Through special arrangement, what follows is an excerpt of a current story from Supply Chain Digest, presented here for discussion.
Recently, I highlighted many of the important stories Supply Chain Digest covered in 2006. As promised, I am now going to offer more general thoughts on the top trends in supply chain and logistics for 2006. Here is my list in reverse order.
10. Voice Technology in Distribution Goes Mainstream: It's been building for the last couple of years, but voice technology in order picking and other distribution processes seemed to really go mainstream last year, as price and performance continue to improve, and the recognition of the productivity gains available become more widely understood.
9. Labor Unions at an Inflection Point: This was a story we covered with a piece on auto parts maker Delphi's push to reduce its North American wages and move many operations offshore. If this trend continues, it could have big implications for supply chain costs and off-shoring decisions.
8. Concern Over Commodities: Concern over the availability and price of raw materials caused companies to rethink supply chain strategies. Caterpillar blamed a revenue shortfall in part on the inability to receive needed super-sized tires; that in turn was blamed on rubber shortfalls. Is anyone paying attention to all those commodity deals and acquisitions Chinese companies are making worldwide?
7. Continued Supply Chain Vendor Consolidation: The year 2006 saw plenty of action with supply chain software pioneer Manugistics being acquired by JDA; Symbol Technologies agreeing to be acquired by Motorola, along with many others. Make no mistake in a maturing software market, it's now all about acquiring customers and taking out overhead costs through acquisitions.
6. The Perfect Storm Blew Over: Long term, we still have many transportation challenges to deal with, but port congestion was basically a non-issue and trucking capacity swung back more in balance with demand. Fuel prices even managed to drop throughout the fourth quarter. Enjoy it while you can...
5. Focus on Risk Management: A huge number of companies turned their attention to supply chain risk mitigation.
4. Supply Chain Icons Stub Their Toes: We've been talking about Dell and Wal-Mart as the supply chain leaders for so long, most of us say it without thinking. Both had troubles in 2006, with no clear path back to glory for either one. Important because it shows supply chain advantage is never forever, and if Wal-Mart someday loses it current level of dominance it will have huge ramifications across the supply chain.
3. RFID Slows - but Grows: Observers saw little momentum in terms of real action in the EPC-based consumer goods-to-retail market. Wal-Mart moved much of its attention to a series of other supply chain, store strategy and external issues, rather than the RFID roll out. The number of consumer goods manufacturers doing anything meaningful with RFID is still just a handful, and announcements on the retailer side were very quiet. On the other hand, we saw strong progress with RFID in a wide variety of other markets and applications, as a supporting technology, not a cause in itself.
2. Global Supply Chain Gets Serious: As we predicted early in the year, 2006 saw huge numbers of companies finally get that global supply chain isn't a logistics sub-discipline it's an area where performance can mean the difference between success or mediocrity.
1. The Greening of the Supply Chain: The most significant trend will be that the environmentally friendly supply chain (aka sustainability) really turned the corner as companies started to take real action. To the surprise of many, an early leader: Wal-Mart. From energy efficiency to alternative fuels to packaging and much more, the supply chain will increasingly be colored green.
Discussion Questions: What are your thoughts on Supply Chain Digest's Top 10 Supply Chain Trends for 2006? What would you add or subtract?