Prediction Four in our Supply Chain Matters 2012 Predictions for Global Chains outlines a year of turmoil among three specific industry sectors, one being the Retail and B2C segment. More empowered consumers armed with smarter mobile devices continue to make a profound impact on this industry sector, and the results of these impacts again manifested themselves in the 2011 holiday buying season.  A recent Wall Street Journal article again re-iterated that showrooming is an increasingly bigger problem for retail chains ranging from Best Buy to Barnes and Noble, while at the same time being a boom for online retailers such as Amazon.

Retailers have no choice but to respond with alternative strategies to restore some balance of power and recent announcements from major retailers Target Corporation and JC Penny have provided some initial indicators for alternative strategies being explored.

Target has emphatically stated that it will not allow its brick and mortar stores to be utilized as a showroom that consumers utilize, only to later buy an item at an online site offering the most attractive price. This latest statement is on the heels of a rather disappointing 2011 holiday sales period for this U.S.  major retailer.   The retailer issued an urgent letter to its major suppliers suggesting that special differentiated products be made available only to Target. Where special products could not be made available by suppliers, Target is seeking assistance in matching the lowest available price for that item. While Target has had a history of influencing its suppliers to provide Target exclusive products, this new iteration appears to be an effort to expand this initiative.  In its reporting, the WSJ noted that designated Target suppliers will have little choice but to cooperate with the initiative or run the risk of losing a significant volume customer.

Meanwhile, retailer JC Penny’s new CEO Ron Johnson, who was the former chief of Apple’s retail stores, will unveil this week a sweeping re-alignment of that retailer’s brick and mortar merchandising strategies.  In an effort to make JC Penny stores a destination,  major stores will be partitioned into a variety of specialty shops, with the high traffic center of the store being turned into a “Town Center” hang-out or experience center similar to the Apple “Genius Bar”.  In addition to these physical store changes, the retailer is eliminating most all previous sales markdown efforts in favor of a lower price every day pricing strategy.  Here again, there is a strategy of differentiation among branded goods and making it more difficult for consumers to price shop particular items.

Supply Chain Matters fully anticipates that other big retailers will also follow with differentiation strategies, but the real impact will involve individual suppliers, who after many months of efforts to consolidate overall product offerings, may find themselves under pressures to once again provide product offerings for individual retailers.  That could also have negative inventory connotations.

As more retailers fire more salvos in the war with online providers, the implications cascading across supplier networks could well negate any previous cost and operational efficiencies.  If these same retailers do not invest in supply network efficiencies and more enhanced supplier replenishment initiatives, the overall goal may be for naught.

Bob Ferrari

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.

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.

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 Seven: Expect additional M&A and strategic partnership activity among supply chain technology, consulting services and ERP providers as vendors shore-up application areas with the best prospects for sustained future growth.

This is the natural follow-on to predictions five and six.  As concepts of supply chain control tower, more leveraged deployment of predictive analytics, multi-channel supply chain operations management and cloud computing options gain more traction and interest among technology buyers, the vendor community will make additional market moves either in acquisition or strategic partnerships to shore-up overall product offerings for buyers.

While we predicted high activity in 2011 which do not come to pass, we believe that 2012 will provide more motivation, namely because overall spending on software is predicted to decrease in 2012. This makes any path to growth dependent on a keen focus on near-term customer buying needs, quickly filling gaps in technology offerings or gaining market growth by outright acquisition.

Supply Chain Matters believes that two smaller vendors in the planning area, and perhaps one or two vendors in the B2B procurement area are likely targets in 2012 from multiple larger acquirers and we will anticipate, as our readers, on what actually transpires.

We expect more acquisition efforts by the major ERP, B2B cloud services and procurement technology providers, and do not be surprised if some leading vendors in these new adoption areas get acquired by larger players. Some targets will be acquired with high multiples to prevent competitors from scooping them up.

B2B commerce and collaborative planning and execution networks will most likely be the hottest area for deals and shifting of players and anticipate more announcements as big players IBM, Salesforce, Amazon, Google and  possibly Microsoft square-off and bankroll for control of online commerce infrastructure and business process control.  Similarly, SAP and Oracle will continue to fill-in advanced supply chain technology software gaps, particularly in cloud and control tower areas.

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.

This collective area has been percolating for many years and we anticipate that 2012 will 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.

