Unveiling the Crystal Ball A Glimpse of the Future of Supply Chain Management & Innovation. Tim Foster Managing Director, Asia-Pacific, Chainalytics
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1 Future Trends & Competitive Drivers Unveiling the Crystal Ball A Glimpse of the Future of Supply Chain Management & Innovation Tim Foster Managing Director, Asia-Pacific, Chainalytics
2 UNVEILING THE CRYSTAL BALL A GLIMPSE OF THE FUTURE OF SUPPLY CHAIN MANAGEMENT AND INNOVATION Tim Foster Managing Director, Asia-Pacific
3 A BOLD PREDICTION Businesses will seek to grow in increasingly complex and volatile environments against fierce competition. SLIDE 3
4 AGENDA Five trends impacting supply chain leaders Measuring and managing supply chain complexity Five challenges to supply chain leaders SLIDE 4
5 1 FIVE TRENDS IMPACTING SUPPLY CHAIN LEADERS
6 1 ACCELERATING CUSTOMER INTERACTION 50 BILLION There will be [devices] in These will include phones, chips, sensors, implants, and devices of which we have not yet conceived. Source: Patrick Tucker, Author of The Naked Future SLIDE 6
7 1 ACCELERATING CUSTOMER INTERACTION The opportunity to interact with customers will continue to expand as digitization and mobility increase Conventional marketing strategies are having less effect in an on-demand world Go-to-market landscape is rapidly change Real-time price and value trade-offs are driving purchase decisions Volume and sources of customer data are exploding SLIDE 7
8 1 ACCELERATING CUSTOMER INTERACTION Source: Johnathan Bonnell and Jason Theodor SLIDE 8
9 2 TRANSFORMING MARKET STRUCTURES Value chains will be re-built to better reach customers and create efficiencies Co-existing channels to market will need to be managed Offering the consumer choice will be critical to success (i.e., omni-channel) Compressed timelines to market demanding greater responsiveness Elimination of non-value adding activities within the value chain SLIDE 9
10 2 TRANSFORMING MARKET STRUCTURES EXAMPLE Australian Pharmaceutical Distribution BEFORE PHARMA COMPANY WHOLESALER PHARMACY AFTER 3PL PHARMA COMPANY PHARMACY SLIDE 10
11 3 COST INFLATION Cost inflationary pressures at all levels in the supply chain will continue to build and squeeze margins On the supply side, inputs including raw materials, labour, and fuel costs will increase New sources of low cost competition means the pressure on price will continue Accelerating efforts to share costs and consolidate will be more evident SLIDE 11
12 4 Political SUSTAINABILITY Environmental Economic Sustainability will be an even more important driver for business decision-making as consumers, governments and stakeholders exert pressure on operational teams Legal Sustainability Technological Social SLIDE 12
13 5 GLOCALISATION There will be a stronger movement towards hybrid global and local supply chains ( glocal ) that is, global networks of local supply chains DEMAND SUPPLY PRICING Source: Asia-Pacific Manufacturing Increases to Meet Growing Local Consumption by Gene Long (Chainalytics) SLIDE 13
14 5 GLOCALISATION Multiple strategies will be employed Global primary sourcing with value-adding supply chains Postponement locating closer to the point of demand Source: Asia-Pacific Manufacturing Increases to Meet Growing Local Consumption by Gene Long (Chainalytics) SLIDE 14
15 2 MEASURING AND MANAGING SUPPLY CHAIN COMPLEXITY
16 CHALLENGING GROWING COMPLEXITY Supply chain leaders are dealing with complexity through: Innovation and creativity Focus on customer experience and consistency Simplifying and removing non-value adding products and customers Analysing and measuring complexity Rank Company 1. Apple 2. McDonalds 3. Amazon 4. Unilever 5. P&G 6. Samsung Electronics 7. Cisco Systems 8. Intel 9. Colgate-Palmolive 10. The Coca-Cola Company Source: The Gartner Supply Chain Top 25 for 2014, Gartner SLIDE 16
