subscribe: Posts | Comments | Email

Rolls Royce- Another Potential Weak Link for Commercial Aerospace Supply Chains

0 comments

Supply Chain Matters has highlighted some percolating supplier weak links among commercial aerospace supply chains from either financial, operational or product quality perspectives.  Certain key suppliers such as Pratt and Whitney have provided signs of such industry concern. Now, broader industry visibility to engine producer Rolls Royce is likely added.

Rolls-Royce Trent 1000 aircraft engine

Source: Rolls-Royce Image Gallery

This week, Rolls Royce reported financial and operational performance for the December-ending quarter and the headline was a $5 billion annual loss driven by a corruption scandal and negative currency factors, along with signs of premature engine component failures.

Recall that this manufacturer is a prime supplier of aircraft engines for the newest models of wide body, longer distance aircraft such as the Airbus A350 XWB and A330 aircraft and Boeing’s 787 Dreamliner.

The reported annualized loss in the latest year reflects a large, noncash accounting charge from the revaluation of U.S. currency hedges after the British pound slumped. It further includes a £671 million one-time charge for bribery settlements with U.S., British and Brazilian authorities after the company admitted to illegal business practices spanning decades.  Operating pre-tax profitability fell for a third year to £813 million from £1.43 billion a year earlier. Total revenues declined 2 percent to £13.4 billion. Chief Executive Warren East indicated to shareholders and analysts that 2017 will provide another challenging year. Shareholders responded with a reported 5 percent decline in the company’s stock value.

The UK based company has now undertaken a corporate-wide restructuring that unfortunately includes the shedding of positions. A reported 600 manager positions are being eliminated along with upwards of 2,600 job losses in the aerospace division. About 1,800 jobs are further reported as being eliminated in the ship-engine group. The company is forecasting annual savings starting at the end of this year of around £200 million as a result of such efforts.

Further, according to business media reporting, the company is preparing for the introduction of new accounting standards that will impact the reporting of near-term profitability. Rolls-Royce typically sells aircraft engines at a loss and makes up revenues during the operating phase through various pay by the hour servicing contracts with airline operators. The company buffers the early losses by booking some of the assured services revenue early. Under new accounting rules, such losses reportedly will need to be reflected immediately, while services revenue should be accounted for as-delivered.

According to reporting by The Wall Street Journal, costs associated with the Trent 1000 engines used to power Boeing Dreamliner’s have also risen as a result of turbine components degrading prematurely. Other problems include weakness in its business in equipping engines for the regional and business jet sectors where Rolls-Royce is losing ground to rivals.

Thus, as the commercial aerospace industry now enters its next industry inflection point, with overall airline order demand for larger, wide-body  aircraft is now showing signs of contraction, a potential supplier weak link is likely added.  An added irony is that Rolls can likely benefit from added automation of manufacturing and supply chain business processes along with the more leveraged use of advanced technology in areas such as improved sensing of key component operating performance parameters in its engines. Such investments can be difficult when shareholder eyes are focused on near-term profitability.

Bob Ferrari

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.


Supply Chain Matters Coverage of Oracle’s Modern Supply Chain Experience Conference- Part One

0 comments

This afternoon marked the opening keynotes of the Oracle Modern Supply Chain Experience conference that is expected to draw over 2800 attendees.

Rick Jewell, Oracle Senior Vice President for Supply Chain Applications Development kicked-off the event with his presentation titled: The Adaptive Intelligent Supply Chain Cloud. In this presentation, Jewell re-iterated a number of supply chain predictions relative to digital supply chain transformation and on Oracle’s current efforts in development of the Oracle SCM Cloud suite of applications. Release 13 of the SCM Cloud Suite is expected this summer.

Jewell then moderated a customer panel consisting of:

Jeff Abbott, Vice-President, Supply Chain and Logistics, Sears Canada Inc.