In the U.S., legislative leaders and industry groups have become much more alarmed with the existence of counterfeit electronic parts penetrating defense and industry oriented supply chains, much of which is alleged to be originating from China and other countries.   The U.S. government has already discovered 1800 cases of suspect counterfeit electronics being sold to the U.S. Defense Department from commercial and military suppliers.  The Semiconductor Industry Association testified that U.S. semiconductor companies face more than $7.5 billion in costs related to counterfeit parts each year as non-conforming electronic microelectronics are being embedded in automotive, aerospace, communications, medical device, and other industry supply chains.

In our industry-related prediction pertaining to Pharmaceutical and Healthcare, we noted that increased shortages of drugs has led to more unscrupulous and criminal behavior relative to grey market supply, cargo theft and prescription drug abuse.  Increased outsourcing of production to global contract manufacturers and API providers adds to the problem.

Regarding cargo theft, brazen criminals have stepped up their sophistication of methods in stealing whole cargo shipments, by utilizing active surveillance of driving patterns, GPS global tracking and other means to circumvent existing security measures.   A challenged economic environment often leads to increased criminal behavior, and in 2012, the criminals can leverage more sophisticated means and methods. Stolen cargo adds to the problem of non-conforming products.

Look for governments to increase the pressure on industry players to accelerate initiatives in authentication, tracking and genealogy of components, parts and raw materials. In the U.S., state wide initiatives and efforts were enacted to overcome lack of any concerted action by the federal government. In Pharmaceutical and healthcare, the looming deadline is the California anti-counterfeiting and diversion legislation which requires pedigree tracking.  After numerous industry lobbying efforts to postpone the implementation, the program remains target for implementation in 2015.  Serialization and authentication program mandates continue to evolve across the Eurozone countries and Brazil has called for implementation of serialization and track and trace requirements in 2012.

As the deadlines come closer, and the costs in terms of revenue, liability and implementation costs loom ever larger, we believe that industry teams will become much more actively involved in influencing some forms of global-wide process standards and inter-industry cooperation in sharing product movement information across global supply chains. We may finally have the opportunity to observe industry teams stepup efforts to actively influence global standards and enhanced mitigation initiatives in prevention as well the tracking and interception.

This concludes Part Six of our Supply Chain Matters 2012 Predictions.  In Part Seven, we will explore our Prediction Nine, our continued belief in wider-scale adoption of and leverage of in-memory computing technologies harnessed into predictive analytics and decision-making process needs.

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.

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

Prediction Five: The concept of “supply chain control tower” will come to the forefront, but in 2012, there will be a need for vendors and consultants to focus on further market education and early adoption support.

In our discussions, presentations and attendance at 2011 supply chain forums and events, we have discussed and heard from manufacturers on the need for a “supply chain control tower” technology enablement.  The term itself is not one that was primarily conceived by technology vendors, but rather industry visionaries who now acutely understand that there is need to have complete visibility and decision control of all that is occurring across the extended global supply chain.  The clock speeds of business change have increased dramatically, along with their subsequent impact on supply and demand planning and fulfillment execution needs. Sequential planning cycles predicated on historic data views and incorporation of the impacts of the latest real-time events are the new challenges for managing highly dynamic supply chains.

The control tower concept stems from OEM’s primarily in the high tech and consumer electronics industry that are deeply involved in supply chain planning and fulfillment execution in a highly extended and complex network.  They have come to understand that constant volatility in product demand, supply, and other unplanned events are exposing the vulnerabilities of cadence or process driven planning, execution or S&OP processes.

Supply chain teams require more-timely, and more forward looking decision making vs. just visibility to what has occurred. A control tower can become a single utility view for tracking information related to supply chain wide events, decisions and information flow. In essence, it can provide an information hub that supports two-way decision-making, interaction and extended collaboration for what is occurring and what needs to occur. Consultants and systems integrators have also honed-in on this new requirement, and some pilot process implementations will continue in 2012.

Technology vendors have greatly overhyped the terms “supply chain wide visibility” and we believe that users demand much more supply chain business process control specifics and capabilities with this new concept.  Our prediction is that in 2012, the supply chain control tower will come to the forefront of discussion, but this is still an early phase period of market adoption and early adoption. The notion of a supply chain control tower will benefit from more discussion among both functional and IT support teams and will require more market education of the various technology elements that can enable this concept. The payoff in industry competitiveness and financial benefits can be huge.

We anticipate that the technology vendors themselves will converge on this area from four separate perspectives: supply chain execution, supply chain planning and business process management (BPM)/ business intelligence (BI), and B2B trading network perspectives. This will place the burden on consultants, system integrators and end-user teams to sort out the best approach for specific needs.  Vendors and consultants will also need to provide more hand-holding support to early adopters in their deployments.

