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Five Supply Chain Predictions For 2016Wednesday, December 16, 2015 > 10:14:51
From plummeting fuel prices to disastrous disruptions, 2015 was an action-packed year across the global supply chain. But it’s time to move on. What about 2016? In the spirit of “everybody has one,” I reached out to a number of our industry’s thought leaders, anxious for their opinions and unwilling to let them off the hook without at least one solid prediction. I deliberately stayed away from listing the popular trends and have limited the following summary to the not-so-obvious:
The Use of Predictive Analytics, Planning Tools and Machine-Learning will Skyrocket.
“In 2016 we will see that bigger data doesn’t make us smarter unless we couple the intelligence with problem-specific techniques that enable effective decision making,” said Jim Wetekamp, CEO of BravoSolution, a global procurement provider. “Many people are still telling us that having all the data in one place is the goal. In reality, it’s just a step in the journey.”
Advanced analytics and machine learning technologies that can simulate supply chain scenarios, predict outcomes and make recommendations are transformative. The applications of predictive analytics are nearly endless, from deciding where and how to source raw materials to managing supply risk and optimizing production and logistics.
“We’ll see an aggressive push by sector leaders to accelerate the realization of the Industry 4.0 vision. Specifically, big data analytics combined with advances in cloud-based robotics – call it ‘machine based learning on steroids’ – will finally combine to improve factory performance,” predicts Jim Lawton, CPMO at Rethink Robotics.
Transparency, Quality and Sustainability will Trump Cost-based Decision Making.
The days of making supply decisions solely based on cost are long gone. Today’s consumers want to ensure the products they purchase are safe, of high quality and responsibly sourced. This is especially true in the food services industry, which has seen a massive movement away from low-cost offerings to healthier alternatives. Beyond quality, food safety and handling is expected to be front-and-center in 2016.
The CDC estimates that approximately one in six Americans get sick each year from foodborne diseases, leading to roughly 3,000 deaths. Proper food handling techniques, from farm to fork, can go a long way toward minimizing the toll foodborne illnesses take on our health.
“The spotlight on foodborne illnesses and recalls is brighter than ever. And when you consider the requirements of the new Food Safety Modernization Act (FSMA), it goes without saying that grocers, restaurants and frankly, anyone who touches the food supply chain is expected to put a greater emphasis on inspections, certifications and supplier management in 2016,” said Brian Miller of Intesource, a managed sourcing provider in the food and retail industries.
“Next year we expect to see buying organizations work more closely with their supply chains to not only minimize the risk of an outbreak, but to help suppliers improve conditions. This will likely lead to even more recalls, as companies will be more proactive in eliminating products that aren’t up to par,” said Miller.
The push for quality, safety and sustainability extends far beyond the food supply chain and represents a radical evolution in how consumers buy and demonstrate their loyalty to brands.
“Companies will finally realize that sustainable procurement means more than compliance and reporting,” predicted Pierre-Francois Thaler, CEO and Co-Founder of EcoVadis. “In increasing numbers, consumers will align with brands that offer quality products and make the world a better place. The organizations that best integrate sustainability into their systems and processes will experience a direct correlation to sales and brand reputation in 2016.”
Increased Corporate Card Acceptance will Help Streamline Supply Chain Processes.
While the likes of ApplePay, Google Wallet and Venmo, to name a few, are radically changing how we pay for goods and services in our personal lives, the B2B payment structure is simultaneously undergoing its own transformation. With increased security measures and streamlined processes, businesses will be looking at new ways to bring their payment solutions up to speed.
Steve Pedersen, vice president and head of North American corporate credit card products at BMO Financial Group thinks the payment and technology adoption gap will start to close in 2016. “The benefits associated with card acceptance will push more suppliers to accept this payment method, as buyers will take their business to those that do. In 2016, card acceptance will no longer be an AP-only issue. It will have a direct impact on customer retention.”
The latest chip technologies implemented by issuers like Europay, MasterCard and Visa have enhanced security and shifted liability to a point “where suppliers will accept cards at a greater rate, leading to a more efficient and accurate supply chain, which will ultimately accelerate Days Sales Outstanding, reduce processing errors and eliminating invoice processing and delivery,” predicts Pedersen.
Business and Consumer Applications will Converge.
Most everyone I spoke with talked about the proliferation of “apps” and the “collision” of the historically separate worlds of business and consumer software and technology. Advancements in the user experience, seen specifically in today’s consumer app-driven world, will invade the enterprise scene.
According to Wetekamp, “consumer applications will integrate with enterprise applications to link personal efficiency with corporate effectiveness. We have great tools for personal productivity. We have great enterprise tools for professional ROI. Rather than forcing one into the other, 2016 is the year that they will begin to integrate instead of replicate.”
Consumer and enterprise technologies will also become less distinguishable. Take robots, for example. 2016 will see the widespread democratization of robots in manufacturing. As they have become readily accessible to consumers for various specific purposes, they will also find their way into the corporate enterprise.
The Talent Gap will Be More Directly Addressed.
“The shortage of qualified procurement talent –those that can take advantage of the innovations and techniques available to the world’s most successful organizations—will be more directly addressed in 2016,” said Ed Bauer, president of PROACTIS Holdings North America.
The supply chain talent gap has been a pressing topic for years – covered at length by the media, analysts and at industry conferences and events. “The big winners in 2016 will be the organizations that invest in adding supply chain talent – through both internal hiring and external partnerships – to position their procurement teams to capitalize on the immense, untapped value in the market today,” predicted Bauer.