Debi Hanes, CIO Supply Chain, General Electric Global Operations

Emre Kusce, Supply Chain Engineer, Transit Wireless

Chris Nerf, Senior Director, Supply Chain, NCR

Each panelist described their business motivations for adopting elements of Oracle SCM Cloud, along with important lessons learned that would be of interest to the conference audience. The session, from this analyst’s lens, provided rather important learnings which Supply Chain Matters will dwell further upon in a subsequent posting

Jewell further took this opportunity to announce Oracle’s upcoming new applications supporting Internet of Things (IoT) Cloud capabilities. This announcement includes expanding its Internet of Things (IoT) portfolio with four new cloud applications to help businesses fully utilize the benefits of digital supply chains. The applications are being designed to enable businesses to detect, analyze, and respond to IoT signals and incorporate these insights into existing and rapidly evolving market capabilities.

Applications will include:

IoT Asset Monitoring Cloud: being designed to monitor assets, utilization, availability, and data from connected sensors and creates incidents in the backend SCM, ERP, or Service Clouds to automate workflows’

IoT Connected Worker Cloud: designed to tracks employees to support safety, service, and regulatory compliance initiatives.

IoT Fleet Monitoring Cloud: Monitors position and progress of passenger, service, and transportation delivery vehicles and driver-behavior.

IoT Production Monitoring Cloud: designed to monitor production equipment to assess and predict manufacturing issues.

This supply chain industry analyst had the opportunity to attend a conference pre-session held by three Oracle development executives that briefed a standing-room only audience on these upcoming applications.

According to the executives, the overall strategy for Oracle is to support five dimensions of supply chain visibility that include market, partner, enterprise asset and social visibility needs. They described Oracle’s unique approach to IoT, namely to bring together structured, semi-structured and unstructured information to support the convergence of operational technology (OT) systems and IT business applications. The approach leverages Oracle’s prior acquisitions of select data analytics tech providers as Oracle’s newly announced Data-as-a-Service (DaaS) platform along with its existing Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) platforms. A design principle emphasized was how to get access to OT data while managing this data in a cost-effective storage and hardware approach.  The design approach makes use of supporting a streaming data lake strategy that leverages open source Hardoop running in the background.

Release of this new compliment of Oracle’s IoT cloud applications is expected later this year.

This afternoon’s keynotes included a fairly interesting presentation delivered by K.S. Khurana, Vice President, Sourcing and Engineering Operations at Facebook. He opened his talk with the obvious question, why would a senior Facebook infrastructure development executive be presenting at a supply chain management conference. The answer became fairly obvious 10-15 minutes later after Khurana outlined Facebook’s strategies in the planning, forecasting and acquiring the social media’s giant’s own uniquely designed data center hardware and networking needs while supporting the explosive growth to support data management needs with a fixed staff of 600 operations personnel.

Bob Ferrari

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.

 


Deep Dive on 2017 Prediction Nine: Business Self-Interest Will Fuel Continued Efforts in Supply Chain Sustainability Actions and Initiatives

0 comments

The following Supply Chain Matters blog is part of our ongoing series of deep dives into each of our previously unveiled ten 2017 Predictions for Industry and Global Supply Chains.

At the start of the New Year, our parent, the Ferrari Consulting and Research Group along with our Supply Chain Matters blog as a broadcast medium, provide a series of predictions for the coming year. These predictions are shared in the spirit of assisting industry specific and global supply chain cross-functional teams in helping to set management objectives for the year ahead. Our further goal is helping our readers and clients to prepare supply chain management and line-of-business teams in establishing impactful programs, initiatives, and educational agendas.

The context for these predictions includes a broad cross-functional umbrella of supply chain strategy, planning, execution, product lifecycle management, procurement, manufacturing, transportation, logistics and customer service management.

In an earlier Supply Chain Matters blog postings, we provided deep dives related to:

 Prediction One- Subdued World Economic Outlook and Heighted Uncertainty to Test Industry Supply Chain Agility.

