Category Archives: Supply Chain

Supply Chain 2026 or Supply Chain 2008? Part III

Still continuing our “the more things change, the more things stay the same” theme, back in 2008, the Supply Chain Digest published an article on Key Trends Impacting Supply Chain Management and Logistics for 2008 where it asked a number of leading academics and practitioners what they saw coming. (Their responses are summarized in this SI post.)

Nine (9) experts weighed in and provided 24 thoughts on what they saw coming in 2008. Those thoughts more-or-less fell into seven themes, and for the most part, those themes are the same themes today. Moreover, the specific concepts addressed are more-or-less the concepts being addressed today. Let’s continue to take them theme by theme and conclude our initial series.

Globalization

Three (3) of the nine (9) experts included globalization as a core theme and stated that they believed:

  • Globalization will continue to take up a lot of organizational focus as companies try to efficiently and cost-effectively manage their global operations.
  • Supply chain globalization is about to enter a new phase, driven by the recognition by many organizations that their initial off shoring decisions were made with a myopic focus on product cost, and not a thorough evaluation of total delivered cost.
  • Freight volumes will continue to fall in the first half of 2008, but will stabilize by the second half of the year.

With the tariffs, global instability, and continually increasing natural disasters, globalization will continue to command organizational focus and attention.

As the pendulum swings back from full globalization to isolationism, we’re returning to an earlier time where trading partners are limited, friend-and-near-shoring is finally gaining traction, and pushes are being made for home-sourcing. (Which won’t happen until proper investments are made because, even with tariffs, it’s still cheaper to use someone else’s multi-million/billion dollar facilities than build your own.)

Freight volumes by country and route will continue to rise and fall as tariffs, oil price surges, recessions, sanctions, border closings and other contributing factors play a factor in actual consumer demand, available supply, and permissible routes.

Multi-Stage Manufacturing

Two (2) of the nine (9) experts included multi-stage manufacturing as a core theme and stated that they believed:

  • More companies will resume manufacturing in-house.
  • Multi-stage manufacturing that allows for decision postponement and re-purposing of parts in-line with fluctuations in demand across product lines will start to become common.

That didn’t really happen much as a result of the financial crisis or the carrier failures because it was still cheaper to outsource, but when tariffs, border closings, oil price surges, and other detrimental factors combine, companies take an analysis of in-house manufacturing seriously and as soon as it looks like it will be cheaper long-term to bring manufacturing back in house (which will happen if the government that pushes an isolationist strategy starts to actively invest in the industries it wants to nationalize / build / resurrect).

This has become common in electronics and control systems where components have been standardized across product variations, and even product lines, to the extent possible to allow for production plan updates and postponement as long as possible to reduce stock-outs in the product versions and lines in greatest demand and minimize overstocks in product versions and lines not selling as well as possible. However, with parts shortages bing common, you can see more and more products are going to be designed with the ability to use multiple components from multiple manufacturers with specs that are “similar enough”.

Green

Two (2) of the nine (9) experts included green supply chain as a core theme and stated that they believed:

  • Activity & Hype around “Green” Supply Chain will continue.
  • “Green” Logistics will continue to attract mind-share, but until profitability is proven, market-share will lag.

While the USA might be rolling back environmental legislation to (at least the) 1970s to please the tech bros so they can build their energy and water intensive data centers for Gen-AI (that can blackout and dry entire towns, while nearby energy plants pollute on a scale not seen in decades), as the same mega corps try to build similar massive data centers in the EU and other environmentally conscious countries, we will see a renewed effort to introduce new environmental legislation, that will renew a push for “green” supply chains in those countries.

Nothing has changed in the past two decades. When the economy is good and consumers have extra disposable income, they become interested in corporate responsibility and green, and the green hype sells. But the reality is that, like corporations, consumers like to virtue signal and when the rubber meets the road, or, more importantly, the plastic hits the terminal, they still won’t spend more than they need to for a product or service they want to fulfill a need.

This concludes our coverage of the market predictions from the thought leaders in 2008 and how nothing has really changed over the past two decades.

