Top 10 Predictions for the Worldwide Supply Chain

The overlying theme for our IDC Manufacturing Insights 2011 predictions is “finding the cadence of growth in a complex world”. Given the overall view for manufacturing, we see 2011 as a "back on track" and "back to basics" year. While we do not anticipate massive IT spending growth for supply chain organizations, there is no question that pent-up demand and a need to push forward with new capabilities are going to drive expenditures in 2011.  But at the same time, supply chains are going to be cautious and focus on those things that return high probability benefits.

In addition to seeing 2011 as a year of finding the cadence of growth, we acknowledge that the supply chain is certainly going to be no less complex in 2011.  As a result, managing, and capitalizing on, complexity is one of the underlying themes of our predictions. Part of that complexity comes from extending supply chains, as companies broaden their portfolios, their supply networks and the regions where they serve customers.  Keeping this in mind, we've added a prediction about our concept of "profitable proximity sourcing" — the notion that companies should choose their supply networks based on a combination of cost, lead time and the location of demand, because of its applicability to the complex supply chain.

In the 2010 supply chain survey we conducted of 415 manufacturers, the top supply chain priority was reducing supply chain costs, not surprisingly. We were more interested in the next two priorities -- improving forecasting and being more responsive to demand changes. Certainly it should be important to try to improve forecasting capability (particularly if a company lags behind competitors), but it is equally important to be able to respond quickly to the inevitable unanticipated changes to that forecast. In other words, it is increasingly important, given market and demand volatility, to have the ability to be more responsive to demand changes in the marketplace. As a result, balancing forecasting with responsiveness is also a key theme in our predictions.

At IDC Manufacturing Insights we believe that an integrated decision-making environment separates leaders from laggards, and can drive truly differentiated business and supply chain performance. You'll find that we've incorporated our expectations for better decision making into our predictions, especially as it relates to practical supply chain visibility with clarity around use cases: traceability, supplier management, and of course, responsiveness, with a balance between cost and service. And when it comes to service, fulfillment excellence is high on the agenda.

-- Prediction #1: Manufacturing supply chain organizations, recognizing the inherent complexity in their global supply chains, will look for ways to drive out unnecessary complication through segmentation, simplification, and the use of more practical analytics.

-- Prediction #2: IT vendors will continue to develop business intelligence and analytics tools that enable manufacturers to improve decision making at the strategic, tactical, and operational levels.

-- Prediction #3: Although demand forecasting continues to be important, supply chain organizations will begin to recognize the critical role of supply-side responsiveness.

-- Prediction #4: Supply chain visibility will climb on the IT application priority list as manufacturing companies increasingly identify critical use cases to drive both cost savings and improved service levels.

-- Prediction #5: In the context of taking a broader view of total cost, supply chain organizations will gain a new appreciation for shortening lead times through profitable proximity sourcing strategies.

-- Prediction #6: Cost containment, and the desire for variable supply chain structures, will continue to drive outsourcing of operations, but will also bring a more enlightened perspective to SaaS and "skills resourcing."

-- Prediction #7: Supply chain modernization will pick up speed again as manufacturing companies look to drive fulfillment excellence through transportation, warehouse, and labor management tools.

-- Prediction #8: As manufacturers increasingly outsource manufacturing and expand in emerging regions, they will search for ways to improve information sharing and support more organic collaborative processes across the extended supply chain.

-- Prediction #9: Value chain captains will put a stake in the cloud to level-set technology capabilities, with focus on aligning with the "clock speed" of the supply chain.

-- Prediction #10: Manufacturers will invest in learning how to incorporate mobility applications and smart devices into the supply chain while balancing IT management concerns with employee enthusiasm.