Topic: Pearson on Excellence

Supply chain decision makers are well-positioned to help the world become a more habitable place, and to benefit financially from their efforts.

This is the final column in our series about dynamic operations, or global supply chains imbued with the ability to alter the function and focus of key processes (manufacturing, transportation, distribution, etc.) in response to changing events.

In this column—the fourth in a series of five articles focused on dynamic supply chain operations—we look at the role and importance of “flexible innovation.”

In this column—the third in a series of five articles focused on dynamic operations—we look at the role and importance of adaptable structure.

In our previous column we introduced the concept of “dynamic operations:” supply chain networks that respond quickly and smoothly to changing business conditions. We also identified dynamic operations’ four enabling capabilities and looked briefly at how they work together to help companies identify, accommodate, and even benefit from supply chain disruptions. The first of these capabilities is “insight to action.”

Dynamic operations—supply chain networks that respond quickly and smoothly to changing business conditions—sounds like something every company should desire. Who wouldn’t want a supply chain whose processes, people, capital assets, technology, and data are always positioned to surmount the primary challenges of the day?

One hallmark in the era of permanent volatility is fluctuating commodity prices: everything from aluminum (variations up to 30 percent in 2012) to zinc (variations up to 25 percent in 2012). The result is endless headaches for people and departments in virtually every industry: the procurement folks buying materials; the logistics and transportation staff moving it; the finance guys forecasting expenses; and even the sales and marketing staff struggling to pass unanticipated cost increases on to customers.

有效利用业务analytics-using quantitative methods to derive forward-looking insights from data—is essential for companies that are serious about supply chain excellence. Why? Because with analytics, supply chain managers gain a deeper understanding of what is happening upstream and downstream. As a result, they’re better able to assess the operational impacts of prospective supply chain decisions.

Today more than ever, innovation is a top priority. Sixty-two percent of executives questioned in a recent Accenture survey noted that their business strategy is “largely” or “totally” dependent on innovation. Nowadays, however, companies don’t only need to innovate, they also need collaborators—partners—to help make innovation happen.

In last month’s column, we presented some dramatic research insights about emerging markets. By 2020, 57 percent of the world’s economic growth could come from emerging markets. Emerging market household incomes are expected to increase by a total of $8.5 trillion between 2010 and 2020. And if emerging-market-to-emerging-market (E2E) exports continue to increase at their current rate, they will outpace developed-country-to-developed-country (D2D) volumes by 2013.

This month we reflect on the views of the businesspeople, government policy makers, and academics that participated in the World Economic Forum (WEF) study of supply chain risk.

In this first installment of a two-part series, I will look at a variety of risk-focused research efforts. In May, I will offer suggestions for managing supply chain risk—not just responding more effectively but preparing more completely.

In Logistics Management’s April 2010 issue, we introduced Profit, Sales, and Operations Planning (PS&OP), a way to align supply chain decision-making with high-level financial goals and long-range strategic planning. Since that time, more companies have begun implementing PS&OP-like approaches—using financial data, scenario modeling, and analytics to concurrently optimize sales, balance demand and supply, and maximize profits.

Most companies’ manufacturing strategies involve decisions relating to landed cost per unit, cost/quality balance, and various SKUs’ compatibility with supply chain parameters—transportability, packaging, serviceability. However, one thing is often missing: insights for connecting manufacturing operations with business results. Few companies excel at understanding and optimizing the business value of their manufacturing decisions.

When it comes to the oil and fuel markets, it’s been quite a year. On the supply side, the biggest story was the Middle East and North Africa (MENA) region uprising epitomized by the Libyan revolt that led to the death of Muammar Gadaffi and the shuttering of 1.6 million barrels of daily oil production.

From a business standpoint, the first 10 years of the 21st Century have been anything but normal. Economic turmoil is almost constant, currency valuations shift with the wind, and bank lending vacillates between lenient and tight-fisted.

In the future, companies’ physical end-to-end supply chains will work in concert with equally comprehensive and far reaching “digital supply networks”—from systems that support initial design and development work, all the way to those that help manage delivery and post-sale service.

Procurement is one of many areas vying for a supply chain executive’s time and attention. But when you consider the variety and depth of benefits that high performance in procurement can deliver, perhaps a little extra time and attention are warranted.

Risk is part of business. It’s a significant, permanent reality faced by virtually every organization. Without risk, business as we know it might not exist. To compete, grow, and capture benefit, companies need to take chances. It’s what businesses do.