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Future of supply chain management

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A short and crisp paper on future of SCM by a student at Era Business School, New Delhi (PGDM 2012-14)

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Future of supply chain management

  1. 1. Era Business School 1 Assignment : SCM SCM : WHAT LIES AHEAD (Future of Supply Chain Management) Submitted By : 0121pg014 Col Ajay K Raina, SM Date :26 January 2014 1 – Introduction 1.1 Supply Chain Management (SCM) forms the backbone of business architecture whether the product is a good or a service. In the present era of seamless expansions and globalisation, SCM implementation is an urgent need rather than an option. At the same time, as businesses and economies around the globe go through a phase of churning, it is but natural for SCM processes and methodologies to feel the heat. 2 – Objective & Approach 2.1 The objective of this brief is to assess likely future trends in SCM. 2.2 An approach based on identifying future challenges so as to visualise the future roadmap for SCM would be followed. Keeping in mind desired size of this paper (brief and concise), the focus would be on enumerating relevant points rather than lengthy explanations. 3 – Future of SCM 3.1 SCM and business architecture are almost synonymous, at least as far as execution of business model and delivery of the product are concerned. It is, thus, obvious that any challenge, that business environment faces, would impact SCM too. It is, therefore, felt that in order to fulfill the work at hand, we look at the challenges that SCM is likely to face in the future because of challenges being faced by the industry per se. Having identified such key challenges, we would be in a better position to identify the likely future profile for the SCM. 3.2 Challenges for SCM. The vital challenges, that the field of SCM faces today, have been summarised as under:(a) Ever-increasing pressure from global competition, eg entry of retail giant in developing country like India and its impact on local retail SCM. (b) Consumer expectations that are moving away from local stereotypes to global aspirations; phenomenon of crowds spending night before the launch of i-phone, outside the Apple stores is not restricted to USA alone. (c) Unpredictable complex patterns of customer demand; customers are volatile and so are their demands. (d) Cost pressures arising from global giants as also smart operators who achieve competitive advantage through latest technology or cheap labour. (e) Environmental and ethical concerns; more awareness among customers means no more short-cuts to success. (f) Volatile commodity prices. (g) Existence of flashpoints across the globe and threat of geo-political fallouts off such conflicts; China-Japan-US stand off or embargo on Iran eg. Submitted to Prof Rajneesh Mahajan
  2. 2. Era Business School 2 Assignment : SCM 3.2 Impact of Challenges on Key Focus Areas of SCM. A summary is as under:(a) Cost reduction – the tool for survival. (b) Inventory control – why Japanese have done so well! (c) Quality (of service fulfilment) focus – for retaining customers. (d) CRM – no way out. (e) Going green – reducing carbon footprint in SCM. (f) Speed – either first to hit shelves or perish. (g) Risk mitigation – being situation-aware. (h) Involvement – CEOs cannot wish it away to subordinates. 3.3 The Way Forward. In light of the above, the following issues may define what lies ahead for SCM:(a) Bridging the gap that arise out of lack of cross-functional collaboration as far as SCM is concerned. Every department has its own priorities and it is imperative for the top management to intervene and plug such gaps so as to achieve efficiency as well as efficacy in SCM. (b) SCM would be treated as an extension of company’s business strategy and not a standalone option. (c) Real time information flow would be a must for improving service and responding to new potentials and arrays of customer demand irrespective of the terrestrial range or the dimension of supply chains. As the marketplace becomes more and more disjointed, keeping superior track of customer data and costs, which can inform and support relational, cross-functional discussions, will help companies prepare for the supply chain uncertainties that lie ahead. (d) Companies, in the times of price volatility, will have to view SCM resources as a hedge. By considering investment in manufacturing resources that may not necessarily be cheap as of now, companies can place themselves for better elasticity in the future. (e) It would be prudent to pursue economically smart opportunities that address environmental impact in the near term and prepare to react quickly to any unexpected shifts in environmental prospects and necessities. 3.4 Conclusion. The business world in particular and economies the world over in general, are just about coming out of some of the toughest times in the recent past. As the environment sees businesses recovering and trying to re-assert themselves, it is natural to predict a simultaneous churning in the related conceptsSCM being one of the most vital. Road ahead, therefore, despite being tough for businesses as a whole, bodes well for SCM per se because no business would be able to ignore this aspect without facing some serious consequences. References:http://www.mckinsey.com/insights/operations/the_challenges_ahead_for_supply_chains_mckinsey_global_su rvey_results https://supply-chain.org/top-supply-chain-challenges http://www.scdigest.com/assets/On_Target/09-06-02-4.php http://www.oracle.com/us/media/057011.pdf Submitted to Prof Rajneesh Mahajan