Supply Chain Expertise and Technology Blog by TMC, a division of C.H. Robinson

Takes on Tomorrow

The future of supply chain

‘Tis the peak season for predictions, with experts from every quarter reading the runes about what lies ahead in the next year.  So, let’s slip into prophesy mode with some thoughts on the future of supply chain over the next decade or so.

The most visible shape of things to come is almost certainly on or near your person right now: a mobile device such as a cell phone. I talked to a senior supply chain executive from a leading fashion apparel firm recently about future trends, and mobile communications is his leading game changer.

This notion might seem odd given that cellular technology is already so ingrained in every facet of our lives. However, communications devices are morphing into incredibly powerful personal information centers, changing the way consumers make purchases. Take, for example, the ever-expanding range of apps that turn smart phones into versatile handheld shopping portals. One I saw the other day enables users to switch between on-line auctions at lightning speed.

My friend in the apparel business is more focused on mobile gizmos such as Apple’s iPad tablet. His company is wrestling with the challenge of how to compress elaborate store front displays into the window of a tablet. The organization expects a growing number of its future customers to do their buying in this small space. Add projected increases in processing power and the introduction of a new generation of high-speed networks, and it is easy to appreciate why the company is paying so much attention to its virtual customer base.

These developments will bring a raft of changes for supply chain managers. Faster fulfillment, more complex point-of-sale data, and additional variables for overstretched demand planners to number crunch, are a few examples.

As if these innovations are not enough, product customization will likely add to the complexity. As marketing guru Seth Godin described in the World Innovation Forum in New York City this summer, manufacturing is still based on a system of factories busily “making average products for average people.” This is changing as more consumers and producers gain access to worldwide markets through smart communications. The focus is shifting to serving groups of people he calls “tribes” that share common interests and want specific, tailored products. Advances in manufacturing technology such as the wider availability of very sophisticated production line robots and automation will enable companies to deliver these offerings.

Today’s agile supply chains will seem almost pedestrian in this environment. Buyers will be able to marry super-fast communications with “intelligent” software to access sources of materials and manufacturing capacity across the globe. Supply chains will be created for individual projects and be reconfigured on the fly to take advantage of fleeting commercial opportunities.

If all this seems like an Orwellian nightmare for hapless supply chain managers take heart, help is on the way. Good old Moore’s Law – that the number of transistors on a chip will double about every two years – continues to increase the amount of computing power available to businesses. This power, coupled with advances in data storage and analysis and particularly the greater use of pattern recognition technology, will make demand planning a more exact science.

What of transportation? Well, fossil fuels are not going away any time soon, but the industry is moving towards a more sustainable future. Researchers are developing more efficient diesel engines and so-called “lightweighting” projects aim to cut the weight of vehicles through the use of new materials and designs. The end result will be substantial reductions in fuel usage. And don’t discount the arrival of renewable energy sources. One of the most promising is solar. For example, work is underway to produce a new generation of solar cells that mimic the natural photosynthesis processes that have evolved over millions of years.

These trends raise some intriguing questions. For example, will the sustainability gap between truck and rail shrink as the former becomes more fuel efficient? If energy costs become minimal how will this impact supply chain designs?

I will leave you to ponder these questions and, if you are so inclined, to offer your thoughts on the future of supply chain. Alternatively, there’s nothing wrong with taking the future one step at a time, and in this spirit let me wish you a healthy, happy, and prosperous 2011.