The current year is nearly over, and as usual December provides a good vantage point for businesses to look back at 2013 and the lessons that were learned in the last 12 months. The year has arguably provided the supply chain industry with more challenges than opportunities, however the sector has shown a good ability to roll with these metaphorical punches.
This year has seen a very slow economic recovery, which has made the supply chain industry’s job of cutting costs even harder. However, 2014 promises its own challenges for supply chain companies to deal with.
While there is a distinct possibility that customer demands could increase in 2014, the supply chains of many businesses are increasingly shouldering the burden of cutting costs, to boost the bottom-line for the company. Increasingly, firms have sought to impose penalties for late deliveries and tighten delivery windows.
While many see such practices as little more than attempts to claw back revenues from hard-pressed suppliers, many companies are committed to create a more efficient and cost-effective supply chain to boost their competitive advantage. Supply chain suppliers may have to accept this, working with the new paradigm, rather than resisting the change.
There is also the need to pay attention to new research. For example, a newly-published academic research paper has revealed something unusual about risk, when applied to the supply chain industry.
The researchers discovered that, although it is next to impossible to fully predict what the sources of high-impact, low-probability risk will be, a clear danger has been identified in the supply chain that is forcing companies to rethink their strategies.
Previously, it was assumed that the more a manufacturer spends with a supplier, the more profit would be lost if the supply would be interrupted. However, researchers have found that this is not the case. They studied the supply chains of automotive manufacturers, for example, and discovered that the companies would be hurt the most should any disruption happen to the supply of its low-cost components.
As a result of this research, one of the challenges the industry faces is working around the discoveries made. There will be a much larger emphasis in 2014 on avoiding supply disruption, and clients will be looking for a reliable supply chain more than ever.
However, 2014 is not simply going to be full of problems and devoid of hope. Supply chain firms can look forward to a probable increase in demand, as retail profits hit an all-time high in October and look set to continue to grow. This means that the retail supply chain will likely find 2014 to be an especially busy year.
This recovery has been a long time coming, and is still only arriving very slowly, but is definitely there. Manufacturing is also up from previous years, so it is expected that the supply chain industry will find itself very much in demand ferrying goods to retailers.
Of course, what this could potentially bring with it is a tightening of capacity. This is forecast to potentially occur during produce season in late April and early May, and possibly even extend into the summer months.
In order to succeed in the supply chain industry, businesses must look to meeting all these challenges and dealing with them successfully. The companies that succeed will be the ones who have not only looked to the future and analysed the problems they will face, but also prepared for them.
Those that are ready, with adequate planning and hard work, will be able to make the most of the challenges that 2014 will throw at them and turn them into opportunities, ensuring a thoroughly profitable year.