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Is It Time to Invest in Your Supply Chain?

I spent a few days recently at a conference listening to how some world-class companies are investing and improving their supply chain visibility and analytics. It's not only limited to hi-tech products, but also across-the-board from beauty products to grocery stores. Projects in this area kicked off more than a year ago when the economic outlook looked a little unclear, yet these companies forged ahead with their plans and are now netting tangible, positive results. What can we learn from their approach?

Recently, the supply chain functions of companies have become increasingly linked to customer experience. I'm not sure if most people think of Amazon as a supply chain and distribution company, or simply a company that has just about everything anyone could want, from physical to digital. It's a good example of how supply chain directly affects customer experience. Add this experience to the revolution in digital delivery of content across the web and mobile networks, and we all expect instant inventory and next-day shipping. The personal shopping experience is now setting the same bar in the business-to-business (B2B) space.

All of this is driving the need for better tools — analytics, demand management, logistics management, sales and operations planning (S&OP), and so on. All of this costs money, so my question is: Is it time to invest?

How do things look in the macro economy? I was dissecting some data from the Economist Intelligence Unit, and listening to some of their analysts, and while they are not hugely enthusiastic, there is a very positive trend under way and a forecast for modest growth across the world, including Europe. The Euro area, while forecasted at -0.5 percent in 2013, is forecasted for 0.7 percent growth next year.

In 2014, there is not a major economic area in the world that is forecasted for a negative trend, which sounded simple to me at first, but compared with the past 36 months, it's a very big change.

We all look at the US and China as leading indicators, and while China is coming down from double digit growth over the past few years, the 7.0 percent 2014 forecast is still substantial due to the increased size of the base economy. The US, with its continued loose monetary policy (all agree this can't continue) turned in a very good annualized growth number of 2.4 percent in the last reported quarter. The 2014 forecast is 2.6 percent.

Even with all of the turmoil in the world, the macro numbers encourage me. I am largely convinced that now is the time to invest and to make some big, innovative changes in our supply chain capabilities that will directly, and positively, impact our customers.

What do you think? Share your thoughts below.

5 comments on “Is It Time to Invest in Your Supply Chain?

  1. RyanL
    October 2, 2013

    Thanks so much for the encouraging macro outlook Wade! I wonder though as a contract manufacturer who typically does not have access to our customers own supply chain investitures, or even tentative forecasts, is it still worth our time and money to invest heavily in supply chain at this time? We would love to better facilitate our place in the industry by investing in the better tools  you mentioned (analytics, demand management, logistics management, etc.). However if we ourselves have not recovered from the economic downturn yet, and don't have enough information from our customers about their needs to accurately forecast, should we invest knowing the macro but not specifics? It's something we struggle with a lot around here. Our forecasts are only based upon looking upon past demand, we don't have any access to look towards future trends. Is it worth trying to get customers to share that information with us? How hard do we push to get that information? Do we invest now with little data to move on because of the encouraging overall economic upturn, or do we wait for increased orders to motivate the need to invest? Does that leave us behind the curve or more financially sound because we waited?

  2. Hailey Lynne McKeefry
    October 3, 2013

    Like you, Wade, i'm optimistic about the way things are heading. It's sometimes tough to see the small signs, but like the first daffodil after a long winter, they are there. I appreciate you pointing them out!

  3. FLYINGSCOT
    October 5, 2013

    I believe it takes a brave person to make significant investment right now given the uncertainty in many markets.  Whilst our revenues and profits are lacklustre I cannot foresee anything except a steady low key course until things pick up somewhat.

  4. Hailey Lynne McKeefry
    October 25, 2013

    @Flyingscot, i think that the uncertainty, which is certainly there, means that investments need to be strategic and well researched. Moving forward is important, even in tough times.

  5. Hailey Lynne McKeefry
    October 25, 2013

    @Flyingscot, i think that the uncertainty, which is certainly there, means that investments need to be strategic and well researched. Moving forward is important, even in tough times.

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