Prediction Two- A Challenging Year in Procurement

Prediction Three- A Supply Chain Talent Perfect Storm

Prediction Four- Increased Anti-Trade Geo-Political Forces Provide Added Global Sourcing Challenges

Prediction Five- Continued Global Transportation Industry-wide Turbulence

Prediction Six- A Renaissance in Supply Chain Focused Business Services and Technology Investments

Prediction Seven: Enhanced Supply Chain Intelligence Capabilities Among B2B Network Platform and Managed Services Providers Will Pay Dividends for Industry Supply Chains

Prediction Eight-Amazon and Alibaba Continue to Position for Global Online Platform Dominance

 In this deep-dive series posting, we drill down on our next prediction.    Paris_COP21

2017 Prediction Nine: Business Self-Interest Will Fuel Continued Efforts in Supply Chain Sustainability Actions and Focused Initiatives

Despite the declarations by U.S. President Trump that climate change has not been proven to be an issue, we predict that individual business and supply chain self-interest needs, along with the track record of benefits to-date, will continue multi-industry green and supply chain sustainability initiatives and momentum.  There is literally too much positive momentum on a global basis to motivate senior executives to derail such efforts in 2017.  The need remains compelling.

Where Emissions Emanate

Scientists point to three sectors that are most critical toward reduction of GHG emissions:

Energy– the engine and most influential cost aspect of global business and of industry supply chains represents upwards of 30 percent of global CO2 emissions. Throughout modern history, the cost of energy and fuel has been the principal driver of a majority of industry, manufacturing, distribution, and global supply chain strategies. Reduction opportunities reside in the consumption of alternative and low carbon renewable energy sources, smarter and far more efficient energy, and logistics utilization practices.

Agricultural, Land Use and Forestry Practices account for an additional 30 percent of global-wide emissions. With world population growth expected to reach 9 billion people by 2050, our planet cannot tolerate an unsustainable food production system. Farming practices, fertilizer, water use, animal husbandry all add to considerable emissions.

City Infrastructure, Buildings and Transportation can be responsible for upwards of 40 percent of global emissions. More of the world’s population is expected to be concentrated in larger cities, (mega-cities) and thus will be the hubs for economic growth, commerce, delivery, and fulfillment logistics. The potential of smarter, more connected cities coupled with advances in more sustainable, renewable energy sources provides the opportunity for a complete re-thinking of urban logistics and transportation. Global trade must now stem from advances and efficiencies in global, regional, and local transportation networks.

To address these three imperatives, more and more organizations have discovered that the firm’s supply chain can be responsible for up to four times GHG emissions beyond that firm’s direct in-house operations.  Industry supply chains are therefore one of the most critical areas of opportunity to enable GHG reductions and climate chain resilience.

Sustainability is further not limited to emissions and natural resource protections, it further umbrellas global-wide social responsibility as a business and corporate citizen, and in the treatment and respect of labor provided by individuals. Here, the latter is especially pertinent to industry and global supply chains who elect to source production, component supply or business services in low-wage, limited protection geographies.

Current Status

As we begin 2017, scientists indicate that the Earth reached its highest temperature on record during 2016, breaking an earlier record set in 2014. This development represents the first time in the modern era of global warming data that average temperatures have exceeded prior levels for three years in a row.

The 12th Edition of The Global Risks Report 2017, sponsored by the World Economic Forum, observes that extreme weather events, climate change and water related crisis have each consistently been noted as among the top ranked global risks for the past seven editions of this report. However, according to this latest report, the pace of change is not yet fast enough to curb current warming trends.

The Artic sea ice had a record melt in 2016 and the Great Barrier Reef suffered an unprecedented coral bleaching event last year. Estimates are that GHG emissions are growing by 52 billion tons of CO2 equivalent per year even as the share from industrial and energy sources may be peaking because of investments in green and sustainability initiatives among multiple industries and countries.

Much has been accomplished these past few years, but more difficult work remains.

