Every year, the SFRT invites some of the Bay Area's most insightful business executives to share their vision of supply chain in years to come. Each prediction is subjected to scrutiny, not just from fellow panelists, but from the audience as well. Disagreement is far from rare, and often lively.
Prediction: Michael Hester, senior vice president of merchandising operations and supply chain with BevMo! Corp., apparently lives in the belief that a prediction will eventually come true if he makes it often enough. So he once again declared that the coming year will see the arrival of new and bigger ships at the expanded Panama Canal. The massive engineering project involves the addition of two new sets of locks, one on the Pacific side and the other near the Atlantic, capable of accommodating the latest generation of container vessels. A bigger and deeper canal is expected to satisfy demand for imports by consumers in the Eastern half of the U.S. Ships sailing from Asia will be able to bypass the U.S. West Coast, which in recent months has proved to be a nightmare of congestion for shippers and carriers alike.
Response: Eventually, perhaps. But the canal project has been subjected to repeated delays, and even a temporary halt to major work. It now looks as though the latest completion estimate of 2015 is going to slip into early 2016. Still, all other members of the SFRT panel agreed with Hester that the canal will play a much bigger role in container shipping between Asia and the U.S. in coming years. The audience concurred, with one member estimating that the cost of moving a container from Asia to the U.S. East Coast will be cut in half or more.
Prediction: Lisa Bugajski, senior director of product delivery operations with Adobe Systems, expects to see “an extreme supply-chain nodal convergence.” With the arrival of cloud technology, technology vendors will begin bypassing value-added resellers. Application infrastructure will become easily available through a handful of popular sites such as Facebook and Google. Meanwhile, manufacturers will be forced to cut time to market in order to meet on-the-spot demand by picky consumers, necessitating faster access to goods and information. “People are going to go elsewhere, to whoever has the product,” Bugajski said.
Response: The panel agreed. Greg Ginsburg, vice president of global sourcing and supply chain design with The Clorox Company, envisioned a radical change in the e-commerce landscape. “The customer wants to touch the product quickly,” he said. Others said Google will effectively become its own original equipment manufacturer, cutting out yet another middleman. “The whole thing is going to compress and compact in ways that we can’t even think of right now,” said Kerry McCracken, vice president of business solutions for the Integrated Network Solutions segment of Flextronics.
Prediction: “Real time is going to be the mantra going forward,” said G.S. Iyer, director of worldwide materials with Citrix Systems. Business-intelligence systems will combine with strict metrics and alerts, all with the goal of supporting more efficient supply chains.
Response: That would seem to be an uncontroversial observation, but McCracken disagreed. “I agree that everybody wants real-time information,” she said, “but the supply chain works pretty much like watching lava flow. It is really, really slow.” The concept that every transaction of data needs to be real time is a “fallacy,” she said. Ginsburg said the existence of real time and metrics, with the ability to act on them, probably won’t come about until 2020. An audience member said progress depends on the kind of information being viewed. A majority of the data that’s available to supply-chain managers doesn’t need to be looked at every day.
Prediction: Supply chains, in order to remain relevant to their companies, will have to sharpen their focus on the security of digital assets moving upstream to partners, said Bugajski. They’ll need to do much more than just protect the flow of digital goods.
Response: McCracken agreed with the premise – “Security is a massive issue” – but said software vendors also need to acquire a better understanding of the hardware that’s running their product. “They need to bring those two worlds together.” Bugajski concurred, while expressing relief that Adobe isn’t a company “that has to get into hardware too often. We’ve already transitioned into this area of the supply chain.” The trick, she said, is getting other vendors to follow.
Prediction: Next year will see either a dip in corporate dividend yield or a slowdown in the rate of payout growth to shareholders, said Ginsburg. And what will companies do with the extra cash on hand? They’ll enter the race for new supply-chain talent, which is in short supply and could prove costly to attract, develop and keep. “The challenge is finding the best and brightest,” he said. “I’m hoping that corporate responsibility will show up as a bigger driver of change than absolute shareholder value.”
Response: Again, general agreement from the panel. Few companies haven’t felt the impact of a retiring generation of Baby Boomers, and wondered who was going to take their place. Panelists predicted that 2015 will be a watershed year in terms of addressing the talent shortage, or feeling its full impact. They suggested that the obsession of business schools with maximizing shareholder value is at least partly to blame for companies taking their eye off the ball when it comes to talent development. But they were hopeful for a turnaround in attitude.
Next: More predictions from the seers of the San Francisco Roundtable.