Supply Chain 2026 or Supply Chain 2008? Part II

Still continuing our “the more things change, the more things stay the same” theme, back in 2008, the Supply Chain Digest published an article on Key Trends Impacting Supply Chain Management and Logistics for 2008 where it asked a number of leading academics and practitioners what they saw coming. (Their responses are summarized in this SI post.)

Nine (9) experts weighed in and provided 24 thoughts on what they saw coming in 2008. Those thoughts more-or-less fell into seven themes, and for the most part, those themes are the same themes today. Moreover, the specific concepts addressed are more-or-less the concepts being addressed today. Let’s continue to take them theme by theme.

Automation / Tech

Three (3) of the nine (9) experts centered on automation/tech as a core theme and stated that they believed:

  • Enhanced Visibility and Automation will take hold in logistics
  • The firms that recognize that a fresh approach focussed on value, cash flow, and light, non-intrusive, web-service-based, value-add software components that work with existing solutions and technologies will be the ones that make progress.
  • Successful supply chain technologies will become solution/results focussed, not just technology-focussed.
  • On-Demand / SaaS will continue to gain traction – particularly in TMS

Enhanced visibility is now needed across the entire supply chain. If you don’t identify a disruption at the source three levels down your supply chain (mine collapse, plant fire, etc. resulting in a material or part shortage), you won’t have time to recover by the time your tier 1 supplier misses the delivery date.

The best solutions are those that plug-and-play with the ones you already have — that connect out of the box. That’s why I2O (the “term-du-jour”) solutions are so hot — they help an organization plug and play disparate systems together.

The real leaders are those that use technology as an enabler, not a talent replacement, and definitely not as the ultimate solution. They focus on next generation tech that augments intelligence and makes their talent more efficient.

Despite all the hype that Agentic AI will take over, since the majority of it is based on hallucinatory Gen-AI and failures are becoming commonplace enough that organizations are losing faith in the hype, organizations will soon return to trustworty multi-tenant SaaS based on (A)RPA and deterministically controlled/gated agents, and efficient, affordably priced next-gen SaaS will soon come to the forefront again.

Logistics

Two (2) of the nine (9) experts centered heavily on logistics as a core theme and stated that they believed:

  • The need for Integrated Logistics will increase.
  • Carrier bankruptcies will increase in 2008.
  • The biggest challenge carriers will face is staying afloat as lower volumes and reduced margins crunch their cash-flow.
  • The biggest challenge for shippers will be maintaining service levels as carriers exit unprofitable markets and lanes.

The need for integrated logistics is still increasing as the constant interruptions across the global supply chains come fast and furious. We’re in a reality where you need to re-route shipments on the fly at not only every cross-dock and modal interchange point, but at every intermediate stop. Major road, bridge and border closures will force new routes; port, canal, and strait closures will force alternative shipping options or a switch to air cargo; sanctions will force entirely new carriers, routes, and supply chains; and so on. Once you head down the wrong route, it can take days to backtrack and select a new one, potentially causing perishable cargo to be wasted. Once your cargo is boarded on a ship that might be halted mid-route, it’s too late to have any hope of getting it on time. Once it gets into the hands of a now sanctioned carrier or hits a port in a sanctioned country, you’re never getting it back.

Carrier bankruptcies are a regular occurrence every time recessions cause a significant drop in spending and bookings drop, oil prices shoot up, insurance rates shoot up, or global pandemics prevent critical maintenance parts from being obtained and too much of the fleet goes offline. We’ve had multiple instances of mass carrier shutdowns and bankruptcies over the past 20 years (2008 recession, introduction of Map-21 in 2013 [RIP-21], COVID, and now the tariff crisis (with carrier shutdowns in 2025 almost equalling the closure rate of RIP-21: about 8,000 last year compared to about 10,000 during RIP-21).

Now that volumes are still down on many lanes and in many sectors due to the tariff crisis and rising oil costs are crushing their margins again, carriers are again desperately struggling to stay afloat.

