Executive Briefings

More Visions of the Future from the San Francisco Roundtable

Here are five more predictions for 2013 and beyond, from a panel of five well-informed (and well-fed) Silicon Valley business executives. (See my previous post for the first five.) Assembled in Santa Clara, Calif., by the San Francisco Roundtable of the Council of Supply Chain Management Professionals, these individuals took part in the group's fourth annual effort to answer that age-old question: What does the future hold for supply-chain management?

Prediction: Expect a "limited" amount of re-shoring of manufacturing from China back to the U.S., said Craig Cuffie, vice president of supply chain and chief procurement officer with Clearwire Communications. Factors in the shift will include new tax incentives, rising commodity and fuel prices and the value of the dollar. "There will be select commodities that will come back onshore in the U.S.," said Cuffie, "but they won't be large [in number]."

Response: Cuffie's fellow panelists, along with most of the audience, agreed. Some noted that Mexico in is good position to siphon off some of the production capacity returning to the West, offering a combination of geographic proximity and low labor costs. Cuffie wondered what kind of manufacturing jobs will be available to American workers - will they pay enough to prop up the endangered middle class?

Prediction: Big electronics companies are in peril, according to Kerry McCracken, vice president of business solutions for the Integrated Network Solutions Segment of Flextronics. Last year, she criticized industry giants for lagging in the area of business-to-business electronic commerce. "Some folks can't even figure out how to set up an order electronically," she said at the time.

One year later, things haven't gotten much better. "I'm happy to see that the electronic industry has discovered plumbing," McCracken observed, but companies are still struggling to embrace the possibilities offered by modern technology. "They're stuck in about 1992-93," she said. Younger businesses, on the other hand, don't carry the baggage of old infrastructure and are in better position to offer their customers lower lead times at less expense. "If you're in a big company today," she said, "I would say wake up."

Response: Panelists, not surprisingly, disagreed. "Cash is king" today, declared Mark Buck, global supply chain and procurement leader with Bio-Rad Laboratories, and big companies still have more of it. The most successful small entities, he added, are the ones that will get gobbled by their larger competition.

McCracken replied that her prediction was about young companies, not small ones. She noted the example of F5 Networks, Inc., a specialist in application delivery networking that has been riding the wave of cloud computing and Web services. Founded in 1996, the venture is "not a tiny company anymore." Revenues in 2011 were $1.15bn.

"The companies that are smart," said McCracken, "are going to adopt e-commerce. And electronics companies are discovering it."

Prediction: Robotics will play a huge role in transforming physical distribution, especially in the warehouse. Devin Fidler, research director of the Technology Horizons Program at the Institute for the Future, likened this moment in history to the transition from the Arpanet to the internet. "It's the switch from bits to atoms," he said. Once it was all about moving information in a completely new way. Now it's about moving product.

In the distribution center, the science of robotics has made it possible to bring shelves to the worker who's processing orders, rather than the other way around. "The order-fulfillment person at Zappos doesn't move more than five feet," Fidler said, referencing the successful online shoe and apparel retailer. (It's no coincidence that Amazon.com now owns both Zappos and Kiva Systems, a pioneer in automated material-handling systems for order fulfillment.)

Response: Panelists didn't take issue with Fidler's vision, but they questioned his timeline. "Within a five-year horizon," McCracken said, "folks are reluctant to spend money on automation. They're still more interested in finding out where's the best place to be."

In fact, robotics is hardly a new feature of material-handling technology. You can find a number of totally automated, "lights-out" warehouses in operation today, although most of them are outside the U.S. (Their deployment is often motivated by highly regulated labor regimes.) Audience member Greg Stein, director of global trade compliance with SanDisk Corp. (and himself a former panelist), acknowledged that research in the technology will continue, but said "there's just too much headwind in the investment community now to support that." Even Fidler admitted that "I may disagree with my own time frame as well."

Prediction: Expect to see producers taking greater responsibility for launching and complying with green initiatives, said Buck. Regulations like the European Union's Restriction of Hazardous Substances (RoHS) directive, coupled with shortages of raw materials and growing pressure on companies to recycle, will drive the development. "It's going to become a hard and fast requirement across the board," Buck said.

Response: Not in the opinion of Jim Miller, vice president of worldwide operations with Google. "I do think it's going to pick up," he said, "but it's not going to be driven by the consumer." Companies themselves will provide the motivation to go green. Despite all the noise about consumer concern over the way big business is affecting the environment, "there's not that kind of outcry in the U.S. yet."

Buck agreed that the consuming public needs to become more educated and responsible about ecological issues. But at least one audience member noted the double standard practiced by individuals who tout their concern for the planet by carrying around smart devices that contain raw materials from nations with severe environmental problems.

Prediction: This one could be the most radical and plausible of them all, given recent rapid advances in the technology. Miller cited the science of 3D printing, in which digital technology makes possible the layering of materials to create solid, three-dimensional objects. Applications include circuit boards, apparel, medical equipment, automotive, engineering and construction. The implications are huge for manufacturers, who could turn out precisely tailored products for customers in extremely small production runs - even one or two items.

The technology's full impact might not be felt in the next three to five years, said Miller, "but there's more evidence that 3D printers are going to [be] a pretty disruptive force."

Response: Again, some pushback from the panel, but mostly from the standpoint of timing. "I like the overall idea," said McCracken. "But I think we have a little bit of time to figure it out. Not five years. Maybe ten."

On this one, I'd bet sooner rather than later, but who knows? The great thing about making predictions is you don't have to be right, unless you're a hedge-fund manager, and ... uh, never mind.

Happy Holidays.