The Paris COP21 Agreement on climate change entered force during November 2016. This agreement has now been formally ratified by 110 countries with another 196 countries including China, now indicating strong support. The Global Risks Report 2017 cites data indicating: “The reality remains that to keep global warming to within two degrees Celsius and limit the risk of dangerous climate change, the world will need to reduce emissions by 40% to 70% by 2050 and eliminate them altogether by 2100.

Moving Forward

This new era of the Paris COP21 Agreement provides both a profound call to action as well as a significant opportunity- an opportunity for bolder collaboration and joint goal-setting to not only address greenhouse gas reduction imperatives and to saving our planet, but the imperative of sustainable business itself. It literally should change our perspectives and goal-setting for sustainability strategies surrounding industry supply chains, moving such initiatives beyond supply chain functional to line-of-business level efforts.

Across many industry supply chains, a lot has already been accomplished in identifying opportunities related to reducing industry supply chain related GHG emissions, preserving natural resources including water, and insuring sustainable supply of Earth dependent commodities. Multi-year objectives have been established that include annual tracking of performance to each objective. The benefits of these initiatives are meaningful in relation to savings on supply chain related costs, reductions in responsible emissions, insuring adequate supply of key strategic supply needs and a more positive perception to one’s corporate and product branding.

Opportunities to Further Leverage Technology

With the era of COP21, industry supply chains are presented opportunities to seize upon the tenets outlined in Jeremy Rifkin’s book, the Third Industrial Revolution as well as other Industry 4.0 thought leaders that point to the compelling convergence of technologies that are before us. One that leverages the convergence of green and renewable technologies, new more renewable energy sources, IoT enabled predictive-focused analytics and the digitization of manufacturing and supply chains. All are converging over the not too distant future, and collectively can foster insured business continuity through strategies that are directed at long-term sustainability of commodity, raw material, and natural resource supply.

Our Takeaway

In 2017, despite any U.S. political notions that climate change may or may not be a significant factor for business risk, industry supply chains and the respective businesses and customers they support and serve, will be at a disadvantage in de-railing or slowing down sustainability efforts.

Benefits have already been recognized along with added opportunities. From our lens, the ongoing convergence of digital and physical business processes manifested by IoT, more predictive analytics, autonomous decision-making and additive manufacturing will provide added opportunities towards sustainability needs and objectives.

The challenge remains insuring a sustainable business within domestic and global dimensions, and that momentum is likely to continue in the coming year.

 

This concludes our Prediction Nine drill-down. In our final posting of this series, we will explore Prediction Ten which addresses certain industry-specific supply chain focused challenges in the current year.

Stay tuned.

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.


Deep Dive on 2017 Prediction Seven: Enhanced Supply Chain Intelligence Capabilities Among B2B Network Platform and Managed Services Providers Will Pay Dividends for Industry Supply Chains

0 comments

The following Supply Chain Matters blog is part of our ongoing series of deep dives into each of our previously unveiled ten 2017 Predictions for Industry and Global Supply Chains.

At the start of the New Year, our parent, the Ferrari Consulting and Research Group along with our Supply Chain Matters blog as a broadcast medium, provide a series of predictions for the coming year. These predictions are shared in the spirit of assisting industry specific and global supply chain cross-functional teams in helping to set management objectives for the year ahead. Our further goal is helping our readers and clients to prepare supply chain management and line-of-business teams in establishing impactful programs, initiatives, and educational agendas.  holding-the-future

The context for these predictions includes a broad cross-functional umbrella of supply chain strategy, planning, execution, product lifecycle management, procurement, manufacturing, transportation, logistics and customer service management.

In an earlier Supply Chain Matters blog postings, we provided deep dives related to:

Prediction One- Subdued World Economic Outlook and Heighted Uncertainty to Test Industry Supply Chain Agility.

