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Report Card on Supply Chain Matters 2012 Predictions for Global Supply Chains- Part Four

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On the eve of the Thanksgiving Holiday here in the U.S., a holiday to look back and reflect on the blessings of family and life, it is also our time to reflect and scorecard our Supply Chain Matters 2012 Predictions for Global Supply Chains which we published nearly a year ago. Our annual process is to first scorecard the current year’s predictions before publishing our upcoming 2013 predictions during December.

Our scoring process this year will be on a four point scale.  Four will be the highest score, an indicator that we totally nailed the prediction.  One is the lowest score, an indicator of; what were we thinking?

In our Part One posting, we reflected on the initial three predictions issued nearly a year ago.

Our Part Two posting scored Prediction Four, focused on specific industry supply chain challenges in 2012.

Part Three scored Predictions Five through Seven.

In this final Part Four commentary we will look back and score Predictions Eight through Ten.

 

2012 Prediction Eight: The challenges related to higher incidents of counterfeit products, cargo theft and other unscrupulous activities within and across global supply chains will finally motivate government and industry to step-up process standards and corrective mitigation efforts.

Score: 2.5

This collective area had been percolating for many years and we developed our predictions we anticipated that 2012 would be the year when government and industry finally become motivated to take action to address the growing incidents of non-conforming materials that have penetrated multi-industry global supply chains.   A snapshot of 2012 events clearly indicates that government stepped-up its enforcement efforts. The same could not be stated for active industry efforts, and thus, our rating score reflects a missed prediction.

In our industry-related prediction pertaining to Pharmaceutical and Healthcare, we noted that increased shortages of drugs led to more unscrupulous and criminal behavior relative to grey market supply, especially incidents of counterfeit and fake life-saving drugs such as Avastain for the treatment of cancer. U.S. government regulatory agencies clamped-down and discovered counterfeit drug supply routes that crossed multiple foreign countries and corporate entities, with violations of drug safety standards.  What was once believed to be a suspected problem with counterfeit drugs originating from Canadian based distributors has turned out to be far wider in global origins, and continues to be an area of strong concernDuring 2012 there was a severe shortage of generic, sterile injectable drugs that caused multiple healthcare providers to have to alter or stop life-saving treatments. This led to extraordinary efforts to ration and allocate supplies, which in-turn, added more motivation for grey market and counterfeiters to take advantage.

Supply Chain Matters believes that if it was not for the U.S. Presidential election event, there would have been more legislative cries for industry to step-up tracing and drug safety efforts. Unlike the U.S., Europe has been gearing up additional 2013 country-specific pilot programs for validating the genealogy of pharmaceutical drugs via serial number identification.

Regarding cargo theft, while brazen criminals stepped up their sophistication of methods in stealing whole cargo shipments, to our knowledge, there were no noteworthy major loss incidents.  That is not to declare that cargo theft incidents are on the wane, but rather mitigation efforts have protected the most expensive cargoes. 

 

2012 Prediction Nine: Wider scale adoption of in-memory computing technologies, coupled with broader leveraging of data mining, have the potential to be game changing influences on supply chain wide business planning and response management.

Score: 3.5

This prediction has been included for two consecutive years, but 2012 provided a heck of a lot more progress and demonstration of the business benefits of predictive analytics, powered by the latest advances in in-memory technologies.  We therefore score our prediction in a high range.  It has taken some time but the era of predictive analytics powered by in-memory and other advanced IT technologies has begun to be discovered for significant impacts to business outcomes.

What has moved this area forward are broader demonstrations of the compelling business benefits. The most visible was the 2012 U.S. Presidential election, where leveraged use of advanced analytics by the Obama for President Re-election team effectively targeted the U.S. wide voting population among the critical eight swing States, along with their hot button issues that led to a sweeping of all but one swing state.  Similarly, a number of books have been published, the latest being The Signal and the Noise, by New York Times Blogger Nate Silver, who exactly predicted the state- by- state results of the U.S. Presidential election.  Supply chain teams such as Amazon, Barnes and Noble, Dell, Cisco Systems, Procter and Gamble, and others have also actively deployed advanced analytical capabilities in supply chain wide business planning and response management.

The enterprise vendor with the highest game-changing impact for leveraging in-memory and predictive analytics capability is SAP, and its HANA development platform.  In June, SAP boldly announced that HANA had become the fastest growing technology platform in that company’s history. SAP had established a 2012 revenue goal of €100 million for HANA, and indicated that it exceeded that goal by €60 million. This newly released family includes restricted availability of the SAP Sales and Operations Planning (S&OP), Powered by HANA application, which provides some rather interesting potential in what-if and simulation decision making capabilities. Similarly, Oracle has been touting increased development efforts concerning in-memory and advanced analytics, particularly in the areas of supply chain planning support.

 

2012 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.

Score: 3.5

In 2012, leveraging mobile-based applications access, interaction and applications interchange was a red hot topic among most all software vendors, particularly ERP and Enterprise vendors.  It seemed that every 2012 customer conference featured announcements related to enabling mobile based computing, or demonstrating leading-edge applications that incorporated combinations of mobile and social media based interaction and collaboration.

In our travels, Supply Chain Matters began to hear some companies begin to speak to methods for monitoring social media channels for early-warning indicators of new product market acceptance.  One organization practicing active use is the Barnes and Noble Nook supply chain business team, who monitors consumer chatter regarding upcoming and new book titles.

During major supply chain disruptions in 2012, such as the Hurricane Sandy super storm that impacted the Northeast U.S., there were far more manufacturing, service and other firms utilizing Twitter and Facebook to account for employee safety and assess initial indications of the severity of damage, flooding and destruction.  An usually high frequency of severe typhoons impacted eastern Asian coastal countries in the July through September period, and more initial information regarding conditions on the ground came from social media. In late April, a series of severe tornadoes impacted the Wichita Kansas area, causing severe multiple building damage to Spirit AeroSystems Holdings, a major airframe supplier for Boeing and other aerospace OEM’s.  The company suffered a complete suspension of power and gas, with the consequence of the interruption of all phone and computer connectivity preventing any off-site coordination of response.  Spirit employees utilized personal cell phones, social media and emails to communicate with one another, outside contractors and customers during the immediate aftermath of the storms, and Spirit was able to resume production operations in a matter of a few days.

Our Supply Chain Matters 2012 prediction was that the momentum for leveraging systems of engagement would accelerate for tech-savvy organizations, and we believe that was indeed the case in 2012. The power and potential of social media in establishing communication links, forming virtual ad-hoc teams in time of need and discovering information is indeed, not been a passing fad.  However, obstacles remain with corporate policies and broader understanding of the plus and minus aspects.

 

This concludes our four part series for self-rating our 2012 Predictions for Global Supply Chains.  Readers are again encouraged to share their perceptions regarding important predictive milestones that occurred this year. Readers can also comment on our final scoring.

Beginning in mid-December, we will move on to publish our 2013 Predictions for Global Supply Chains. We certainly appreciate reader input on what should be expected in 2013. You can send your comments to info <at> supply-chain-matters <dot> com.

Bob Ferrari

 

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