Felgendreher at supply chain specialist GT Nexus looks at six trends that will affect supply chains in 2015.
Manufacturers, equipment suppliers and distributors know that an efficient, well-managed supply chain is essential for business success, and that advances in technology and adverse economic or other conditions can present challenges and opportunities.
Far from being an afterthought, efficient management of the supply chain is high on the agenda at the company’s senior level. After all, an integrated and flexible supply chain can reduce costs, increase operational efficiency and help safeguard companies against damaging risk. Optimising supply chain management is therefore a necessary business objective and there are opportunities and challenges in this area that manufacturers will face in 2015:
3D printing has begun to cause quite a stir with its almost science-fiction quality of delivering a fully-formed object from raw materials and a design. Commercial opportunities are certainly promising, with the potential for businesses to create products on-site. Where this is a viable option, the potential for lowering the variable cost of components is a compelling opportunity. As is the added flexibility of being able to tweak production quickly. 3D printed goods will, no doubt, find their way into the supply chain, at the very least through the production of simple parts as part of an assembly process. Of course, 3D printers still need raw ingredients to feed their output, so for supply chain managers, this may mean refocusing global supply chains away from finished products to the rapid local movement of raw materials. As with all supply chain management, the aim is affordability, speed, and agility.
Smart manufacturing has promising potential in industry. From smart chips and sensors embedded in devices in the factory large volumes of precise measurements and data can be gathered, analysed and used to inform decisions to optimise factory conditions and improve delivery. Tweaks and alterations to production can be made in almost real-time on the basis of the data gathered. With technology ably keeping an eye on production and logistics in this way, supply chain managers will be free to focus on problem-solving and decision making, but only if all that ‘smartness’ gathered at source is connected to other partners in the end-to-end supply chain.
The potential of ‘big data’ is still being realised across industry. Businesses will seek out and find new ways to use the vast amounts of data that provides information on manufacturing volumes and timescales, delivery schedules and inventory. This data, residing in the supply chain, should be shared amongst trading partners to maximise its usefulness in streamlining delivery. Analytics will enable new insights into processes and encourage business models based on detailed real-time information. Companies that find smart ways to use all this intelligence will benefit from efficiencies, cost reductions and risk management.
Assurance of supply
So many factors can wreak havoc on the smooth movement of goods through the supply chain – natural disasters, suppliers going out of business, an upsurge in demand that was unforeseen. The list goes on. With more global trading, end-to-end manufacturing processes are increasingly complex and with that complexity comes an increased probability of a breakdown in the supply chain. Trading partners that share information and collaborate across the supply chain for seamless delivery are best placed to mitigate against all this risk.
Supply chain finance
Lenders, as collaborative members of the end-to-end supply chain, can have greater confidence in providing supplier finance when they have good visibility of the parties involved and the course of orders through to payment. With new banking regulations in the U.S. making it too costly for banks to hold certain deposits, many are threatening fees on accounts that had previously been free for large customers. This leaves companies searching for alternative places to park their money. In 2015, a growing number of companies will turn to supply chain as a place to not only park cash but to get a return on it. Self-funded early payment programmes, for example, will become an increasingly attractive alternative to getting rejected by banks. In these programmes, excess cash is put to use in the supply chain to essentially finance a company’s own transactions while assisting suppliers in obtaining low cost capital needed to fulfill their orders.
Collaboration on standards
Companies are feeling an increasing obligation to know more about the standards worked to by their suppliers and are taking an ethical stance on labour, environmental and health and safety standards. More companies will look to collaborate with their partners to agree to standards that suppliers need to meet as part of the contractual arrangement, and finance plans that incentivise this will gain traction.