Maintaining service levels is a considerable challenge with declining margins and the need to maintain secondary lanes that will never operate at capacity in order to secure major contracts.

Supply Chain 2026 or Supply Chain 2008? Part I

Continuing on our “the more things change, the more things stay the same” theme, back in 2008, the Supply Chain Digest published an article on Key Trends Impacting Supply Chain Management and Logistics for 2008 where it asked a number of leading academics and practitioners what they saw coming. (Their responses are summarized in this SI post.)

Nine (9) experts weighed in and provided 24 thoughts on what they saw coming in 2008. Those thoughts more-or-less fell into seven themes, and for the most part, those themes are the same themes today. Moreover, the specific concepts addressed are more-or-less the concepts being addressed today. Let’s take them theme by theme.

Delivered Cost

Four (4) of the nine (9) experts centered on cost as a core theme and stated that they believed:

  • total delivered cost will take hold as a concept
  • The required cross-functional focus needed to reduce costs will not get its due in most organizations
  • The firms that recognize that a fresh approach focussed on value, cash flow, and light, non-intrusive, web-service-based, value-add software components that work with existing solutions and technologies will be the ones that make progress
  • There will be an extensive focus on controlling oil and logistics costs
  • Businesses will start to understand that supply chain efficiency is linked to price.

Total delivered cost is still a major theme today with the tariff mania, the steep price hikes in certain categories and shipping with the Red Sea and Strait of Hormuz issues, and the increasingly price-sensitive consumer economy that is cash strapped as a result of so many essentials skyrocketing in price that is putting extra pressure on manufacturers, distributors, and retailers to keep costs down across the board.

Furthermore, in organizations that have already implemented reasonably modern procurement, logistics, and supply chain solutions, and achieved some process and cost savings, the only way they are going to get the next level of savings is with cross-functional coordination — reducing overstock and stock-outs; streamlining shop-floor procurement (from central warehouses and suppliers) with automation across manufacturing, logistics, supply chain, and procurement; etc.

The best results always involve identifying where automation and augmented intelligence can increase process efficiency and help identify more savings.

Oil and logistics costs are again at the forefront.

Finally, businesses have always known that supply chain efficiency is always linked to price. Business exists for Procurement, and it only continues to exist if it is more efficient in Procurement than individuals acting on their own.

Strategy/Models

Four (4) of the nine (9) experts also centered on cost as a core theme and stated that they believed:

  • Strategy will become more important
  • Companies will re-examine their strategic supply chain design decisions with regards to outsourcing
  • Software and Service Provider Business Models will Continue to Change
  • SCM organizations will have to focus more time and effort on tactical and operational issues driven by economic and competitive pressures

Strategy is becoming more important by the day as the rate of man-made disasters exceeds even natural ones, which have increased five fold over the last couple of decades. Especially with an AI-Hype induced market crash coming.

As a result of the tariff mania, companies are finally reconsidering their outsourcing and seriously looking for friendly sourcing, near sourcing, and home sourcing options where they have the opportunity to do so. For complex electronics or manufactured components that can only be produced in a few factories in the world, companies don’t have any choice but to outsource for those components but they are rethinking where final production takes place and then importing just what they need into select destinations.

The reality is that the fundamental capabilities of the vast majority of today’s software offerings are not that much different than the fundamental capabilities of the same software 20 years ago. The only difference: true multi-tenant cloud SaaS, hundreds of features you probably don’t use, greatly improved user interfaces, and more data to power them. Not counting Gen-AI, which is not reliable anyway, earlier versions of every other AI tech existed 20 years ago. And maybe the processing power wasn’t available to the average user or corporation, but the tech was there. However, most business apps don’t need AI, and all of the core procurement, supply chain, logistics, production, etc. functionality was there 20 years ago. Integration wasn’t out of the box, sometimes took forever to get basic data transfer between systems, and often happened just in time for a system upgrade. And the workflows were often so clunky it would take days to do what should take about an hour. Thus, since no one wants to buy the same stuff over and over, you need to change the business model to make it happen. Also, most consultants sell the same playbook for at least a decade, so they need to change the business model to hook you over and over.