Prediction Two- A Challenging Year in Procurement

Prediction Three- A Supply Chain Talent Perfect Storm

Prediction Four- Increased Anti-Trade Geo-Political Forces Provide Added Global Sourcing Challenges

Prediction Five- Continued Global Transportation Industry-wide Turbulence

Prediction Six- A Renaissance in Supply Chain Focused Business Services and Technology Investments

In this deep-dive series posting, we drill down on our next prediction.

2017 Prediction Seven- Enhanced Supply Chain Intelligence Capabilities Among B2B Network Platform and Managed Services Providers Will Pay Dividends for Customers

In 2017 and beyond, there will exist increased industry specific needs for deeper and wider levels of customer, product, physical object and supply network focused information visibility, capture and analysis.  This need is coupled to building multi-industry supply chain requirements for more predictive, analytics data-driven decision making competencies that involve outside-in insights. The objective is a literal 360-degree view of supply chain wide data and information, horizontally spanning the end-to-end supply and vertically coupling high level enterprise to shop-floor decision-support needs.  Enhanced business intelligence and overall process improvements further enhances the ability of industry supply chains to support new, more innovative business models that can leverage digital technologies in areas of product or customer related services.

A means to achieve such capabilities are analytics and business intelligence engines that are now being embedded across supply chain focused B2B network platforms, edge systems and production shop floor transactional and information transfer flows. B2B business networks and edge platforms are today the prime opportunity for digitizing the horizontal and vertical flow of information and analytics across end-to-end supply chains. Whereas predominantly EDI messaging platforms were viewed as required external messaging utilities to transfer and receive transaction and electronic messaging information across disparate systems, there is now collective movement by network providers to transform these platforms to business intelligence and analytics based information repositories available to support broader supply chain and product focused decision support needs. As noted in Prediction Six, this an area where blockchain technology can have a profound long-term impact, but beyond that, many existing B2B technology platform vendors such as Ariba, an SAP Company, E2Open, GT Nexus, IBM, OpenText are already moving in the direction of blending supply chain wide planning and execution related transactional data with analytics, cognitive and business intelligence capture. Such analytics and trending information can then be moved to and from various existing business application systems related to planning and customer fulfillment.

Similarly, the vertical notions of what is being often described as either Industrial Networks, Industrial Internet and edge systems, are various physical devices communicating via IoT enabled technology, within their respective operational and performance status data streams. Here again, emerging IoT network technology providers are similarly incorporating cognitive and analytics based capabilities to synthesize the streaming levels of data being captured into information and required decision-making alerts.

An Evolving New Challenge

The evolving new challenge for industry supply chains will be the ability to exchange information and insights among various existing Cloud-based B2B networks and resident business software applications focused on either customer, product, supply, production, service or fulfillment process needs.  This is a challenge that must be addressed in order to gain the full benefits of the Cloud. Ideally, supply chain teams will seek the ability to have a virtual information utility or data lake, but that could be expensive and many industry supply chain teams are not necessarily ready to manage such capabilities at this point. Today, such challenges fuel an evolving need for managed services providers or systems integrators to tie-together such structured and unstructured information and analytics in virtual streaming information and analytics data pools or zones available to all enterprise and supply chain business applications and systems.

Technology vendors now recognize this problem. For instance, Oracle recently released a Hybrid and Multi-Cloud Services utility as part of its Platform-as-a-Service (PaaS) Cloud infrastructure services. Oracle’s intent with this service is to support the needs of data movement, data transformation, data quality and applications integration among multiple Cloud platforms and applications.

Focus on a Networked Cloud Strategy

All the above stated, industry supply chain and line-of-business teams should strive to prioritize and scope certain business process decision need areas, for example customer fulfillment and logistics, or an initial supply chain control tower capability, and work with an individual platform vendor or focused systems integrator to start the journey towards streaming analytics and insights from external Cloud-based platforms.  We view this as a prime process and business support opportunity for supply chain teams in 2017.

