- A Note on Futurism
- The Underpinnings of Supply Chain Management
- What You Will Learn from This Book
- Managing the Supply Chain to Mitigate Macrotrend Risks
This chapter is from the book
This chapter is from the book
This chapter is from the book
What You Will Learn from This Book
The remainder of this chapter sketches the mission, methods, and roles of supply chain management in the modern business organization. Then it explains how the supply chain should react to leverage opportunities and countermeasure risks. We do so by integrating the DSI and GSCF concepts to achieve the best outcomes for companies seeking to compete in the transforming world. We juxtapose the two theoretical bases with our research predictions addressing the future of the business environment. The result takes the form of an organizing framework, as shown in Figure 1.3.
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Figure 1.3. Organizing framework
Part I outlines four sets of intertwined macrotrends that are shaping supply chain management theory and practice. These forces are currently challenging business leaders’ commonly held assumptions related to both consumer demand patterns and companies’ and industries’ supply capabilities. Thus, our macrotrends framework emanates from the rapid and somewhat unpredictable sociological and economic changes presently occurring. These changes influence the demand for products and services that supply chains are designed to fulfill and, in addition, inhibit supply-side systems capabilities. We believe that ignorance of these factors will lead to great risk of failure in the future if the forecasted changes reach fruition and are not proactively addressed. We begin our analysis in Chapter 2, which focuses on how some identifiable changes in population growth and human migration are rapidly affecting global demand. There are more people on Earth than ever before, and they are relocating at an unprecedented pace, creating potential chaos for mostly static supply chain processes. This chapter unpacks the reasons for our current population dynamics and illustrates several common problems companies will face if they fail to proactively design their supply chains to accommodate such changes.
The immediate outcomes of population change are, of course, a primary concern for future business leaders and policy makers. Each of three subsequent forces represents a unique macrotrend in its own right, although it emanates from population change itself. Chapter 3 looks at the global population’s increased interconnectedness and the economic leveling it will soon stimulate across world regions. The Information Age has spurred many great innovations and benefits for society, but the changes it has brought are also undermining the assumptions firms have traditionally made about demand market—the same assumptions that enable cost control in the supply chain. Likewise, Chapter 4 addresses the environmental, climatological, and sustainability-related issues that are already beginning to impact global demand and supply as more humans consume more resources. The environment has been damaged during the harvesting and collection of these resources. Not only are new consumer tastes swiftly beginning to reflect environmental conscientiousness, but these issues also are impacting the supply. Weather, climate, and their human reactions have already started to affect worldwide logistics practices. Chapter 5 concludes Part I by approaching a handful of political and governmental issues that may adversely impact demand and supply in the coming years. Here we focus on the potential regulations, market controls, conflicts, and interregional disputes that are projected to impact global market competition. Such issues have the potential to create great supply chain inefficiencies for companies that fail to account for them in planning and supply chain operations.
Part II turns to the implications of the aforementioned forces on four selected, critical areas of supply chain functionality. Chapter 6 examines the effect of the macrotrends on the supply chain planning function. The four forces of interest can greatly disrupt supply chain planning by obscuring important information related to supply and demand quantities and assortments. They also can increase variation both geographically and in terms of rote quantity. Chapter 7 addresses the potential disruptions presented to firms’ sourcing and procurement functions as a result of the combined macrotrends. Summarily, we anticipate that sourcing will become more complex as populations with different but homogenizing product expectations increase. This also will happen as the world’s supplies of many key commodities become strained due to overuse and/or suboptimal location versus established supply networks. Chapter 8 considers the macrotrends’ collective implications for production of goods and services. The diversity and migratory nature of populations, combined with geopolitical strains and leveling of purchasing power, could yield a confusing, complex, and disaggregated production process, such that ubiquitously favored lean strategies may not suffice. Alternative strategies are presented that should allow for more effective matching of customer needs to production outputs. Finally, Chapter 9 is concerned with the impacts on firms’ transportation and logistics functions. A key focus is managing more complex networks with scarce assets and addressing the implications of issues such as fuel shortages and congestion on supply chain logistics costs and customer-facing metrics.
Part III describes strategies for mitigating the aforementioned problems’ effects. Chapters 10 and 11 present two unique and compelling frameworks for analyzing and mitigating the resultant issues that will influence supply chains in the 2020s and beyond. Included within these chapters are strategies for allaying the risks of both supply- and demand-driven imbalances. We also discuss how failing to address these macrotrends holistically and proactively will influence the company’s services, customers, financials, and, ultimately, vitality. We conclude with actionable initiatives for each set of imbalances so that managers may begin to enact our recommendations immediately and be ready for the more distant issues on the horizon. The proposed initiatives should allow firms to develop a set of interconnected resource utilization and supply chain sustainability strategies that specifically address the problems we all will soon face.
Our message should resonate with managers and executives alike. When considered together, the identified macrotrends imperil world commerce, but it isn’t too late to prevent such chaos; today’s supply chains need to be adapted to take into account and prepare for tomorrow’s issues. Our book aims to assist forward-thinking managers seeking to do just that.