Supply chain technology continued to evolve throughout 2012 as companies realized that a highly visible supply chain is necessary for success in today’s business climate. Of course, overall IT trends such as the cloud, big data and rapidly expanding mobile accessibility are impacting the supply chain just as they do other sectors. But there are other trends specific to supply chain that came to the forefront in 2012. Here are the five trends that truly shaped the supply chain this year, and some implications for investment recovery professionals.
This was the foremost trend during 2012 and will continue through 2013. Supply chain costs have been continuously cut since the recession began four years ago, but customers have begun pushing back on the cost-cutting measures that negatively affected service levels. Companies are now focusing on how to improve service levels while simultaneously decreasing costs.
Implications for IR Professionals: Cost cutting is certainly not new for anyone in the investment recovery field! Previous surveys of association members have shown that many organizations require their IR staff to support other non-IR activities, and doing more with less has been a pretty steady drumbeat. Hopefully, the massive cost cutting of recent years is now being softened somewhat with more thought given to the implications of those decisions on customer service.
Demand and supply planning has been rightly focused on as this is a critical point for supply chain success. However, the ability to execute on the plan when forecast errors occur–a constant issue– results in the need to focus more and more on execution. Forecast errors (or the difference between what is planned and what actually occurs), are driven by every day issues of “abnormal” supply chain events that can cause major disruptions.
The ability to react efficiently and effectively is critical to every supply chain and primarily relies upon end-to-end supply chain process visibility at the transaction level. This was a theme that came up again and again in 2012. Implications for IR Professionals: Obviously, not all of the surplus assets that come to the IR department are part of a planned process. Surprises occur in our business virtually every day, potentially impacting everything from personnel planning to budgeting and revenue forecasting. In short, planning notwithstanding, excellent execution on your end often requires exceptional effort and excellent communication skills when the playing field changes hands unexpectedly.
As supply chains have gotten leaner, reduced inventory levels require the ability to react quickly when abnormal events occur. Otherwise, stock outs will increase exponentially. Because these events are occurring more frequently, responding to them in an effective manner is a must or companies will face severe revenue losses. The result is that we have seen resurgence in contingency planning this year to ensure that supply chain functions continue even in emergency situations.
More importantly, companies want to know how well they performed against their plan and if the plan was truly followed. When a crisis occurs, individuals have the tendency to find “workarounds” to resolve the issue as quickly as possible. Companies are focused on developing contingency plans, executing those plans and understanding in real time if their plans are effective. Implications for IR Professionals: Inventory levels of new parts, products and equipment are certainly leaner than in previous times.
When emergencies happen (as they always do!) visibility within the organization of available surplus or idle equipment can be a critical stopgap to keep critical functions operating or to get up to speed quickly. Is your inventory up to date? Is it visible throughout your organization? Is your process for redeployment smooth and transparent?
All partners in the supply chain, from retailers through raw material providers, must constantly collaborate on what events are occurring, the data behind those events, and how they can execute as a unified group to respond to the challenges as they unfold. Trading partners are now acting in a concerted manner based on transparent information to resolve issues when they happen.
Solving a problem by pushing costs to another supply chain partner is an antiquated proposition as companies realize that cost shifting is not a sustainable, competitive solution. Implications for IR Professionals: Every member organization of the investment Recovery Association relies heavily upon outsourcing services. Often quite heavily. Operating efficiently, these partners become a critical part of your success. However— fairly or not—poor communication or execution by those performing on your behalf can have a negative impact on the reputation of your department. Clear contracts and open communication are key.
Big data was the big IT story in 2012. And combining the data of multiple supply chain partners, turning that data into information and being able to react and execute accordingly requires a lot of data. Big data solutions combined with complex event processing (CEP) solutions are being used more than ever to digest the enormous magnitude of available data and turn it into executable actions. Leveraging these tools with supply chain visibility solutions will quickly become a “must have” rather than a “nice to have” as companies utilizing these tools set the bar for the new normal in supply chain performance.
Implications for IR Professionals: Knowledge is power. BUT…the information in your surplus listings (data) is only as powerful as the accuracy and completeness of the data and the visibility throughout your organization and your prospect database. Yes, the “cloud” is big in the IT world, but where and how your data is stored is certainly less important than how accurate and visible it is. Are your website listings up to date? Do you even HAVE an online catalog? Is your primary method of communication still a fax or email to your prospect list? Is it time to review your IR software solutions?
If there is one thing these fi ve trends have in common it is that having constant feedback and control over supply chain functions is key to doing business in today’s ever-changing environment. For this reason, these trends are likely to continue into 2013 and beyond.
Source: Sean Riley, Director of Supply Chain Innovation, Software AG