Prediction Six: Cloud computing and broader managed services options directed at enabling selective supply chain business processes will continue to gain more traction.

The momentum for cloud computing technology adoption continued during 2011 as manufacturers, retailers and service enterprises filled-in tactical holes within supply chain problem areas such as procurement efficiency, overall spend reduction, broader supply network collaboration and deeper insights into demand and supply patterns.

The prospective of a much more challenged global economy and added pressures to reduce cost and improve service levels directed at maintaining or acquiring key customers is a given in the coming year.  External clouds can provide more flexible options for supply chain networks to exchange information with key customers and partners and collaborate more effectively on planning and execution needs. We therefore believe that more organizations will turn to broader cloud computing adoption or managed outsourced service options for selective supply chain process areas during 2012.  Cloud deployments will continue to include both private and public cloud options, with private clouds continuing to be favored within supply chain mission critical management process areas.

The cloud computing option provides enterprises with a further means to limit large up-front costs for the acquisition of key technology, and further provides the flexibility for offsetting the traditionally high annual software maintenance fees associated with enterprise level behind the firewall software use. Cloud-based technology further provides a role in helping supply chain networks to foster “plug and play”  process support capabilities. A key sign of acknowledgement of cloud computing market adoption occurred in late 2011 as dominant ERP providers made acquisitions to shore-up their cloud computing options for customers.  In late October, Oracle agreed to acquire cloud customer service provider RightNow Technologies, and in early December SAP agreed to acquire HCM cloud provider SuccessFactors. The ERP providers will have to mask their desire to sell more “seat-based” revenue opportunities with the need for customers to have meaningful cloud options that do not require major upgrades of the existing ERP technology stack.

Smaller, specialized cloud oriented supply chain technology vendors will continue to gain more market visibility.  Selection however should consider that some vendors may be targets of acquisition from bigger players in 2012 (see Prediction Seven).  Insure that your service-level agreements include provisions for carryover, in the case of acquisition or merger.

Managed Services

We also continue to hear reports from vendors and consultants that more managed services options directed at select supply chain process areas are gaining interest.  A big help in this area has been a broader understanding and education of the concepts of Vested Outsourcing, as advocated by the University of Tennessee. Vested Outsourcing calls for a outcome-based partnership among the outsourcer and the managed service provider for establishing goals for defined outcomes, joint oversight, and win-win incentives.

Look for more uptake in 3PL / 4PL partnerships in logistics and order fulfillment process needs, procurement of indirect services, and some areas of supply chain planning related to steady-state product offerings. In the U.S., 3PL’s are mindful of the likllihood of a truck capacity shortage if overall manufacturing activity increases, and are continuing to take advantage of cloud delivered technology, intermodal modes, optimized shipment structures and a heightened focus on collaborative capacity utilization.

Managed service options will continue to provide an attractive option for small and mid-sized businesses, but cost competitive, develop or buy factors will remain a part of the process.

This concludes Part Five of our Supply Chain Matters 2012 Predictions.  In Part Six, we will explore our Prediction Seven, reflecting on added M&A And strategic partnership activities among technology providers, and Prediction Eight, a move toward stepped-up standards and mitigation efforts on the part of industry and governments to combat the growing problem of counterfeit parts and supply chain theft.

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.

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: Three specific industry sectors will be especially affected by significant supply challenges or turmoil in 2012.

In 2011, we correctly predicted that two industry sectors, B2C and Pharmaceutical/Healthcare would be especially affected by process impacts. For 2012, we predict the continuance of significant supply chain challenges within our 2011 selected industries and we add High Tech / Consumer Electronics as a third industry facing significant supply chain challenges.

B2C Sector

The B2C sector will continue to be impacted by the momentum of online multi-channel commerce and a more technology empowered consumer who demands multiple buying options and service experiences. Retailers have quickly come to discover that their supply chains need to have the ability to respond and execute holistically across all consumer buying channels, including online, in-store, vendor direct-ship, or combinations thereof.  Even as we pen these predictions, the headlines for Black Friday and Cyber Monday 2011 indicate an online traffic increase of a whopping 43 percent.  What has become even more apparent is that added investments in online and mobile capabilities and web tools in 2011 must also be complimented with investments in advanced supply chain inventory management and multi-channel commerce fulfillment technology.

