This continues our series of commentaries outlining our 2012 Predictions for Global Supply Chains. These predictions are provided in the spirit of advising supply chain organizations in setting management agenda for the year ahead, and in helping our readers and clients to prepare their supply chain management teams in establishing programs, initiatives and educational agendas for the New Year.

Readers are welcomed to review our previous series of postings.  These include:

The full listing of 2012 predictions

Predictions One and Two.

Prediction Three

Prediction Four

Predictions Five and Six

Predictions Seven and Eight

Prediction Nine

Prediction Ten: The leveraged use of systems of engagement, namely mobile and social media applications within select supply chain business process areas will gain additional momentum in select areas of supply chain, PLM and manufacturing process.

The year 2011 provided increased evidence of increasing interest and initial deployment of means to engage people or virtually orchestrate self-forming teams. The leveraging of mobility based tools has had increased popularity and many supply chain related technology providers have been augmenting applications for mobility use. Leveraged use of mobile and social media based applications such as Twitter and Facebook to enhance areas of supply chain management or enhance communications is also gaining increased interest.  While social media remains an emerging area, primarily because broader use of social media remains blocked in many corporate settings, supply chain management teams remain excited about the longer-term potential to enhance communication and team collaboration, and we anticipate more momentum in 2012.

Much of the efforts in 2011 were focused on the product demand side and included gaining immediate feedback on new or current product offerings, enhancing product promotional programs, or incorporating the voice of the customer in product development and customer service programs. Interest in mobility based applications came in the areas of product demand planning, procurement, replenishment and basic business intelligence.

There was also selective use of social media tools in helping to manage major supply chain disruption, including the tsunami that occurred in northern Japan.  Companies are discovering that social media applications can augment supply chain management in time critical or time sensitive needs, or when traditional means of communication will not suffice, such as the assessment of employee safety or status of supplier teams in times of severe natural disaster.

In our conference travels during 2011, we noticed more educational sessions dedicated to social media use within supply chain.  At the CSCMP (Council of Supply Chain Management Professionals) Annual Conference this year, a social media workshop session was packed with attendees and panelists represented initiatives underway at Con-Way, Wal-Mart and Volkswagen.

We predict that the momentum for systems of engagement will continue, especially as more tech savvy professionals take on further responsibilities. We anticipate leading-edge organizations to leverage further use of social media technologies on the supply side of global supply chains along with broader use on the demand side. The power and potential of social media in establishing communication links, forming virtual ad-hoc teams in time of need and discovering information is not a passing fad, but is here to stay.

This concludes our series of Supply Chain Matters 2012 Predictions.

In our discussions and consideration, there were certainly other Predictions that almost made our Top Ten, and merit a listing. They were:

Honorable Mentions:

• A capacity blow-up among global ocean container and vessel operators that could dramatically impact the landscape of carriers.
• A continued shortage of cross-functionally experienced supply chain management professionals, particularly in middle management areas across the globe.
• Turmoil among global currencies impact supplier contracts.
• Rising labor and manufacturing costs in China and other parts of Asia.
• Continued cross-industry pollination of supply chain management professionals across industry boundaries. (CPG and High Tech, High Tech and CPG in Pharmaceutical, ….) This will lead to continued diversity of thought and process innovation.

Needless to state, 2012 will no doubt be a very challenging and invigorating year for global supply chain management.

Our complete research report which outlines all ten predictions in a single document is now available for no obligation free download in our Research Center.  (Listed as We only request that you provide some basic registration data including name, email, role and phone contact.  All information remains confidential and no salesperson will call. We also do not sell our registration lists to any third parties.

Readers are encouraged to share observations and added predictions from your industry and functional lenses.

As we formally enter the end-of-year holiday season of celebrations, we take this opportunity to wish all of our Supply Chain Matters readers a peaceful holiday and rewarding New Year.

Bob Ferrari, Executive Editor

© 2011 The Ferrari Consulting and Research Group LLC and the Supply Chain Matters, All rights reserved.

The following commentary is also featured on the Supply Chain Expert Community web site where the author is a featured guest contributor.

Much has been stated and written noting the fact that global enterprises compete not only on the differentiation of offered products and services, but also on the differentiated capabilities of individual supply chains.  There are many industry case studies, but one that continues to evolve is the global automotive industry.

The global automotive industry has experienced a post-recessionary comeback from the depths of the 2008-2009 global financial crises. Growth markets have been in Eastern Europe, China, Latin and North America. There is, however, a strong possibility that the top three players including Toyota, will shift in ranking status because of a series of quality, supply chain disruption and economic setbacks.  Some industry watchers are predicting that Volkswagen will surpass both Toyota and General Motors for the top global spot.

The Financial Times (paid subscription or free metered view) has been featuring a series of running commentaries related to Volkswagen.  This auto maker is current on-track to sell 8 million vehicles on a global basis in 2011, and deploys a supply chain presence involving more than 90 manufacturing plants, over $80 billion in procurement activities supporting the building of 200 different vehicle models.  Revenues have increased 26 percent in the latest quarter with profits surpassing 13.6 billion euros. More importantly, the Times points out that industry competitors view VW as the benchmark for manufacturing efficiency and profitability, a competency that was once the sole purview of Toyota. VW was one of the first auto makers to invest in China, choosing a partnership strategy with existing Chinese producers SAIC and FAW.  Today, VW brands have the number one market status within China, followed by GM and Hyundai.

