Iyer sees no end to the volatility that is common to supply chains today. "It is imperative that each service provider [develop a] customized offering to handle uncertainty," he says. Best-in-class entities take a careful look at their operations, with an emphasis on their overall spend in a given market, and the proper assessment of risk. Some companies, in addition to rationalizing their supply base to cut costs, are moving to own inventory to offset some of the accompanying risks.
Another important exercise is to deploy analytics throughout the chain. "Zero-based costing used to be good to do," says Iyer. "Now it's a must to do." Companies need to determine where the majority of their spend and value lie, before they can make an effort to drive out material costs. Sometimes that evaluation will lead to the near-shoring of manufacturing or materials. Other times a distributed model is best.
The proper management of "big data" can help companies to get a handle on their operations. So can the incorporation of a formal risk-management strategy in the procurement function. "It's imperative for them to look at this data, get the top talent, the smart people who understand and can make sense of it," says Iyer. "That is where the world is moving toward." Many service providers are beginning to build a supply-chain analytics arm that focuses on modeling from end to end, complete with the required data.
Finding the right people to do that job, however, isn't always easy - in fact, with the growing complexity of supply chains, it's getting more difficult than ever before. "In the next 20 years," says Iyer, "talent is gonna be in a shortage."
The successful approach can't be one-dimensional. "It's going to be a combination of technology tools, analytics and process excellence," says Iyer. "If a company is able to bring these together, it will have a much better handle to predict its demand."
