The Future of Collaborative Supply Chains and Global Business 2005-2010
By Dr. James CantonCEO & Chairman
Institute for Global Futures
Copyright 2002
Overview
This summary is from an ongoing research report and advisory service provided by the Institute for Global Futures on the future of supply chains and global business. For over twenty-five years the Institute for Global Futures has been conducting an analysis of key trends that will shape the future of business, the economy and society.
Overall we are headed toward an era of greater complexity, more competition, and faster change. Innovations will come sooner and cut deeper. Technology will continue to be a prime enabler of market share growth, profitability and competitive advantage. Information technology (IT), in this new era will become even more mission-critical to the survival of the enterprise. A new generation of power tools led by the Internet is just now emerging. The exponential growth of technology-from super smart computers to super fast networks will demand an enterprise and supply chain transformation. We are at the beginning of this era.
Supply chains are being reshaped by the Internet and the new efficiencies of e-business but there maybe something larger that is emerging. Do supply chains point to the evolution of a future economy? We think so. The movement of goods and services from manufacturer to supplier through distribution channels into the marketplace and eventually delivered to the customer is being transformed by information technology at a rapid pace. This is as true for knowledge-based products financial services) as well as manufactured goods. But this is just the beginning. Supply chains as a fundamental component of an economy, may give us insight into the larger economic shifts yet to come in the future. As next generation of supply chains are deployed---no longer reactive to commerce but being proactive, predictive and anticipatory emerge, so shall the next global economy.
The key trend that will enable the future of supply chains is electronic collaboration. Electronic collaboration between all the players of the supply chain, once collaboratively enabled, from the DNA of the products' inception to the customers' digestion-will be the sea change. This cannot occur without the embrace of new business models (e.g. JIT production) and shifts essential especially to the enterprise, (e.g. workflow engineering, eProcurement, eLogistics). These forces and the associated shifts described here will provide the transformation of the next global economy.
Collaborative supply chains will become prevalent in the future as fierce competitive forces use information technology as a weapon to differentiate their value. We are just at the beginning of this shift. Web-centric end to end solutions, today seemingly innovative will become tomorrows' EDI. As a new generation of tools and applications and networks emerge, smarter and faster solutions will prevail. Radical innovation is the only competitive advantage. Customers and their logistics partners who invest in flexible organic and scalable innovations that can fast adapt with the markets needs will be the winners. Real-time will be a key differentiator until it becomes the standard for all supply chain optimization. The capacity of the 21st century organization will continually be updating it's IT, this will be the norm. They must learn to be able to move faster and provide a smarter solution set so their customers can thrive in the extreme future.
As corporations become increasingly dependent on global trade to offset local maturing markets, the borderless transnational enterprise will require a streamlined new generation of supply chains. Innovations today will seem less so in the future. This report considers the leading trends that may indicate what's next for supply and chains and how these changes will both drive industry, economics and global markets in the near future.
Future Collaborative Supply Chain Paradigm Shifts
Seven paradigm shifts will define the next generation supply chains. Some of these shifts are emerging now; others are yet to reveal their role. Some can be seen in parallel economic and business environment, not associated with supply chains as yet-but together will become a change driver. What is interesting is that the traditional supply chain thinkers are holding hard to the infrastructure of the past even as the new infrastructure is growing up around them. Those leaders that have discovered the Web think that it is the end game. It is not. This is just the beginning where the new channel, the Web is an accelerator of dramatic changes to come. Everyone will be using end to end, Web-centric technology to accelerate their supply chains. This is not the innovative breakthrough. This is the new commodity. By cultivating a capacity for continual radical innovation, anticipating future opportunity and customer demand, leaders will be able to better navigate the challenges of the near future.
As we move beyond, into 2005 and further On-Demand Supply Chains will provide more speed, business intelligence and transparency for growing business opportunities. Seven key paradigm shifts point the way to the future of supply chains:
1. Real-time Predictive Forecasting
The ability of an enterprise to be able to anticipate and forecast future customer demand, identify profitable niche markets, turn that into products and services and then turn that information into a business asset will be essential to the competitive advantage of the enterprise.
2. Business Intelligence
Critical information about competitors, customers, and the industry that can be used to accelerate the development of profitable opportunities will be the key driver of the 21st century enterprise. Customer and supplier data will become a weapon for competitive advantage if tied to the IT infrastructure.
