2.4 Current Trends in Global SCM
Many reliable management researches and surveys conducted in recent years have come to a broad consensus that some significant development trends are shaping and moving today's global supply chains. The following trends are mainly based on and adapted from the PRTM 2010 Survey results with the author's own interpretation and analysis to facilitate student learning.
Trend 1:Supply chain volatility and market uncertainty is on the rise.
Research survey shows that continued demand volatility in most of global markets is a major concern to the executives of supply chains. Significantly more than any other challenges to supply chain flexibility, more than 74% of the surveyed respondents ticked the demand volatility and poor forecasting accuracy as the increasing major challenges to supply chain flexibility. Apparently, few companies have strategies in place for managing volatility in the years ahead let along implementing it. The lack of flexibility to cope with the demand change is increasingly a management shortfall. In the path of economic recovery, this shortfall could well be the trigger for bullwhip effect.
The fast development of cyber market and mobile media has given rise to the market visibility leading to high level of market transparency. B2B customers and consumers ha1ve found it a lot easier to shop for alternative lower price or better value. The switching cost is evaporated rapidly, and so is the customer loyalty, which adds salt to the injury. The only known approaches to deal with the trend of increased volatility are improving forecasting accuracy and planning for flexible capacity throughout the supply chain. Best performing companies tends to improve supply chain responsiveness through improving visibilities across all supply chain partners. On the downstream side, companies are now focusing more on deepening collaboration with key customers to reduce unanticipated changes.
Trend 2: Market growth depends increasingly on global customers and supplier networks
The research survey has shown a positive growing trend in international customers and international suppliers in more international locations. As a result, more than 85% of companies expect the complexity of their supply chains to grow significantly at least for the coming year. The immediate implication of this trend is that the supply chain will have to produce higher number of products or variants to fulfil the customer expectations, albeit this may vary slightly for different geographical regions. In the main, the pattern of global supply chain is going to be more complex in terms of new customer locations, market diversity, product variants, and demand volatility.
On the supply side, the trends indicated that a more dyl!lamic supply networks stretching far and wide globally. Managing those suppliers, developing them and integrating them become more a critical challenge than ever before. Nearly 30% of respondents expect the in-house manufacturing facilities will decline and to be replaced by outsourced and off-shored international contractors. Similarly nearly 30% of respondents expected a decline in the number of strategic suppliers to the OEM (original equipment manufacturer) in order to achieve more closely integrate the supply chain for higher collaborated value adding. This will result in more con:solidated supply base. This is more evident in North America and Europe, but significantly less so in Asia where expansion of supply network is more of the case.