Manufacturers and other supply chain constituents will face plenty of challenges in 2012. How will they react to the disasters of 2011, and what does their take on co-opetition say about their outlook for the year ahead?
It’s been too long since we put a year to bed and thought, “Now that’s one I’d like to live again.” Here’s hoping that 2012 is that kind of year.
Here in the New Year, I’ve decided to look back on some of my past supply-chain predictions. Late in 2010, I jotted down some thoughts on supply chain management, including three areas that I thought would be primary concerns for manufacturers in 2011. That list included prices in China, the cost of oil, and the availability of rare earth metals. China’s currency did appreciate in 2011, and that, coupled with upward pressure on wages, changed the supply chain equation for many global companies.
Oil prices rose during 2011, from $91.40 on the final trading day of 2010 to $98.80 at the end of last week. But the resurgent economy that I thought would propel prices even higher turned out to be farther in the distance than most of us had hoped. Ditto for rare-earth metals: that ordeal may have been postponed by a sluggish world economy, which tempered demand in 2011 and restrained prices.
So, which supply chain management concerns will top the list for manufacturers and shippers in 2012? This year I’ll defer to some intriguing predictions by other supply chain-watchers—including Bob Ferrari, who blogs at Supply Chain Matters, and Adrian Gonzalez at Logistics Viewpoints. Ferrari says that the B2C, pharmaceutical, and high tech sectors will be “especially affected” by turmoil in 2012, and that supply chain software vendors will increasingly partner with ERP software providers this year. Gonzalez expects social media tools to play a greater role in supply chain affairs, and predicts that third-party logistics providers (3PLs) will more actively engage with their customers this year. Both cite the challenge of dealing with unanticipated events, and both anticipate increased use of cloud computing in supply chain operations.
I’ll keep an eye on all of those trends. In particular, I’m keen to see how manufacturers react to the punishing disasters of 2011. Will they boost insurance coverage? Spread their inventory across more locations to mitigate their risk profiles? Diversify their supplier bases? Invest in supplier relationship management software and risk management technology?
I’m also intrigued by the role co-opetition will play in supply chain management in 2012. Jason Busch, writing on his Spend Matters blog, got me thinking in this direction. Busch relayed some insights from a conversation with Steve Gold of consultancy Alvarez & Marsal. A&M conducts an annual survey of 3PLs and the manufacturers and other shippers that contract to use their services. According to Busch, Gold cited two “very large” food/CPG companies that are “co-mingling and aggregating spend for truckload procurement in North America. “Together,” Busch wrote, “these companies represent a large enough spend and overlapping transportation lanes that their volume has a material impact on carrier pricing.”
That scenario underscores the supply chain power that comes from co-opetition. I dug a bit deeper to try to understand what role cross-aisle collaboration might play in 2012, and what that might reveal about business prospects in the months ahead. According to the “2012 Third-Party Logistics Study,” led by Capgemini, co-opetition doesn’t hold the appeal it did in 2011. As 2011 approached, 68% of shippers told Capgemini that they were interested in “collaborating with other companies, even competitors, to achieve logistics cost and service improvements.” As 2012 neared, just 44% expressed the same interest.
Supply chain co-opetition is often a byproduct of desperate times. In my estimation, a waning interest in co-opetition reflects a pent-up optimism percolating in the new grass of 2012. The proprietors of the supply chain seem to be telling us that this may just be a year that we want to relive when it’s done.
How does 2012 look for you?