3. On-Demand Service
This is a shift in thinking, designing and implementing supply chain resources not shaped just by cost or efficiency but by speed smart software, and system optimization. The ability of a company to have access to a flexible, transparent and interoperable Knowledge Network that can accelerate business opportunity, is the central paradigm forecasted here.
4. Pervasive Networking
The use of the next generation of intelligent devices-from chips in packaging, to network sniffers that monitor to mobile devices that are pervasive, intelligent, fully integrated into the products being moved in the supply chain, will provide efficiency, speed and knowledge that can be monitized...
5. Electronic Markets
Electronic markets will emerge providing AI optimized trade, where price, speed and feature transparency will dominate those players that can function in the new environment. These markets, tied to banks and manufacturing and logistics will present vast new opportunities as new technologies tied to the Web such as interactive TV and wireless commerce become widespread in use throughout the world.
6. Smarter Software
Software that can automate human functions with less error and chance will enable more efficient and more cost-effective supply chains. Many functions today could be automated around rule-based AI systems providing faster efficiencies.
7. Next Generation Collaborative IT Infrastructure
Not much can or will be done if companies don't spend the resources to design the nextgen IT infrastructures. Deep collaboration offering transaction, communications, clearing, confirmation, validation, and decision-support with customers, suppliers, partner's even competitors is what the future holds. It is the agility and intelligence of the collaboration that will determine success. Delivery channel architectures tied to customers, data warehouses linked to the desktop or wireless web, offering real-time, on-demand streaming data-this is what's next.
Ten Key Drivers of Future Collaborative Supply Chain Scenarios
The following are the prime enablers that will shape the future of supply chains based on research conducted by the Institute for Global Futures. Much of this is an evolutionary shift, inevitable yet hard to definitively predict a timeline. With so many companies offering third party web-centric end to end solutions, it is probable that one standard electronic infrastructure will emerge. In addition, the enablers, and the systems will eventually become commodities, like many of the products they will move via their logistical systems. No supply chains will exist by 2010 that are not electronically enabled, collaborative or are on-demand. The following are the key drivers of this emerging Collaborative Supply Chain future:
- Artificial Intelligence, AI-embedded decision-support for predicative modeling and automatic logistics management
- Innovations such the next generation Internet 2, 3, 4; broadband; peer-to-peer; nanotechnology; Grid computing; the Semantic Web and VoIP will provide voice and data integration with wireless, satellite, interactive TV for max logistics coordination.
- On-Demand supply chain components that get created and then become invisible until when needed, Lego Supply Chains
- Banking and telecom infrastructure Web unification tied invisibly to the enterprise and to logistics systems
- Just in Time Production, tied to predicative analysis of customer demands and logistical systems availability
- Real-time data mining to drive the best logistical utilization of supply chain resources, systems and costs
- Customer supply chain hosting, to re-purpose underutilized infrastructure within and outside the customer's systems
- Supply chain optimization objects built into the system with DEPS, digitally engineered personalities that automatically monitor and configure customer, logistic and supplier needs
- "What if "scenarios with forward placed digital cash commitments to determine buyers interest before manufacturing starts.
- Customer Relationship Forecasting, to determine buying interests and business to business competitive-advantages that the "aware supply chain" can use to improve "itself"; to become real-time self-aware of the need to enhance the functionality of 'its' network architecture.
The challenge before business leaders today is how to prepare to meet the challenges of this emerging future. Collaborative Supply Chains will shape the future success, even the future survival of the enterprise. Investing in infrastructure, technology, or human resources alone is not the answer. More radical technologies are coming that will change the supply chains; even quite fantastic. Wireless packages will communicate their location and arrivals to a global customers waiting for them. Nanotechnology, using enhanced self-organizing materials that reassemble themselves from components into finished products are coming. Molecular models for network chips that mimic natural processes like DNA to hydrogen fuel cells for trucks and planes are coming.
A forward looking strategic plan that incorporates a cohesive strategy designed to take into consideration, both core competencies and future business objectives, that is in step with the customer and the changing marketspace is the right direction. This is a learning process that is a formula for long term profitability and success.
We must also remember as we look forward to look back. Even though billions have been spent on the intermodal system today, the raising of the tunnel clearances alone was quite expensive to accommodate double-stacked trains in the US; this system is still not used as efficiently today as it could be. Newer technologies may breathe new life into older solutions.
The era of the supply chain that reacts to customer needs alone is over. Leaders both in the logistics industry and those customers who understand this vital paradigm shift will prosper given this new reality. Collaborative Supply Chains will both be shaped by the next economy and be shaped by the forces of change.