- Robert J. Bowman, SupplyChainBrain

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Here are five more predictions for 2013 and beyond, from a panel of five well-informed (and well-fed) Silicon Valley business executives. (See my previous post for the first five.) Assembled in Santa Clara, Calif., by the San Francisco Roundtable of the Council of Supply Chain Management Professionals, these individuals took part in the group's fourth annual effort to answer that age-old question: What does the future hold for supply-chain management?

Prediction: Expect a "limited" amount of re-shoring of manufacturing from China back to the U.S., said Craig Cuffie, vice president of supply chain and chief procurement officer with Clearwire Communications. Factors in the shift will include new tax incentives, rising commodity and fuel prices and the value of the dollar. "There will be select commodities that will come back onshore in the U.S.," said Cuffie, "but they won't be large [in number]."

Response: Cuffie's fellow panelists, along with most of the audience, agreed. Some noted that Mexico in is good position to siphon off some of the production capacity returning to the West, offering a combination of geographic proximity and low labor costs. Cuffie wondered what kind of manufacturing jobs will be available to American workers - will they pay enough to prop up the endangered middle class?

Prediction: Big electronics companies are in peril, according to Kerry McCracken, vice president of business solutions for the Integrated Network Solutions Segment of Flextronics. Last year, she criticized industry giants for lagging in the area of business-to-business electronic commerce. "Some folks can't even figure out how to set up an order electronically," she said at the time.

One year later, things haven't gotten much better. "I'm happy to see that the electronic industry has discovered plumbing," McCracken observed, but companies are still struggling to embrace the possibilities offered by modern technology. "They're stuck in about 1992-93," she said. Younger businesses, on the other hand, don't carry the baggage of old infrastructure and are in better position to offer their customers lower lead times at less expense. "If you're in a big company today," she said, "I would say wake up."

Response: Panelists, not surprisingly, disagreed. "Cash is king" today, declared Mark Buck, global supply chain and procurement leader with Bio-Rad Laboratories, and big companies still have more of it. The most successful small entities, he added, are the ones that will get gobbled by their larger competition.

McCracken replied that her prediction was about young companies, not small ones. She noted the example of F5 Networks, Inc., a specialist in application delivery networking that has been riding the wave of cloud computing and Web services. Founded in 1996, the venture is "not a tiny company anymore." Revenues in 2011 were $1.15bn.

"The companies that are smart," said McCracken, "are going to adopt e-commerce. And electronics companies are discovering it."

Prediction: Robotics will play a huge role in transforming physical distribution, especially in the warehouse. Devin Fidler, research director of the Technology Horizons Program at the Institute for the Future, likened this moment in history to the transition from the Arpanet to the internet. "It's the switch from bits to atoms," he said. Once it was all about moving information in a completely new way. Now it's about moving product.

In the distribution center, the science of robotics has made it possible to bring shelves to the worker who's processing orders, rather than the other way around. "The order-fulfillment person at Zappos doesn't move more than five feet," Fidler said, referencing the successful online shoe and apparel retailer. (It's no coincidence that Amazon.com now owns both Zappos and Kiva Systems, a pioneer in automated material-handling systems for order fulfillment.)

Response: Panelists didn't take issue with Fidler's vision, but they questioned his timeline. "Within a five-year horizon," McCracken said, "folks are reluctant to spend money on automation. They're still more interested in finding out where's the best place to be."

In fact, robotics is hardly a new feature of material-handling technology. You can find a number of totally automated, "lights-out" warehouses in operation today, although most of them are outside the U.S. (Their deployment is often motivated by highly regulated labor regimes.) Audience member Greg Stein, director of global trade compliance with SanDisk Corp. (and himself a former panelist), acknowledged that research in the technology will continue, but said "there's just too much headwind in the investment community now to support that." Even Fidler admitted that "I may disagree with my own time frame as well."

Prediction: Expect to see producers taking greater responsibility for launching and complying with green initiatives, said Buck. Regulations like the European Union's Restriction of Hazardous Substances (RoHS) directive, coupled with shortages of raw materials and growing pressure on companies to recycle, will drive the development. "It's going to become a hard and fast requirement across the board," Buck said.

Response: Not in the opinion of Jim Miller, vice president of worldwide operations with Google. "I do think it's going to pick up," he said, "but it's not going to be driven by the consumer." Companies themselves will provide the motivation to go green. Despite all the noise about consumer concern over the way big business is affecting the environment, "there's not that kind of outcry in the U.S. yet."

Buck agreed that the consuming public needs to become more educated and responsible about ecological issues. But at least one audience member noted the double standard practiced by individuals who tout their concern for the planet by carrying around smart devices that contain raw materials from nations with severe environmental problems.

Prediction: This one could be the most radical and plausible of them all, given recent rapid advances in the technology. Miller cited the science of 3D printing, in which digital technology makes possible the layering of materials to create solid, three-dimensional objects. Applications include circuit boards, apparel, medical equipment, automotive, engineering and construction. The implications are huge for manufacturers, who could turn out precisely tailored products for customers in extremely small production runs - even one or two items.

The technology's full impact might not be felt in the next three to five years, said Miller, "but there's more evidence that 3D printers are going to [be] a pretty disruptive force."

Response: Again, some pushback from the panel, but mostly from the standpoint of timing. "I like the overall idea," said McCracken. "But I think we have a little bit of time to figure it out. Not five years. Maybe ten."

On this one, I'd bet sooner rather than later, but who knows? The great thing about making predictions is you don't have to be right, unless you're a hedge-fund manager, and ... uh, never mind.

Happy Holidays.

- Robert J. Bowman, SupplyChainBrain

Comment on This Article