Executive Briefings

Here's What's Next for the Supply Chain. Or Not.

Supply chain experts are well-accustomed to spinning their visions of the future before a room full of docile listeners, especially after a hosted bar and a full meal. It's less common for those prognosticators to be challenged on the spot. That was the idea behind a recent meeting of the San Francisco Roundtable of the Council of Supply Chain Management Professionals (http://cscmpsfrt.wildapricot.org/). The opinions of five local luminaries were subjected to audience vote, as well as the feedback of their fellow panelists. Now it's your turn to play along at home. See what you think about the following bold predictions, and the responses of various devil's advocates.

Prediction: Alexandra Lopez, vice president and chief financial officer in procurement and supply for Kaiser Permanente, says hospitals will come to adopt a "retail" approach to their supply chains, treating the physician as the customer, and the operating room as the store. Instead of allowing doctors to hoard supplies and overstock ORs, hospitals will ensure that each location contains the same product in the same place.

Or not: "I like the concept but it may be further out," said Craig Cuffie, vice president of supply chain operations with Intuit Inc. He thinks it's going to be tough to change the behavior of doctors, who harbor an attitude of "I'm the boss in my OR." Lopez said Kaiser can make it happen because it works closely with doctors to assess their needs in advance. But even she wonders whether other institutions can follow.

Prediction: Cuffie says supply chain leaders will need to know how to manage digital supply chains, which are "here to stay." They'll have to figure out how better to deliver products such as hosted software applications in digital and physical form, while understanding customer needs in both areas.

Or not: "Aren't we doing it already?" asked Krish Mantripragada, vice president of suite solutions management with SAP AG. Cuffie replied that Intuit, a $3bn-a-year software company, is still "making the journey from physical product to digital download." Add to that continuing uncertainties over the software-as-a-service (SaaS) model, and the trendy new label of "cloud computing." As one member of the audience said: "I think it will get there, but there's a big fear factor."

Prediction: Supply chain risk management "is going to be a top priority next year," said Mantripragada. Given fluctuations in commodity and energy prices, and the inflexibility of supply chains caused by downsizing, managers will have to take a proactive attitude toward risk.

Or not: "I don't know how focused that is," said Lopez, while acknowledging that "a lot of companies have already gone down that path." Laura Wilkin, vice president of distribution for North America with Gap Inc., said risk management "is not as sophisticated as it could be. For many companies, it's an afterthought." An audience member ventured that there's enough capacity in supply chains today to temper concerns about disruptions caused by congestion.

Prediction: Wilkin envisions passage by Congress of the Employee Free Choice Act, the controversial labor measure that would make it easier for unions to organize the workplace.

Or not: "It will get bogged down in Congress, on the basis of horse-trading and a desire not to inject any potential showdown," said Dan Gilbert, vice president of customer operations with Cisco Systems Inc. Wilkin replied that a modified version of the bill will pass, although "the debate over healthcare might buy us some time."

Prediction: "Uncertainty and volatility are here to stay for the next couple of years," said Gilbert. The situation will demand increased collaboration among supply chain partners, with greater reliance on such tools as Six Sigma and sales and operations planning (S&OP). Efforts will be undertaken to ensure more reliable upstream supply, through tighter links with suppliers.

Or not: At last? Experts have been calling for that kind of innovation for a long time. "I sincerely hope you're right," said Mantripragada. "We've been talking about supplier collaboration for 10 or 12 years and it has not taken root." But Gilbert sees a new attitude among channel partners, "fueled by survival and the need to grow."

Prediction: Another major development in healthcare from Lopez. The coming years will see a big move toward healthcare aimed at the home, she said. Patients will be able to draw blood panels, check their vital signs and shop for medications, all without the physical presence of a doctor. Medical supply chains will have to adjust.

Or not: "I love the concept, but I think it's a little far out," said Mantripragada. Cuffie, too, was doubtful: "Information is powerful. But how do you use in a way that's smart?" It's another prediction, he said, that would require a big change in human behavior to come true.

Prediction: "People will get more creative and open to the idea of sharing their supply chains," said Wilkin. A company might bypass the services of a third-party logistics provider, opting instead to share its own transportation capacity with other suppliers going into the same retail locations.

Or not: "I don't see it catching on," said Gilbert, due to a ready supply of idled capacity. Conversely, when supply is tight, companies will be concerned about getting the space they need if their products are commingled with those of other suppliers. Wilkin said a large shipper like Cisco is likely to have extra space that would otherwise go begging. A smaller supplier might ask, "Why are we paying a 30-percent markup to a 3PL if we can work with somebody with existing capacity?"

Or not... Outside the world of supermarket tabloids, whoever said predicting the future was easy?