B2B or B2B-to-B2C business network platforms related to process needs in areas such as procurement, product management, planning, logistics or customer fulfillment should no longer be viewed as solely messaging or transactional platforms. Over time, they will serve as sources of analytics, insights and alerts related to process, suppliers, and customers. Business, functional and sales and operations planning teams can gain more real-time insights by broadening their perspectives beyond messaging to messaging and trending.

This concludes our Prediction Seven drill-down. In our next posting of this series, we will explore Prediction Eight reflecting on how Alibaba and Amazon will continue to battle for global online platform dominance.

Stay tuned.

Bob Ferrari

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.


Deep Dive 2017 Prediction Six- A Renaissance in Supply Chain Focused Business Services and Technology Investments

0 comments

The following Supply Chain Matters blog is part of our ongoing series of deep dives into each of our previously unveiled ten 2017 Predictions for Industry and Global Supply ChainsSupply Chain Matters Blog

At the start of the New Year, our parent, the Ferrari Consulting and Research Group along with our Supply Chain Matters blog as a broadcast medium, provide a series of predictions for the coming year. These predictions are shared in the spirit of assisting industry specific and global supply chain cross-functional teams in helping to set management objectives for the year ahead. Our further goal is helping our readers and clients to prepare supply chain management and line-of-business teams in establishing impactful programs, initiatives, and educational agendas.

The context for these predictions includes a broad cross-functional umbrella of supply chain strategy, planning, execution, product lifecycle management, procurement, manufacturing, transportation, logistics and customer service management.

In an earlier Supply Chain Matters blog postings, we provided deep dives related to:

Prediction One- Subdued World Economic Outlook and Heighted Uncertainty to Test Industry Supply Chain Agility.

Prediction Two- A Challenging Year in Procurement

Prediction Three- A Supply Chain Talent Perfect Storm

Prediction Four- Increased Anti-Trade Geo-Political Forces Provide Added Global Sourcing Challenges

Prediction Five- Continued Global Transportation Industry-wide Turbulence

In this deep-dive series posting, we drill down on our next prediction.

2017 Prediction Six: A Renewed Renaissance in Business Services and Technology Investment

As industry supply chains enter 2017, we believe their there are distinct signs for a renewed renaissance in business services and technology investments that will specifically include compelling needs in supply chain related business process and decision-making needs. While current high levels of uncertainty in global markets persists, we believe that many organizations will not hold back on needed or overdue technology investments related to the broad umbrella that includes augmented supply chain management business process needs. The one gating factor to inhibit such investments remains the availability of talent to harness the benefits of the advanced technology, which opens the door wider for augmented business services.

Changing Business Environment

In the U.S., with the election of Donald Trump as President, and with a Republican Congressional majority, business leaders have turned more optimistic towards a period of expected lower corporate taxes, a means to repatriate cash profits currently held in foreign entities, and a climate of regulatory rollbacks. Within the Eurozone, a political climate fueled by increased populism and a need for more accelerated economic growth similarly lead to a more positive business investment support climate.

Across many industries, the trend of plowing excess cash into stock buyback or increased stockholder dividends have taken a noticeable toll on supply chain and manufacturing business process adaptability needs. Increased profit performance has subsequently been stymied by lack of top-line revenue growth or in increased worker productivity levels and continued reduced supply chain costs. By November 2016, the U.S. unemployment rate had dropped to 4.6 percent with active skilled labor force participation believed to be much lower. Many industry settings are further under pressure by upstart disrupters or more aggressive competition which additionally drives needs for added technology investments to support new digitally-enabled business models.

With advanced business process technology and services buying decisions more centered on line-of-business vs. singular based IT influence, Cloud based technology and services make such decisions more viable since many come with subscription or usage based expense costing vs. fixed capital appropriation.  That allows the flexibility to make changes as the business warrants or to augment technology needs based on required bandwidth at any given point. The overriding concern of potential business disruption looms large, which also weighs toward a Cloud-based target business process approach that minimizes significant disruption to mission critical business processes and reduces the managed scope of the technology investment.

