Futures
3 Dec 2009

Responsiveness and Collaboration are Keys to 2010

"Business as usual" is a thing of the past, as the world has been dramatically transformed by the economic meltdown of the last two years. According to supply chain thought leaders at i2 Technologies, businesses must now approach the marketplace with a new mindset and actively refine their supply chains to be prepared for upward demand trends in 2010, while managing to minimize their exposure to financial risks in a market that will still be characterised by uncertainty. In addition to helping organisations be lean and competitive, supply chains must also stay closer to consumer needs and react faster to changes on a global landscape.

"This is an extraordinary time in the history of global economics and the supply chain is the lifeblood of the economy," said Kelly Thomas, senior vice president, Product Strategy and Planning, i2. "We are committed to helping businesses build supply chains that will not only manoeuvre through these uncertain times, but are also poised for the economic rebound. Our predictions for 2010 are based on our more than 20 years of supply chain expertise and a keen sense of how the market is changing."

The Industry-Specific Predictions from i2 Include:

• Manufacturers to make rapid incremental Planning and Inventory Optimisation the "new normal" As demand became increasingly uncertain during the downturn, businesses resorted to more frequent operational planning with multiple scenarios and focused on optimization of inventory deployment across their supply chains to free up cash. This allowed manufacturers to keep operational efficiency improvements ahead of declining demand. As demand recovers, companies will seek to gain margin leverage on the efficiencies and productivity improvements gained in the downturn. Processes and systems for rapid incremental planning will become the "the new normal." Smart managers will demand real-time insight into operations as well as advanced visibility with scenarios that allow them to "see around corners." Leading companies will implement closed-loop solutions for sales and operations planning to standardise these new rapid-response capabilities. Multi-echelon inventory optimisation with frequent review of deployment policies will become part of normal operations at leading companies. In addition, new delivery models that grew in importance during the downturn will increasingly become part of the mainstream, such as cloud computing, managed services and software-as-a-service (SaaS).
  
  
• Brand owners and retailers to synchronise operations through Shelf-Centred Collaboration
  Consumers in mature markets have dramatically cut back on spending. The household savings rate in the U.S. has increased to as high as 6 percent from negative numbers only two years ago. While this may have positive long-term effects, it will likely create multi-year pressures on brand manufacturers and retailers. This means brand manufacturers will be fighting for a bigger slice of consumers' constrained budgets. While price compression may have become part of most business models, those who can break through the clutter and re-emerge with brand strength will flourish in the future. One logical strategy for building brand strength is to extend the power and efficiency of supply chain collaboration to the retail shelf. Today, delivering superior customer satisfaction through shelf awareness is crucial to retaining customers, and it's the new wave in retail optimisation. Retailers and brand owners will increasingly deploy shelf-centred collaboration tools to improve supply chain performance, thereby responding swiftly to consumer trends, knowing customers' buying preferences and opening new revenue opportunities.
  
• Shippers to adopt new partnership models to support the Green evolution
  Driven by economic, social and regulatory pressures, global shippers are seeking more cost-effective and sustainable ways to move product from source to shelves. They have worked to streamline and strengthen their own transportation networks, but in recent years, the more eco-friendly companies have expanded those efforts to include suppliers, partners and customers. To further reduce their costs and carbon footprints, many large shippers will begin to take steps toward forming collaborative partnerships in a consortium-based business model. The multi-shipper collaboration will leverage cross-shipper visibility, powerful analytics and an innovative transaction-based exchange that encourages shippers to share and optimise excess and available trucking capacity. Meanwhile, small- to medium-sized shippers will look to deploy transportation optimisation solutions through SaaS delivery models to stay efficient, responsive and earth-conscious.
  
• Automotive to restructure the Supply Chain
  The global economic downturn has led to a complete restructuring of the automotive supply chain in mature markets and an acceleration of power shift to emerging players in Korea and China. At current unit sales levels, China has already surpassed the U.S., whereas demand in the U.S. has fallen by more than 42 percent from the peak year of the business cycle, which is the largest such decline since the Great Depression. Even previously immune Japanese manufacturers have been negatively impacted by the downturn. Amidst this backdrop, global business processes for supply chain management will become increasingly important. Japanese manufacturers may re-evaluate their build-where-you-sell philosophy, as their U.S. and European counterparts will run at much lower volume-breakeven points and use the restructuring of their dealer networks to run far leaner channel inventory profiles. Korean automakers will leverage their global processes and integrated supply chain management technology infrastructures to continue to gain global share. All of this will lead to a renewed interest in global order-to-delivery and least-landed-cost sourcing processes.
  

back to front page news