Industry Week recently ran an article on the top nine supply chain challenges for 2009. Some were dead on. Some less so. But it got me thinking … what were the obvious challenges for 2009, and what were the challenges that were most likely to be overlooked.
The obvious challenges are getting their fair share of press.
- Risk Mitigation
Between risk of supplier financial failure; the volatility in the energy, commodity, and global financial markets; and the unpredictable nature of economic recoveries, every organization will have their hands full with risk mitigation this year.
- Working Capital
In a very short time-span, we’ve gone from a credit glut to a credit crunch, and chances are, unless you are among the small minority with flush bank accounts, you’re constantly facing working capital challenges.
- Shorter Supply Chains
Since you can no longer afford inventory, you have to move to a demand-driven pull-based model which requires a shorter supply chain to pull-off.
- Renewed Focus on Safety
After all of the recent salmonella, melamine, and lead-paint scares, there is a renewed focus on safety around the globe. You need to make sure your safety procedures and independent safety tests are in order, or risk massive fines and lawsuits.
- Heightened Regulatory Compliance
In response to the recent consumer product safety fiascos, many countries are stepping up import and export related requirements and introducing new documentary and testing procedures. Are you ready?
The most-likely-to-be-overlooked challenges, less so. But they’re just as important.
- Technology Upgrades
You have to do more with less, but your current, aging, software and hardware infrastructure won’t support it. You need new best-of-breed sourcing, procurement, trade, visibility, and analytic solutions as well as a new green infrastructure to run them. That costs money. And even though you can state case-study after case-study and customer success after customer success demonstrating the 2x to 5x ROI the upgrades will deliver, you’ll have trouble navigating the ridiculous obstacle course that the cost-focussed savings-blind CFO will force you through.
Recession or not, the sustainability advocates are not going away. And neither is Generation Y. Since you have to redesign your supply chain anyway, you might as well make sustainability a core requirement.
- Near Country Sourcing
Shortening your supply chain is a good start, but you really need to find ways to take advantage of supply sources in your local geography if you truly want to win in the long term. LCCS regions come-and-go, but your neighbors will always be your neighbors. Find mutual opportunities for success and stick around for the long term.
- Procurement Outsourcing
Every procurement organization has functions and categories it does well, and functions and categories it does not. It needs to get a handle on the latter, figure out what needs to be done, and then outsource those functions and categories to a professional outsourcing firm that has the expertise to do those functions and categories well.
- The Path to Procurement Mastery
If you’ve been keeping up to date with the Hackett and Accenture research, not only do leaders do things different, but they structure their organizations different. In addition to adopting new technologies, methodologies, and supply chain structures, to truly overcome the supply chain challenges of 2009, you’ll have to restructure your organization and intersecting business processes as well. Change management is always a challenge.