Expected Investment Areas

Supply chain leaders have tended to be somewhat conservative, reluctant to embrace perceived new or unproven technology. The adage, “if it ain’t broke, no need to fix it” continues but we predict that will change regarding certain process areas in 2017 as CEO’s require enhanced, digitally-driven top line revenue growth. As noted in Prediction One, industry and global supply chains will be especially challenged by increased risk levels and needs for more informed, analytical-driven decision-making anchored in more predictive decision-making methods. Increased risk levels will manifest in more high-profile cyber and DDoS attacks on corporate networks which spillover or originate in supply chain focused systems.

The continuing effects of always-on online and Omni-channel customer fulfillment will additionally drive needs for added foundational investments in digital supply chain transformation, again focused in areas of mining information insights, more predictive analytics and data visualization trending from vast amounts of existing data. We anticipate further investments in achieving broader end-to-end supply chain network visibility, coupled to inventory, capacity and risk management process and decision-making needs.

In 2017 we concur with some tech vendors that anticipate additional attention from certain industry and supply chain segments in what is being described as “autonomous or low-touch planning systems” that allow the technology to take further control of supply chain planning activities without the need for constant planner intervention and involvement. That can free-up existing planner time for more strategic and tactical planning needs.  We anticipate similar autonomous concepts to gain traction in procure-to-pay and order-to-cash processes.

Internet of Things (IoT) Focused Technology

Despite ongoing information security and consistency of global standards hurdles, we predict that early phase or pilot line-of-business driven efforts to prototype new Internet-of-Things (IoT) enabled business models will continue. They will do so because of the need by industry competitors or disruptors to achieve first mover advantage in locking on to new customer revenue streams. Such initiatives will move forward because of needs to develop new competencies in a digital-driven business process and in addressing specific challenges related to data security, interoperability among various edge and core business systems. Initiatives supporting top-line revenue growth while augmenting information security processes are more likely to receive executive and board level approval.

Blockchain Technology

Blockchain technology is being identified by supply chain focused technology providers for applicability in providing higher levels of intelligence regarding the movement of materials across a supply chain or B2B network. Originally developed to support digital bitcoin currency use, this technology is a shared digital ledger, or a continually updated list of incremental transactions. This decentralized ledger keeps a record of each transaction that occurs across a fully distributed or peer-to-peer network, either public or private. The technology is likely to gain broader recognition in 2017 due to its applicability in recording and keeping track of assets and materials.

Industry supply chain teams will likely hear more from technology vendor efforts in developing blockchain technology methods in areas related to supply chain wide transactional automation or supply chain-wide product genealogy and authentication. While we do not anticipate wide-scale mainstream investment in this technology during 2017, industry supply chains should play close attention as to technology vendor developments and planned process support areas since this type of technology has breakthrough potential in certain process areas.

Increased Vendor Merger and Acquisition Activity

A renaissance in multi-industry business process and technology investment activity will surely lead to further merger and acquisition activity involving either the enterprise software, supply chain, Equipment Manufacturing, IoT, and management decision support vendor communities. Autonomous driving, shared riding services and artificial intelligence driven technology will remain of hot interest as will predictive analytics. The name of the game for tech vendors is current and future top-line revenue and profitability growth, specifically cloud and subscription based revenue flows. Signs further point to a more friendly IPO market in 2017 allowing up and coming new technology providers needed capital to expand.

We predict one or two acquisitions involving high-profile supply chain best-of-breed vendors along with a continuation of acquisitions surrounding IoT focused technologies. We anticipate that enterprise vendors will continue to be active in this area along with industrial companies transforming themselves to software companies.  Likely players will be Amazon, IBM, General Electric, Google, Oracle, PTC, Siemens, among others. There may well be one or two blockbuster M&A deals in the above segment.

This concludes our Prediction Six drill-down. In our next posting of this series, we will dive into Prediction Seven that calls for enhanced decision-support capabilities among B2B business network and managed services providers.

Stay tuned.

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.

 

 


« Previous Entries