The constant changing economic landscape as a result of tariff mania, the intermittent availability of straits and canals that change on a daily basis, the sanction wars, and other constant turmoil is forcing tactical and operational issues driven by economic pressure to the forefront.

BOM Integration is Necessary But Its Not the Missing Link in Direct Material Sourcing …

Supply Chain integration is!

But let’s backup.

A recent article over on Nasscom Community stated to purport why BOM integration is the missing link in direct material sourcing software.

The article made a number of great points:

0. Every component in a BOM represents a commitment to a supplier: as well as a lead time, a cost assumption based on historical pricing, revision-level tracking, and, ultimately, a production schedule that cannot afford to slip.

1. Direct integration allows direct sourcing event initiation from line items. No more cut and paste (or, even worse) manual entry of existing information into the e-Sourcing system.

2. Direct integration enables multi-level BoM visibility. Complex manufactured goods rarely have a flat bill of materials. Sub-assemblies nest within assemblies, and procurement must coordinate across those levels.

3. Direct integration creates a feedback loop that improves future procurement decisions. When actuals are mapped back to BoM line items, planners have a data trail that generic procurement systems do not provide.

But here’s what it’s missing.

Lead times depend on the supplier factory location, carriers, and currently available routes.

Quality, Risk, and Compliance data, used when multiple suppliers are being considered, lie in the Quality Management, Supply Chain Risk, and Compliance modules in the Supply Chain Suite.

Current stock and forecasts lie in the inventory management and forecasting modules in the supply chain suite.

The BoM only holds what needs to be sourced. It doesn’t hold all of the data required for Procurement to make a good sourcing decision — that comes from the supply chain systems, which generally include the BoM!

There’s a reason Bob Ferrari and I wrote a 7-part series on why direct sourcing solutions [which, by definition, include BoM Management] don’t work for direct, and that’s because direct sourcing needs to be tightly integrated with, if not part of, the supply chain suite in order to be effective.

Product Design Must Align With Procurement And Supply Chain As Well!

Port strikes, border closings, tariffs, wars, strait and canal closings, factory fires, droughts, wild fires, volcanic eruptions, earthquakes, tsunamis, mine collapses, etc. There are now an innumerable number of natural and man-made ways your supply chains can come to a screeching halt and cut off your primary (or sole) supply of critical components, parts, and materials that you need to make the product(s) in your key product line(s).

When that happens, you need to so something. If you’re lucky, you have already identified an alternate supply and can switch to it or ramp it up. If you’re not, you have two choices: identify an alternate source quick or re-design to use less/none of the component/part/material in question.

The same way Japanese snack giant Calbee switched to black and white packaging when it could no longer get the coloured ink it needed because of the situation with the Strait of Hormuz, or the same way Tesla rewrote it’s software and firmware to use different chips during a semiconductor shortage, or IKEA reimagined the metal heavy lamp to use 60 precision cut birch veneer pieces to create a spherical lampshade.

But product design can only do this if they know they can get the alternative components or materials quickly and cost effectively. They need to be able to search supplier and product databases, logistics capabilities, and build realistic cost models to see if a an alternative design is worth pursuing before digging in deep, asking a supplier to provide a customized offering, and then having Procurement saying it will cost too much, sales saying the new price point will make the product unsaleable, supply chain say it can’t fulfill the product now because of a man-made or natural (disaster) supply chain issue, etc.

Plus, once it believes it has a workable, cost friendly, alternative it can immediately involve Procurement and Supply Chain, share the data, have its thesis validated, and prepare to update production lines with confidence.

One has to remember that there are two reasons the railroad barons became so rich. The first was their exploitation of workers (before unions and worker protection laws). The second was that they were built by engineers who built vertically integrated organizations that optimized every step and ensured every interaction that was required was executed to keep costs down and profitability high. Remember that vacuums are empty, and thus devoid of profit. So don’t create them between departments if you want to be successful.