The Capgemini Consulting Institute in Munich recently conducted a Supply Chain Management Trend Study in order to investigate the impact of the latest technology trends towards SCM. In this study the results of our collaboration with the MIT have been considered, added by additional research and project experience. The SCM trend study reveals that technical innovation will have tremendous impact on the supply chain of tomorrow. Positioning the recent technology trends for SCM on the Hype Cycle (Source: Gartner) indicates the maturity levels of supply chain related trends.
We have clustered the different trends creating the “Capgemini Consulting SCM Trend Star”. The Trend Star shows 6 major elements, which will have high impact on SCM in the next few years:
Emerging Technologies covers the development of functionality in the area of global communication and information flows within the supply chains. A major innovation in this area is the machine to machine communication capability supported by sensors and content information. Production processes will be accelerated and more transparency will be available supporting management and operations to make informed decisions. This will lead to cost improvements based on avoidance of waste activities which today mostly are coming from troubleshooting activities just because material status is unknown.
Analytics and Simulation will be a central element of future supply chain control. Decisions will be based on real time information instead of assumptions. In the area of Analytics and Simulation the in-Memory technology will play an outstanding role, enabling decisions makers on all levels to define scenarios easily and quickly and to the calculations much fast as today. With the Hana-Technology of SAP even ERP can use the in-Memory Technology – the future of fast and reliable decision making is already there also in the big software providing companies.
Supply Chain Segmentation will replace the “one fits all” concepts of the past. Supply Chain Segmentation allows to really addressing customer requirements thus customer orientation is not a buzz word any more – it becomes reality. Fast Track Supply Chains, Low Cost Supply Chains, Quality driven supply chains up to customer individual services are the future of SCM. Leading companies such as Bayer (Chemicals) and BMW (Automotive) are defining their supply chain segmentation strategy right now. There is again a relation to technology innovation in the area of supply chain segmentation: In order to implement a proper segmentation oriented planning process it is necessary to use simulation technology and create scenarios allowing to define the
ideal supply chain set-up per Segment. The second technology-related aspect in the area of Supply Chain Segmentation can be found in the area of the transactional processes. As mentioned above, for each segment type real time information is required in order to identify relevant supply chain events and act on those interferences, to ensure agreed service levels specifically in high-speed segments.
Service Orientation is strongly related to the above described Segmentation Trend, but also linked to the growing implementation of supply chain service and control centers. Those will take over the important capability of supply chain planning and control. The target is to ensure that agreed service level agreements are met. The basis for success is the integration of global supply chain event information centrally. This enables the supply chain control group or teams in the supply chain service (or supply chain operations) centers to react to supply chain events in a fast and reasonable information based way and make the right decisions.
Optimization of supply chains is already broadly supported by software tools. Specifically in the area of Supply Chain Network Design many optimization tools are available in the market. These tools are capable to apply scenario modeling and simulation in order to define the best possible supply chain set up. Also in procurement optimization software supports the material cost and spend analysis and generate improvement suggestions. Moreover there is a large number of software tools for the optimization of inventories and production processes available in the market. The area of optimization based on operations research methodologies is the most advanced and mature area in supply chain management IT supported functions.
Sustainability has been a top trend on the agenda of CEOs, COOs und Supply Chain managers. The continuously increasing cost pressure, mainly cause by the financial crisis we experienced in the last years, has dramatically reduced the importance level of sustainability. Nowadays the insight that sustainability can also have positive effects on the cost side gains ground. More efficient return and recycle processes, energy consumption reducing supply chain networks and waste avoiding processes lead to significant cost reductions. Again Technology can help to achieve improvements. Sustainable and efficient network design supported by planning and optimization enables supply chain planners to define efficient, energy cost reducing and sustainable supply chain structures. Optimization software for supply chain network design supporting green logistics will gain increasing market share.