Once a year, just before the start of the New Year, the Ferrari Consulting and Research Group and the Supply Chain Matters Blog provide a series of predictions for the coming year. We have maintained this tradition since the founding of the blog in 2008.
In our Part One posting, we explored our first two predictions for 2013, the overall economic and business challenges, and our prediction of inbound commodity prices.
Our Part Two posting explored predictions #3 and #4, which noted a continued renaissance in U.S, based manufacturing and the very important challenge of supply chain skills development and retention.
Our Part Three posting explored Prediction #5, our industry specific supply chain challenges prediction.
Our Part Four posting address the critical need for supply chain resiliency and responsiveness in 2013 as well an increased penetration of Chinese companies in other industry supply chains.
In this posting, we predict a broader umbrella supply chain accountability in 2013.
Prediction #8: The executive level voice and shared accountability of the supply chain organization will invariably extend itself into three broader areas in 2013.
To respond to more demanding customers, products have become more technologically sophisticated and today incorporate broader combinations of physical hardware, bundled software and services components. Product design, customer fulfillment, satisfaction and service now umbrella many more functionally driven activities and the supply chain now finds itself involved, either voluntarily, or involuntarily, in each of these various dimensions. At the same time, increased regulatory and conformance requirements require broader accountability and access to information.
During 2012, there were increased incidents of botched new product introductions because of initial product quality issues or premature product component failures, some of which were related to other tiers of the supply chain. Notable examples reside in the automotive industry, where new models built on standard global platforms have experienced product recalls very early in the product introduction cycle. Ford, Hyundai and Nissan have had visible incidents. In consumer electronics, Apple stumbled of late with its iPhone 5 product introduction marred by certain flaws in its own maps application, which subsequently had to be withdrawn from the market.
In aerospace, Boeing’s long overdue 787 Dreamliner aircraft is experiencing incidents of component failures in internal engine components, fuel couplings and an on-board generator very early after initial aircraft deliveries. Airbus dealt with a number of early component failures related to its massive A380 superliner model including internal engine components.
Retail, B2B, and B2C online fulfillment supply chains also find themselves dealing with many other moving parts in coordinating an on-time and complete customer shipment or responding to customer service requests. While suppliers are often reluctant to share certain information regarding quality and conformance, a product recall event is literally too late in the process and to damaging to the brand to experience a major component or process defect.
In the new era of Service Lifecycle Management where OEM’s and capital equipment manufacturers offer customers pay by use or pay by hour leasing options, product failures or recalls translate to further revenue profitability and customer loyalty impacts. Business leaders are now becoming more acutely aware on the critical dependencies among product and service management and supply chain teams for collaboration of programs.
Corporate commitments for insuring a more green and sustainable supply chain have further led to new initiatives in more efficient product packaging and for more sustainable and earth friendly materials. Efforts to drive increased supply chain sustainability imply deeper collaboration among product design materials engineering and cross-functional supply chain teams. Design for sustainability and design for supply chain must come together under singular umbrella of initiatives.
Finally, increased regulations and governmental oversight remain a challenge in 2013. One example is the Conflict Materials mandate provision in the Dodd Frank Act. It calls for businesses to certify that certain minerals have not been acquired or sourced from unsanctioned mines originating in the Democratic Republic of the Congo. Publically-held companies, in their 2013 annual filings with the Securities and Exchange Commission, must so certify. Other regulations pertaining to hazardous materials such as REACH also imply that needs for accessing and tracing information are getting far more complex while accountability is more pronounced.
For all the above reasons, and others, we predict that in 2013, the executive level voice and shared accountability of the supply chain organization will further extend itself into the areas of product and service lifecycle management. Many firms can no longer afford to have each of these areas operating with non-aligned or conflicting metrics related to new product time-to-market vs. known product risks, critical supply shortages or supplier component quality issues impacting revenue, brand reputation, or loss of customers. With the current clock speed of business running so rapidly, and a 7 X 24 continuous news cycle, information, intelligence and early warning insights must flow seamlessly across the extended supply chain.
This concludes Part Five of our 2013 Predictions for Global Supply Chains.
As always, readers are encouraged to comment on these predictions as well as add additional thoughts as to what to expect in 2013.
© 2012 The Ferrari Consulting and Research Group LLC and the Supply Chain Matters Blog. All rights reserved.