Manufacturing supply chains are experiencing levels of change heretofore unprecedented in their history, according to a recent IDC Manufacturing Insights white paper titled “The Extended Supply Chain.”
In the paper, author Simon Ellis posits that the future of the supply chain is “one of an outwardly networked and collaborative organization that fully integrates supply chain with design, manufacturing, and asset management into an ‘extended’ supply chain that is able to respond quickly and accurately.”
In order to transform existing supply chains into extended supply chains, Mr. Ellis explains that organizations must prioritize the following three drivers of change:
1. Customer-centricity: putting consumers at the forefront of your business
Gaining visibility of actual demand and increasing the speed of response will be the key to improving customer-centricity. Supply chains must be not only accurate but timely, whether we are talking about the time it takes to bring new products to market, the time it takes to process and deliver an order, or the time it takes to manage returns.
Today’s customers are more connected, informed, and demanding than ever. They want the ability to order from any device, anywhere, at any time. In other words, they want complete omnichannel capabilities.
2. Individualized products: Realizing the lot size of one
As the paper states, “Most manufacturing supply chains have been designed for the mass-market reseller, moving full pallets on full trucks, and have operated as such throughout much of their history. Yet these businesses are now facing the challenge of smaller cases or even units, LTL or parcel shipments, and high levels of customization — all things that the current supply chain is poorly equipped to manage.”
Enabling customers to personalize orders is a major business driver. Today, consumers can go online and purchase almost any individualized item they desire, from cars and chocolate to sneakers and spaghetti. But this requires companies to reimagine how they design, plan, manufacture, and deliver products.
3. Collaboration: Responding quickly and accurately to customer needs
As supply chains become more global and distributed, collaboration becomes a vital component of the digital extended supply chain. To be able to respond quickly and accurately to customers requires establishing a network of partners, people, and assets.
According to IDC, the successful future supply chain will require “demand-aware” demand networks, “supply-visible” supply networks, and “innovation-connected” product networks. This will inevitably evolve into a network of partners that can play multiple roles in designing, planning, manufacturing, delivering, and servicing products brought to market.
Get a glimpse of the future of supply chains
If you’d like to learn more about the future of supply chains, I invite you to attend a webinar on February 18: “Disruptions in Supply Chain – Are You Ready for 2016?” In the session, Simon Ellis of IDC and Hans Thalbauer, SVP for Extended Supply Chain at SAP, will discuss:
- Why the current supply chain is poorly equipped to manage high levels of customization
- Why the future of the supply chain is one of an outwardly networked and collaborative organization that will sit at the center of three lobes — a demand network (“demand-aware”), a supply network (“supply-visible”), and a product network (“innovation-connected”)
- How cloud-based business-to-business platforms and other technologies are key enablers to reimagining operations and the supply chain