Natural disasters, acts of war or terrorism, sudden shifts in the market, labor strikes, regulatory changes, bankruptcies of partners and suppliers—disruptive, unexpected events of this kind occur at ever shorter intervals posing great challenges to companies in terms of their supply chains. According to the authors of a recent Deloitte study, this will require a new approach to supply chain management. While previous management approaches focused primarily on cost optimization and reactive risk mitigation, in the future they need to be more forward-looking and proactive. “Today […] leading global corporations are building resilient supply networks not just to withstand but to expect shocks,“ they say.
The authors call this trend the „anticipatory supply chain,“ and identify four key success factors for implementing it:
- Advanced Analytics
Leading companies will make use of cutting-edge advanced analytics tools to better predict and understand demand trends and activities within complex supply chains. Such tools facilitate real-time analysis and access to large amounts of data for all stakeholders across the organization as well as the exchange of information between supply chain partners. This enables companies to make quick and informed decisions.
- A Tighter Connection with Strategy
Because of its focus on risks, the supply chain should be integral to strategy formulation, not just to strategy execution, as commonly practiced in the past. “Leading supply chain companies acknowledge the critical connection between supply chain and strategy; less successful companies focus more on how the supply chain contributes to operational performance," the authors argue.
- New Types of Leaders and Talents
A likely implication of this development is that in many companies new types of leaders and talents will be required. Excellent industry and institutional knowledge and the mentoring of junior staff “in the long-established ways of doing things” won’t cut it anymore. Rather, supply chain managers of the future should be professionals who “combine global experience with creative problem-solving and analytical skills—true innovators who are also disciplined operators." Acknowledging the importance of the supply chain for corporate success, many companies are already starting to give supply chain executive more authority and responsibility.
Another important success factor to make supply chains more “nimble and adaptive,” the authors argue, is the shift away from global supply chain networks to local networks close to prime markets ("near-shoring"). Drivers for this development are mainly the rising production costs and the rapidly growing domestic consumption in China and other former low-cost manufacturing countries, but also the fact that more and more companies are beginning to realize that greater geographical proximity fosters closer strategic cooperation between supply chain partners.
The authors of the study conclude: “As linear supply chains evolve into rich supply networks, the companies that are best positioned for growth may be those that see these networks as core to their business strategies. Their supply chains will not only perform efficiently under normal conditions, or recover quickly from disruptions, but may also be able to spot risks and avert them, and help leaders throughout organizations to anticipate the future.”
Marchese, K. & Lam, B. (2014). Anticipatory supply chains Business Trends 2014. In: Business Trends 2014: Navigating the next wave of globalization. Deloitte University Press. http://dupress.com/articles/bus-trends-2014-anticipatory-supply-chains/