We believe that in 2011 manufacturers and logistics providers will begin to focus on growth as the nation comes out of the recession. The recent economic changes have made it clear that companies must adopt business agility to succeed.
Today’s supply chains are “extreme” – more dynamic across multiple dimensions, including demand, sourcing, product, market, regulatory, transport and financial. In fact, the University of Maryland is now teaching Extreme Supply Chain Management, based on a book it published in conjunction with the Council of Supply Chain Management Professionals.
The magnitude of volatility in today’s transportation sector is unprecedented. The most obvious driver is the price of fuel, but other factors are involved. Many transportation sectors are guarded in capital investment, tightly assessing how and when to bring assets back on line. Transportation providers now seem to understand they can control supply, thus price, but will that resolve break down to gain market share?
They also face driver challenges of an aging work force and the new federal truck safety rule CSA 2010, which is about to affect the driver pool and could result in projected reductions ranging from 250,000 to 400,000 drivers.
The key to managing this volatility is for supply chain managers to build flexibility into internal processes and improve supplier collaboration. In this way, companies can gain deeper insight into their supply chains, allowing them to better plan for the future and to maintain less inventory while still meeting customer demand.
Connectivity can improve a company’s bottom line in a challenging market by reducing process barriers, making it easier to do business with customers and offering end-to-end process visibility to optimize supply chain performance.
Clearly, industry complexity will not go away and volatility will need to be addressed. Having a flexible infrastructure and understanding the extreme supply chain will help companies become better positioned to succeed as the economy recovers.