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How to Keep an Aging Supply Chain Vibrant

American women will do almost anything in their power to slow the aging process, including spending millions annually on moisturizers and creams. That's despite the fact that people in their mid to late 50s are generally happier and experience less stress, compared with young adults in their 20s, according to a study published in March 2010.

It turns out, well-being changes with age. Things get better. People become less stressed and enjoy themselves more. The study on aging suggests that after age 50 both women and men had about the same levels of happiness and tended to feel better overall about their lives.

I'm wondering if the same is true for high-tech supply chains. About 96 percent of the executives managing their companies' strategies now feel pressure to increase efficiencies and boost profit, according to a recent state-of-the-industry report from Eye For Transport.

What Have You Done for Me Lately?

In the survey, high-tech electronics manufacturers and retailers were asked to identify the most effective supply chain cost-cutting measures. Low and behold, improving internal efficiencies came in at 77 percent; improved forecasting, 49 percent; and cheaper or better sourcing of materials, 45 percent. The responses were markedly similar to a previous study, with the exception of a reduction in the number making staff or salary cuts.

As the supply chain continues to mature it seems as though companies need to dig deeper to find the cuts to save money and improve profits. The study suggests this level of satisfaction — call it happiness — could come from the ability to quickly implement platforms and processes, which could include integrating cloud computing or software as a service (SaaS) applications. In an earlier blog post I ask the EBNOnline.com community to provide feedback on how cloud computing might improve efficiencies in the supply chain. (See: Google Chrome Might Improve the Supply Chain.)

Long Knives

Ironically, the results revealed a changing perspective among high-tech executives with regard to forecasts. The survey indicates that in many cases the recession highlighted the danger of relying too heavily on forecasting to determine how to manage supply chain operations. It also points to the importance of risk management.

Interestingly, the study showed that a greater number — 11 percent — of retailers have recently discontinued using certain Asian suppliers. The report suggests more companies have begun to move away from Asia and are relocating operations closer to home. (Have you done this? Why?)

So, what will your company's supply chain look like this year, compared with the past, as it ages and the concept of system optimization continues to mature? How do you cut costs from an aging supply chain to keep it happily increasing profits? Will the more experienced supply chain executives prevail?

14 comments on “How to Keep an Aging Supply Chain Vibrant

  1. SP
    January 11, 2011

    I liked the analogy you have drawn from the age factor. By the time people reach 50 they would have planned their retirement and feel secure. If they haven't then they have to struggle for day to day needs. For companies the better way to age is to improve internal efficiency thats so true. Make everything computerized, be with the latest technlogy and most importanly make your customers grow profitable.

  2. saranyatil
    January 12, 2011

    according to me i will definitely use the resources available to the maximum to reach the required demand and profits. A closed integration along with a clear visibility of the suplly chain should exist. always revamping of strategies should take place finally adding value to the company and its supply chain. cost cut down can take place by utilizing its own manufacturing capability in an efficient way and an improved outsourcing methodology will create wonders.

  3. Ariella
    January 12, 2011

    Laurie, you mention “the study showed that a greater number — 11 percent — of retailers have recently discontinued using certain Asian suppliers. The report suggests more companies have begun to move away from Asia and are relocating operations closer to home.”  I would guess that the weaker dollar is a factor.  The savings that result from obtaining supplies from Asia go down when the dollar has much less buy power there.  Do you have any other theories about it?

  4. Anand
    January 13, 2011

    w.r.t “– 11 percent — of retailers have recently discontinued using certain Asian suppliers”  I can think of two reasons for this :

    1) As mentioned earlier weaker dollor.

    2) Rising transportation cost. With oil nearing 100$ per barrel inflations is rapidly rising.

    If weaker dollor is the main factor then I think this will be temporary phenomenon which will start reversing once the dollor starts strengthning.

  5. Laurie Sullivan
    January 13, 2011

    Anandvy, thank you for your input. I agree that rising transportation costs have promoted the move, but do you really think manufacturing will head back to China once the dollar strengthens? How long do you think that will take? Is it that easy to move manufacturing, or do you think the move back to local areas has been in the process for some time, even before the weak dollar? 

  6. Laurie Sullivan
    January 13, 2011

    Thank you SP for your feedback. It's interesting writing about the marketing and advertising industry these days because I see many of the innovations that began in the electronics industry move to online advertising and marketing.

    For one, the advertising industry has just begun to tie paid search advertising to inventory replenishment systems. Each time a product becomes out of stock the online paid search ad set up to run on search engines no longer serves up on search queries.

    When the last product gets sold it triggers a signal to remove the ad from search engine query searches. Interesting stuff. Maybe in a future post I'll outline some of the changes I'm seeing. It just goes to show that innovations in the supply chain lead to change in other industries. The mature industry teaches the emerging. 

  7. Laurie Sullivan
    January 13, 2011

    Hi saranyatil, what resources are available to you? Do all come from the company you work for or do you tap outside resources?

  8. Anand
    January 13, 2011

    Laurie Sullivan, I belive this is temporary phenomenon. But at the same time I am not surprised if Inflation in China increases and thus in turn  making it unsuitable for primary outsourcing destination. Countries like Phillipines, Indonesia still hold lot of potential.

  9. SP
    January 13, 2011

    Thanks Laurie. Looking forward to your next article on this.

  10. Ashu001
    January 17, 2011

    Anand,

    All the countries you mentioned on your list,face Inflationary concerns thanks primarily to Money Printing by Western Central Banks who are flooding the world with Unheard amounts of liquidity.That problem is not going away anytime soon unless Asia makes a conscious decision to dump the US Dollar as World Reserve currency.If that happens the entire Global financial system will collapse first before a new system emerges,wherein America will most probably default on all its Liabilities.

    It is in the best interests of most of the current Global participants to keep the current system going for as long as it can,inspite of the fact that it no longer serves everyones needs well enough.But then,When have we ever gotten any foresight from our Politicians & central Banks??? They have and continue to be reactive rather than proactive to the many problems that our World faces today.

    Regards

    Ashish.

  11. Ashu001
    January 17, 2011

    Laurie,

    Your comment-

    “American women will do almost anything in their power to slow the aging process, including spending millions annually on moisturizers and creams.”

    is not fair.Its not just American Women but Women everywhere will do what it takes to defy ageing….

    Looking at your Supply chain question-Our Firm was one of those who took the step to reduce dependency on Asian suppliers.The reason it was no longer cost-effective especially as Shipping costs as well as Employee overheads in Asia have gone up so much.In contrast the Suppliers in N.America face much lower shipping costs also most employee wages are falling to such an extent its much easier to get quality skilled labor at decent rates in America today.And the reliability is awesome too…

    Regards

    Ashish.

  12. Laurie Sullivan
    January 17, 2011

    Thanks, Ashish, for taking the time to clear up that aging thing. (And adding your insight on supply chains.) 

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    December 30, 2014

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