- Robert J. Bowman, SupplyChainBrain

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Supply chain experts are well-accustomed to spinning their visions of the future before a room full of docile listeners, especially after a hosted bar and a full meal. It's less common for those prognosticators to be challenged on the spot. That was the idea behind a recent meeting of the San Francisco Roundtable of the Council of Supply Chain Management Professionals (http://cscmpsfrt.wildapricot.org/). The opinions of five local luminaries were subjected to audience vote, as well as the feedback of their fellow panelists. Now it's your turn to play along at home. See what you think about the following bold predictions, and the responses of various devil's advocates.

Prediction: Alexandra Lopez, vice president and chief financial officer in procurement and supply for Kaiser Permanente, says hospitals will come to adopt a "retail" approach to their supply chains, treating the physician as the customer, and the operating room as the store. Instead of allowing doctors to hoard supplies and overstock ORs, hospitals will ensure that each location contains the same product in the same place.

Or not: "I like the concept but it may be further out," said Craig Cuffie, vice president of supply chain operations with Intuit Inc. He thinks it's going to be tough to change the behavior of doctors, who harbor an attitude of "I'm the boss in my OR." Lopez said Kaiser can make it happen because it works closely with doctors to assess their needs in advance. But even she wonders whether other institutions can follow.

Prediction: Cuffie says supply chain leaders will need to know how to manage digital supply chains, which are "here to stay." They'll have to figure out how better to deliver products such as hosted software applications in digital and physical form, while understanding customer needs in both areas.

Or not: "Aren't we doing it already?" asked Krish Mantripragada, vice president of suite solutions management with SAP AG. Cuffie replied that Intuit, a $3bn-a-year software company, is still "making the journey from physical product to digital download." Add to that continuing uncertainties over the software-as-a-service (SaaS) model, and the trendy new label of "cloud computing." As one member of the audience said: "I think it will get there, but there's a big fear factor."

Prediction: Supply chain risk management "is going to be a top priority next year," said Mantripragada. Given fluctuations in commodity and energy prices, and the inflexibility of supply chains caused by downsizing, managers will have to take a proactive attitude toward risk.

Or not: "I don't know how focused that is," said Lopez, while acknowledging that "a lot of companies have already gone down that path." Laura Wilkin, vice president of distribution for North America with Gap Inc., said risk management "is not as sophisticated as it could be. For many companies, it's an afterthought." An audience member ventured that there's enough capacity in supply chains today to temper concerns about disruptions caused by congestion.

Prediction: Wilkin envisions passage by Congress of the Employee Free Choice Act, the controversial labor measure that would make it easier for unions to organize the workplace.

Or not: "It will get bogged down in Congress, on the basis of horse-trading and a desire not to inject any potential showdown," said Dan Gilbert, vice president of customer operations with Cisco Systems Inc. Wilkin replied that a modified version of the bill will pass, although "the debate over healthcare might buy us some time."

Prediction: "Uncertainty and volatility are here to stay for the next couple of years," said Gilbert. The situation will demand increased collaboration among supply chain partners, with greater reliance on such tools as Six Sigma and sales and operations planning (S&OP). Efforts will be undertaken to ensure more reliable upstream supply, through tighter links with suppliers.

Or not: At last? Experts have been calling for that kind of innovation for a long time. "I sincerely hope you're right," said Mantripragada. "We've been talking about supplier collaboration for 10 or 12 years and it has not taken root." But Gilbert sees a new attitude among channel partners, "fueled by survival and the need to grow."

Prediction: Another major development in healthcare from Lopez. The coming years will see a big move toward healthcare aimed at the home, she said. Patients will be able to draw blood panels, check their vital signs and shop for medications, all without the physical presence of a doctor. Medical supply chains will have to adjust.

Or not: "I love the concept, but I think it's a little far out," said Mantripragada. Cuffie, too, was doubtful: "Information is powerful. But how do you use in a way that's smart?" It's another prediction, he said, that would require a big change in human behavior to come true.

Prediction: "People will get more creative and open to the idea of sharing their supply chains," said Wilkin. A company might bypass the services of a third-party logistics provider, opting instead to share its own transportation capacity with other suppliers going into the same retail locations.

Or not: "I don't see it catching on," said Gilbert, due to a ready supply of idled capacity. Conversely, when supply is tight, companies will be concerned about getting the space they need if their products are commingled with those of other suppliers. Wilkin said a large shipper like Cisco is likely to have extra space that would otherwise go begging. A smaller supplier might ask, "Why are we paying a 30-percent markup to a 3PL if we can work with somebody with existing capacity?"

Or not... Outside the world of supermarket tabloids, whoever said predicting the future was easy?

- Robert J. Bowman, SupplyChainBrain

Comment on This Article