Skip to main content

Supply Chain Outlook

12/12/2012
It’s safe to say that the economy remains uncertain, and will remain so in 2013. Consumer products (CP) companies are challenged by slow growth in their domestic markets (United States and Europe), and are investing and shifting assets to capture opportunities in emerging markets.  

The ability to realize growth targets is largely dependent on how well supply chains can adapt and transform from a traditional supply chain that is singularly cost focused to a demand-driven organization that is active with their commercial teams to drive revenue, innovation and differentiation in the eyes of customers and suppliers.

Gartner is witness to many on-going supply chain transformations within the CP industry. Some common characteristics of supply chain leaders are:

  • Employ continuous improvement plans connected to a strong vision, with an end state in mind and supported by a measurement mindset.
  • View change management as a competency and part of the organization’s culture, not something to be done. Change is neither a project nor the result of a burning platform, but is a constant.
  • Connected to the consumer and demand-driven. The supply chain teams rethink the way they win and compete, designing supply chain networks that link process and technology to create value within their trading relationships.
  • Inquisitive and constantly measure themselves against industry trends and best practices within and outside their industries.
  • Seek collaborative platforms to engage customers across all levels of the organization to best manage inventory, cost and service.

The industry is not without challenges. Organizations are active in overcoming silos, transforming from regional to global supply chains and looking for better end-to-end solutions. Some of the largest impediments we see are:
  • A lack of supply chain segmentation understanding to best serve customers and markets, and design networks that deliver a differentiated supply chain response.
  • Despite significant focus on inventory reduction to improve cash flows and working capital, inventories remain largely unchanged in the CP industry due to demand volatility and the inability to produce an accurate demand forecast and reduce buffer stocks.
  • Only a handful of companies have begun to master the use of downstream retailer data to manage pull-based replenishment systems.
  • Performance metrics must be re-defined for stronger organizational alignment, drive continuous improvement plans and support go-to-market strategies.
  • Data architecture in organizations is immature and often lacks a plan that defines data ownership, data entitlement and how data is shared across the enterprise to increase collaboration and deliver stronger value.


Four Thoughts for the Coming Year
  1. Higher growth and lower cost is a paradox for most. Companies that define their supply chain requirements and develop a differentiated, but integrated global supply response (supply chain segmentation) have the greatest opportunity to accelerate revenues and manage costs.  
  2. Supply chain leaders are benefiting greatly from the use of downstream data to manage the supply chain response to improve inventory, cost and service within their trading relationships. We expect further adoption in the CP industry.
  3. “Big data” is all the rage, but remains poorly defined by most companies. The nexus of forces (that is, social, mobile, cloud and information) and its intersection to deliver actionable insights, as well as reach and supply consumers, will be the driving forces of change within the CP industry.
  4. Look for increased merger and acquisition activity in the coming year as companies increase their focus on core businesses or look to rebalance portfolios to find growth.

2013 is stacking up to be an interesting year. At stake is the ability to find new markets for growth, manage costs and better serve customers through an integrated set of solutions that deliver value across trading networks.
X
This ad will auto-close in 10 seconds