While Amazon has become the unstoppable goliath of online commerce and fulfillment capabilities, an announcement by Google in early December 2011 could provide for some industry disruptive dynamics in the coming year.  Google entered talks with select major retailers and shippers to affix its product search capabilities with a one-day quick shipping option.  The capability was pitched to retailers such as Gap, Macy’s, OfficeMax and others. When shoppers place an order on retail web sites, Google’s quick ship would include the capability to scan available store and regional inventories for one day ship fulfillment execution. If adopted, Google has the clout to well become a supply chain fulfillment enabler by the 2012 holiday buying season.

When the dust settles after the 2011 holiday buying season, retailers and online commerce providers will be challenged in 2012 to continue to augment their back-end supply chain fulfillment competencies to seamlessly support multiple buying channels.  By Q4 2012, the holiday focused buying surge will make the notions of Black Friday and Cyber Monday meaningless since consumers will leverage online and mobility tools at will when bargains or available inventory of in-demand hot products are evident.

Pharmaceutical and Healthcare

An article published in Strategy and Business in mid-November re-iterates that the Pharmaceutical industry must fundamentally re-think its supply chain.   The article notes: “There is minimal communication, little effort toward mutual improvement, and no real desire to pursue efficiency gains.”  That reality manifested itself in 2011 as certain Pharmaceutical and Generic Intravenous Drug supply chains failed to deliver on-time and reliable supply, and we do not anticipate any recovery until the latter part of 2012, if at all. Frankly, the industry has shown no public signs of resolving a myriad of supply chain issues involving the increased complexity of a global supply chain involving generic and contract manufacturing relationships. Rather than a mentality that views supply chain as a burden of cost centers, the industry must embrace supply chain efficiency and responsiveness, disciplined and meaningful sales and operations planning as a competitive differentiators. Hospitals, pharmacies and healthcare providers who have faced severe or ongoing shortages and /or allocation of life-saving chemotherapy and intravenous drugs will continue to be challenged in securing reliable supply. Reliable price control, grey market and counterfeit drugs also remain as threats to overcome in an increased environment of scrutiny and regulatory oversight, and a more empowered set of customers.

The year 2012 will be the first major test of former blockbuster drugs losing patent protection and having to compete with high volume generic drug producers. Pfizer’s highly successful cholesterol reducing drug Lipitor will lose its patent protection and the end of 2012.  To hold market share, the company plans to sell Lipitor directly to patients at generic prices.  Pfizer has partnered with Diplomat Specialty Pharmacy to mail the drug directly to patients via online prescription fulfillment.  A dual tier pricing model would be maintained, with generic pricing for Diplomat and higher pricing for existing Lipitor channels. According to a Wall Street Journal article, if successful, the implication would be a distribution model that no major drug maker has implemented to date. Meanwhile, generic drug producers Ranbaxy Laboratories, based in India and Watson Pharmaceuticals plan to produce and distribute generic versions of Lipitor during 2012.

High Tech and Consumer Electronics

We have added High Tech / Consumer Electronics because of the residual impacts of the devastating monsoon related floods that impacted Thailand and other Southeast Asian nations in the fall of 2011.  There are all indications that a significant shortage of hard disk drive components and production capacity will extend to the mid-2102, possibly to through the end of the year.  The production of electronic devices such as laptops and personal computers, storage appliances and disk arrays destined for data centers or cloud computing facilities, and other consumer electronics devices that include a hard disk will all be impacted.  While some large hardware and storage OEM’s will manage to buffer the impact with their buying power and supplier leverage, others may fall short. Readers should not be surprised to hear of well-known brand names impacted by disruption and turmoil during the year.  Prices, both component and finished goods related, will also spike in 2012.

The Wildcard

A fourth wildcard industry mention for 2012 is the Aerospace industry.  A huge backlog of customer orders has caused major OEM’s Airbus and Boeing, along with key component suppliers, to have to aggressively ramp-up planned production output levels.  Boeing itself has a $332 billion order book and has plans to ramp existing production over 30 percent in the coming three years. Its 787 Dreamliner program is three years plus behind schedule, and must ramp-up a second final assembly facility in South Carolina. Airbus, as of October, reported a current backlog representing more than seven years of production output.  Aircraft engine maker Rolls Royce will be opening its first external production facility in Singapore.  Any further major industry glitches, or negative consequences from the Eurozone financial crisis could cause this industry to also be challenged by disruption and turmoil in 2012.

This concludes Part Four of our Supply Chain Matters 2012 Predictions.  In Part Five, we will explore our Prediction Five, where the supply chain control concepts will come to the forefront, and Prediction Six, the increased adoption of cloud computing and managed services adoption in 2012.

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.