The key themes in the supply chain of tomorrow

Filed in archive General on March 9, 2009

According to a Deloitte paper published recently, the one size fits all approaches of the past doesn't satisfy the needs of today's and tomorrow's supply chain.

Some of the factors which in Deloitt's point of view are making a paradigm shift include (they are U.S. centric):

Tightened credit supply. "In another sign that Wall Street's woes are trickling toward Main Street, 'factors' - the companies that offer financing to retail suppliers - are cutting the amount of credit available in transactions involving the weakest retailers. A bigger pullback in this type of financing could make it difficult for some of the weakest retailers to get needed inventory and could even translate into more bankruptcies."

The scarcity of equipment to transport goods domestically. "...in the face of lower volumes and fuel cost issues, about 2,000 trucking firms failed in 2007, and almost a thousand more in Q1 2008. That is taking an incredible amount of capacity out of the market..."

Clogged West Coast ports that slow the import and export of goods. The Los Angeles and Long Beach port is the United States' biggest container port, handling 17.7 million containers in 2007, three times the next biggest, the New York and New Jersey port.

As a response to the new requirements, the paper suggest to include new initiatives in the supply chain agenda:

Sustainable supply chain network design. Optimizing the total supply chain network can help reduce the total carbon footprint and help make better customer service-level decisions as well as lead to more advantageous outsourcing of key functions.

Sustainable sourcing and procurement. By encouraging suppliers to develop environmentally friendly products, making sourcing decisions that take into account Co2 emissions, auditing supplier working conditions and putting into place more efficient procurement process such as e-billing, companies can benefit from a growing market trend that rewards socially responsible organizations.

Sustainable design and manufacturing. Retailers can design products to suit logistical needs, and better manage the product lifecycle through use of advanced technologies, the use and reuse of energy and materials, and environmentally sound waste management.

Sustainable transportation and distribution. By designing products for logistics, companies can more easily consolidate truck loads so that only full trucks go out. Businesses can reap additional cost and social benefits by outsourcing to partners, seeking alternative modes of transportation and paying attention to the fuel efficiency of the transportation vehicle fleet.

Sustainable warehousing. Using alternative energy and designing facilities for reduced energy use, such as insulation and lighting, efficient cube utilization and efficient warehousing management are all excellent sustainability practices that can help companies reap substantial financial and competitive advantages.