17 CHALLENGING GROWING COMPLEXITY Business complexity will increase and market leaders will need to find ways to deal with it Complexity Factor = SKUs Markets Legal x Facilities Served x Entities x x Sales Revenue Suppliers & Customers Source: The Complexity Crisis, John Mariotti SLIDE 17
18 % of Units Demanded CHALLENGING GROWING COMPLEXITY Product portfolios and their supporting supply chains will become increasingly complex Increased number of SKUs Shortened product lifecycles Glocalisation of markets Fragmentation of channels % of Item Locations Source: Chainalytics DPIC SLIDE 18
19 3 FIVE CHALLENGES TO SUPPLY CHAIN LEADERS
20 1 INTEGRATE WITH BUSINESS STRATEGY Supply chain plays an important role in developing and enabling business strategies 2 MOMENTS OF TRUTH FOR THE CONSUMER AVAILABILITY = & EXPERIENCE Source: Martin Christopher SLIDE 21
21 1 INTEGRATE WITH BUSINESS STRATEGY Supply chain plays an important role in developing and enabling business strategies Supply chain touches on all areas of business performance Focus on value-adding through revenue generation, cost reduction and return on capital Become a source of innovation and competitive differentiation Support an iterative approach to strategy through data capture and analytics SLIDE 22
22 2 BUILD SUPPLY CHAIN DEXTERITY Build supply chain dexterity as customer engagement increases, product launches accelerate, and go-tomarket channels proliferate Implement Investigate Analyse Assess FASTER, CONTINUOUS CYCLES Innovate Resource Embed Simplify Optimise SLIDE 23
23 2 BUILD SUPPLY CHAIN DEXTERITY Determine the required portfolio of supply chains Build ecosystems of processes, people, capital assets, technology, and data Review supply chain strategies and infrastructure more frequently Utilise planning tools to quickly inform mid- to long-term decisions Constantly optimise supply chain trade-offs Implement Resource Embed Investigate Analyse Assess FASTER, CONTINUOUS CYCLES Innovate Simplify Optimise SLIDE 24
24 3 LEVERAGE HORIZONTAL COLLABORATION Collaborate to rapidly extend supply chain capability, scale and cost effectiveness Successful collaboration efforts in Europe, peer-to-peer in the U.S. CPG industry initiative laid groundwork for many-to-many studies in other industries SLIDE 25
25 3 LEVERAGE HORIZONTAL COLLABORATION Benefits Optimised shipping Lower inventories Capital avoidance Minimised carbon emissions Challenge Not supported by existing fulfilment and logistics execution systems and processes SLIDE 26
26 4 EMBRACE DATA-FUELLED DECISION MAKING Harness the data explosion turning knowledge into intelligence to fuel fact-based decisions Opportunities for organisations to not just respond to market changes but to predict and act ROAD TO SUPPLY CHAIN DATA MATURITY FOR RESILIENCY SLIDE 27
27 4 EMBRACE DATA-FUELLED DECISION MAKING Prioritise data improvement initiatives Clearly define metrics and outputs that are important to the business Communicate metrics using data visualisation ROAD TO SUPPLY CHAIN DATA MATURITY FOR RESILIENCY SLIDE 28
28 5 DEVELOP SUPPLY CHAIN COMPETENCIES Engage and influence at senior levels within organisations Invest in training and measure ROI Partner to address talent and resource gaps SLIDE 29
29 5 DEVELOP SUPPLY CHAIN COMPETENCIES Core Supply Chain Roles Plan Deliver Source Performance Management New Supply Chain Competencies New Product Development & Launch (NPDL) Customer Experience Management Partner Relationship Management Business Analytics & Intelligence Sixty percent of companies have open supply chain positions, and 15% of vacancies open for more than 5 months. SLIDE 30
30 CONCLUSIONS Businesses will seek to grow in highly volatile and competitive markets Ability to interact more directly and more frequently with customers will be a source of opportunity as well as driving supply chain complexity Supply chain leaders will manage and thrive in more complex environments through innovation, collaboration, fact-based transformations and expanding influence within their organisations SLIDE 31
31 QUESTIONS? Tim Foster bit.ly/chainli
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