Supply Chain Matters Impressions of MIT Crossroads 2013 – Part Two
Supply Chain Matters recently had the opportunity to attend the MIT Crossroads 2013 conference sponsored by the MIT Center for Transportation and Logistics (CTL). In our Part One commentary, we highlighted both a UPS presentation and a multi-industry panel discussion of supply chain management futures.
For Supply Chain Matters, Tom Linton, Chief Supply Chain Officer for global based contract manufacturer Flextronics provided the one of the highlights of the conference in his vision of supply chain evolution. Mr. Linton provided a deep level of experience and insights in many aspects of supply chain management along with perspectives of having been based in Asia for nearly 22 years. At Flextronics, his responsibilities span all of procurement (direct and indirect materials), materials management operations, logistics and fulfillment, including managed supply chain for customers. Mr. Linton, in a Dave Letterman Late Show Top Ten delivery style, provided his Top Ten listing of the trends driving the future of supply chains.
We will not steal all the thunder of Linton’s delivery but will highlight what we believe were highlights of his insightful observations. Number 10 on his listing was the adoption of cloud computing, along with his message that this is indeed an emerging low cost and reliable trend in technology adoption, that “apps” for supply chain is an up and coming trend that most firms will utilizing within the next five years. Number 8 was the prediction that global labor costs would equalize, the implication being that labor arbitrage is a declining trend. According to Linton, we are reaching a point where direct labor costs across major geographic manufacturing regions is reaching parity and that leaders of tomorrow will leverage and manage a regional geographic footprint predicated on customer and product fulfillment needs. Strongly related to this prediction was number 5, the new emergence of regional and local sourcing. Mr. Linton observed that as many manufacturers shifted manufacturing sourcing to China, the component supply chains of many industries also shifted toward a China concentration. With the emergence of a renewed manufacturing presence in the U.S. , the challenge is to re-building a competitive supply ecosystem becomes more important. Readers may recall that Supply Chain Matters has observed these same implications and has called for similar investment in supply eco-systems.
Number #6 reinforced the need for supply chain skills specialization and new areas of skill needs in cloud computing, supply chain design, supply chain cost analysis and other areas. The number 4 prediction was the emergence of control towers, described as virtual integration of the supply chain supported by advanced cloud technology. For further descriptions of what is implied in control tower capabilities, readers can review any of previous Supply Chain Matters commentaries tagged with the “supply chain control tower” category. Number #3 prediction concluded that predictability becomes the competitive advantage. For Linton, predictability is defined in three fundamental questions:
- How safe is my supply chain?
- How fast is the supply chain/
- How cost efficient is the supply chain?
Finally, Linton’s number one prediction was that non-zero supply chains win, that transparent supply chain ecosystems focus on win-win balance for success vs. win-lose.
We want to also highlight the presentation delivered by Jim Cafone, vice-president of supply network services at Pfizer, who spoke on the challenge of managing highly flexible supply networks in healthcare markets, and how a cloud-based system backbone deployed by Pfizer has helped to overcome challenges of information latency and integration. Like other pharmaceutical and life sciences manufacturers such as Johnson & Johnson, Pfizer has centralized its global supply organization to help drive acceleration in required transformation. One of the unique challenges for Pfizer and pharma supply chains is that because of regulatory requirements, recipes are country specific. As an example, four variants of the highly popular cholesterol control drug Lipitor translate to 800+ global sku’s. Lipitor has recently come off global patent which moves the strategic focus toward a more cost-efficient and effective supply chain. Centralized control helps Pfizer to move toward more agile, cost-focused supply chains, built on enterprise supply platforms. Pfizer has also identified both transactional and analytical supply chain control towers as a long-term capability.
The Pfizer supply chain team has moved toward the cloud to provide what is described as a “device agnostic’ layer of information retrieval, one that spans current existing backbone ERP systems. Pfizer now requires all of its highly specialized logistics providers to automatically send tracking information into the Pfizer cloud that is supplied by GT Nexus. The described advantage was the ability to “plug and play” logistics providers into the network, drive differentiated operating parameters and a new “network” information model. A previous Supply Chain Matters commentary on building foundational supply chain control tower capabilities, stressed the critical importance of a singular information utility that spans the cross-organizational business processes and physical boundaries of the extended supply chain. The Pfizer presentation was a great example of that principle in action and garnering positive business outcomes.
For us, the MIT Crossroads 2013 presentations were the manifestation of industry supply chain executives reinforcement that our community has reached important crossroads into even newer and expanded dimensions of needs for agility, responsiveness and risk mitigation. We once again extend appreciation to the MIT CTL team for inviting Supply Chain Matters to this great annual event.