By Tim Foster | Manager Director, Asia-Pacific
Travelers to China often marvel at the great contrasts that are so apparent in this economic superpower, where the old world butts right up against the new in an often deliberate, instantaneous melding of ideas, customs, and technologies. That wasn’t at the top of my mind, though, when I went to the Council of Supply Chain Management Professional’s China Conference in Beijing.
Armed with a presentation entitled “Five Major Changes Impacting Supply Chain Leaders“,
I was there to talk about the future.
The conference contained a notable future facing theme, “Creating Value Through Supply Chain Management”. Keynote speaker Thomas W. Speh, Director of E-Learning, Farmer School of Business, Miami University, and Director of Strategic Initiatives, CSCMP, explored the many ways well-managed supply chains can create and add value to a broad range of business functions from a company’s financial outcomes, to advancing the sustainability of resources and people, and even national macro-economic dimensions.
Similarly, Starbucks China Vice President of Supply Chain Operations, Tobie Gordon, pointed out that supply chains in developing markets must implement fundamental practices of demand-driven planning, end-to-end cost management, and balanced KPIs to leverage the full potential that their supply chains can deliver as diversity in consumer behaviors and products increases.
As the sessions progressed and attendees began discussing the issues affecting them daily, it became clear that emerging global supply chains are facing the same opportunities and challenges faced by their established counterparts. With e-commerce exploding in China at a similar rate that the U.S. saw during the internet boom of the late 90s and early 2000s, supply chains in these emerging markets need to evolve at a quicker pace than their economy. The Chinese market is so huge that it is already beginning to overtake the U.S. in terms of actual spending, so the changes must begin in earnest.
A clear example of this is evidenced by transportation infrastructure that inhibits last-mile delivery capability. Urban transportation is antiquated to modernities and merchandise is often delivered using pushcarts due to these infrastructure challenges. Delivery scheduling, controlling for damage, and handling packages with integrity are no guarantee in this exploding market.
These issues affecting China and many other emerging markets require thoughtful supply chain design to adapt to the economic trade-offs between the level of investment in modern methods versus the low variable costs of the labor intensive old-world operating model — the benefit of doing so is enormous.
These issues are representative of a greater trend affecting global supply chains worldwide: customer dynamics are changing rapidly, along with the products that serve them, and factors affecting the associated supply chains are growing increasingly complex. At the same time, there is an exponentially growing supply of data that can provide unprecedented insights into demand forecasting and supply chain planning — but it is also becoming more difficult to analyze the mountains of data and derive actionable insight.
Breaking that trend down to its three core components, the following high-level steps can be taken to prepare global supply chains for the future:
- Understand that supply chain management now entails managing a portfolio of supply chains. No longer existing in vacuums, supply chains for consumer and product group segments affect one another and managers must build effective processes and put the right people and technology in place that serve the unique characteristics of each supply chain.
- Companies that align themselves strategically with partners will simplify navigating the dynamic marketplace. Collaboration with suppliers, logistics providers, and horizontally with peers — even those considered competitors — can go far to drive efficiencies. Deliberate partner and supplier management that considers what each player brings to the table will advise the strongest consortiums.
- The power of social media has accelerated the path of customer to customer communication. It is quickly augmenting customer to supplier communication as an arena for discussing experiences and airing grievances and that propels expected customer experience to a level where it can affect supply chain management. No longer just about moving merchandise, the core of supply chain management has expanded to include managing the customer experience.
Data remains one of the most effective tools supply chain managers can leverage to guide the path forward in this swiftly changing environment. The amount of data available on existing channels is intensifying, but the best opportunities are gained when those channels are expanded to include multiple external sources. Macroeconomic demand forecasting, big data, and information from social media all increase understanding of the market and should be considered in decision making.
Global supply chains in these exploding markets are capable of taking these steps, while at the same time dealing with the complexities of these emerging regions. This reminds all of us that no matter how far we think we have come, we are still in the infancy of where supply chain knowledge can take us and continue to boost efficiencies and market viability.
Are you ready to take your supply chain global? I’d love to talk you through how to do it. Connect with me on LinkedIn, continue the discussion on the Supply Chain Intelligence Network™ group, or call your nearest expert at Chainalytics.
Tim Foster is Manager Director of Chainalytics for the Asia-Pacific region. In addition to managing the delivery of supply chain consulting projects, Tim specializes in large complex distribution network strategy, process redesign and implementation projects.