What is important to keep in mind relative to VW is its diversity of 10 car and truck brands, from low-cost to ultra- premium, its emphasis on integrating product engineering with production and global supply strategy needs, and a ruthless focus of product quality that stems from senior management. While various brands adhere to autonomy in vehicle design and pricing, areas of procurement and production focus on global supply chain leverage.  The more expensive Audi  and lower-cost VW brands are often produced with the same underlying platforms sharing similar supply components. Of late, various brands have customized vehicle features to accommodate local market needs and desires.

The competitive strategy among global automotive players is having the ability to leverage large volumes of vehicle production leveraging just a few vehicle platforms. We recently penned a Supply Chain Expert Community commentary reflecting on Fiat and Chrysler’s efforts to deploy a global supply chain strategy.

Another evolving strategy has been a renewed emphasis on vertical integration of supply, for instance, the ability to customize specialty steel designs.  Supply Chain Matters recently penned a commentary on Hyundai’s efforts in this area.

VW has been hard at work consolidating underlying product platforms to just two basic architectures, engine in transverse position, and engine in a longitudinal position. Engine and drivetrain production is shared among brands, and each Volkswagen-owned factory features the same processes and controls across the globe. VW is in the process of rolling out a “modular toolbox” manufacturing system that allows for platform sharing on a global-wide scale.

VW also believes in leveraged investment in IT technologies to streamline information flows, increase productivity among procurement and supply chain teams as well as enabling sense and respond capabilities to enhance local and global-wide decision-making.

But as the FT article rightfully points out, vast scale and commonality in procurement of components can lead to increased exposure to risk, as Toyota and other Japanese car makers discovered with the effects of the 2011 Japan tsunami and Thailand monsoon related floods. This places a renewed emphasis on risk mitigation and response management as important supply chain capability differentiators.  Recent reports indicate that Nissan may overtake Honda in global ranking, primarily because it was able to overcome recent natural disaster impacts more quickly.  For its part, VW management is reported to have been closely observing the effects that supply chain disruption can have to the overall business, along with the need for geographical redundancy of parts and production capability.

The global automotive industry ranking may well be different in the coming months and years, and the differentiators in our view, will be the seamless integration of product platform design, procurement sourcing, consistency in manufacturing and agility in global supply chain response capabilities.

Bob Ferrari

©2011, The Ferrari Consulting and Research Group LLC and Supply Chain Matters, All rights reserved.

This continues our series of commentaries outlining our 2012 Predictions for Global Supply Chains. These predictions are provided in the spirit of advising supply chain organizations in setting management agenda for the year ahead, and in helping our readers and clients to prepare their supply chain management teams in establishing programs, initiatives and educational agendas for the New Year.

Readers are welcomed to review our previous series of postings.  These include:

 The full listing of 2012 predictions

Predictions One and Two.

Prediction Three

Prediction Four

Predictions Five and Six

Prediction Nine: Wider scale leveraging and adoption of in-memory computing technologies among enterprise and specialty supply chain vendors, coupled with broader leveraging of data mining, have the potential to be game changing influences on supply chain wide business planning and response management.

This is essentially a repeat of our 2011 prediction, which did not come to full fruition.  We, however, remain firm in the belief that breakthroughs in larger-scale in-memory computing will pave the way for adding much more responsiveness to supply chain operations, planning and business intelligence processes. This is also an area where the challenges for managing and mining large data volume and the fusing of the physical and digital aspects of supply chain can be brought together.  The question is timing and demonstration, and readers should note that we have not affixed a firm 2012 timing for this prediction.

The converging forces of a more rapid clock speed of business change, along with senior management imperatives for quicker, more timely and responsive decision-making in response to events, continue to motivate supply chain management teams to shed sequential supply chain planning and execution processes in favor of a combined response management process that is built upon more rapid planning and predictive analytics that anticipate various scenario responses to an unplanned event. Today’s cadence and process-sequential S&OP processes are having some difficulty with keeping up with the current clock speeds of business change. The goal now equates to delivering the most timely knowledge and insights to the point or process of need.

Vendors such as Agistix, JDA Software and Kinaxis (one of other Supply Chain Matters named sponsors) have already demonstrated this capability.

The biggest player with the highest game-changing impact is SAP and its HANA development efforts.  Unfortunately, the latest indicators coming out of the SAP Influencers Summit in mid-December indicate that SAP wants to not only leverage HANA technology for leveraging more in-memory insights, but also leverage the technology to eventually make SAP one of the top three players in database deployment.  Supply Chain Matters feels that this added burden will only delay the real impact of HANA in the advanced analytics area, and that will be disappointing for many SAP customers.

Oracle has also been developing interesting applications in this area, and recently acquired information discovery vendor Endeca. IBM has also assembled all of the supply chain technology components for in-memory advanced analytics and has the potential to deliver some breakthrough.

This concludes Part Seven of our Supply Chain Matters 2012 Predictions.  In Part Eight, we will conclude this series with our tenth and final prediction, the increased adoption of systems of engagement in 2012.

Our complete research report which outlines all ten predictions in a single document is now available for no obligation free download in our Research Center.  (Listed as We only request that you provide some basic registration data including name, email, role and phone contact.  All information remains confidential and no salesperson will call. We also do not sell our registration lists to any third parties.

In the meantime, readers are encouraged to share observations and added predictions from your industry and functional lenses.

Bob Ferrari

© 2011 The Ferrari Consulting and Research Group LLC and the Supply Chain Matters, All rights reserved.