Almost 20 years ago, back in 2007, I wrote a 2-part series on Supply Management in the Decade Ahead: The Eight Major forces (Part 1 and Part 2) where I discussed the various external forces that will impact a company’s supply chain, as verified by CAPS, AT Kearney, and their clients.

And just like you don’t need to read another state of procurement report for five years! because, except for the tech-du-jour, nothing has really changed in the past five, ten, and even twenty years; you don’t really need to do an extensive study or survey to realize that the core supply chain issues are more or less the same, it’s just where the pendulum happens to be in it’s swing on each major issue.

Today we discuss the last 4.

Customer & Channel Dynamics

The downstream supply chain will continue to change rapidly due to economics and government policies in some industries. In other industries, supply chain dynamics will be influenced by the poor financial condition of major trading partners in the chain. The impact of private equity firms will also be significant, who will continue to take public companies private, slash costs, raise prices, and change business relationships. (PE, which currently controls between 15% and 20% of the US economy, continues to get more powerful by the day … in fact, it won’t be long before they are twice as powerful as the stock markets, which only generate between 8% and 12% of the GDP per year. They may have a market capitalization equal to 2X to 2.5X of the US GDP, but we all know that’s meaningless because some of that results from foreign investment and an AI-triggered crash is coming.)

The only difference between conducting business today and conducting business in the years ahead with respect to channel dynamics is that these changes will continue to come at an accelerating pace and you will have to continue to adapt faster than you do today. That will require Human Intelligence (HI!) and Human Experience to accomplish. AI can make recommendations, but these are generated based on probabilities generated on unknown training data and can be useful or as useless as the AI telling you to eat one rock a day and strawberries with 2 “r”s. (And I’m not sure what those are, FYI.)

Increased Product Variety & Shorter Life Cycles

Variety will continue to mean more models, brands, and products tailored to different geographies and price points. Consumer tastes in emerging and newly developing economies will be new and different from traditional markets. Traditional lines of competition will continue to blur as companies try new products and markets.

While I was right that you don’t want to browse the web on the screen the size of a credit card, that only goes for developed economies (and in economies where the only devices most people have and the only internet they can afford is their phone, they are quite happy with that), it’s still a fact that you don’t want your fridge to tell your local grocery store that you consumed six litres of rocky road this week, and that you don’t want the ability to cut yourself seven times in a jagged fashion simultaneously while shaving. Amongst the big winners will be the companies that realize sometimes you just want a phone, a fridge, and a straight razor – and not all the garbage Gen AI-based hallucinators are trying to shove into these products today. And, oh yeah, there comes a point where it doesn’t matter how many fractions of an ounce less it is than the previous product, how many extra cubic inches you squeezed into the door, or how fast it vibrates (at least in the case of the razor).

People will want better (faster) and cheaper, but they will want it to meet the need better than last gen tech, not just different, and they don’t want to sacrifice what they have just to get something different. And while Weird Al lamented that his computer was obsolete before I opened the box, we’ve entered an age where most products are obsolete once the first unit is produced … which could be months before it gets into the hands of consumers.

Social Responsibilities

Companies in developed economies will continue to be held to high standards wherever they do business in the world. Companies will have to monitor working conditions in their supply chains all the way back to basic extractive and farming practices. Supply management will have to ensure that the supply base meets environment standards. Commitments to a diversified supply-base will become more important in developed economies, and in a significant sub-set of those now insist on DEI requirements (while one country now insists on no DEI).

However, we are still in the age of CSR: Corporate Social Responsibility. While it’s been proven again and again that consumers won’t pay more (than 1% to 2% above the lowest price) for CSR brands, if products and prices more or less equal, they will generally choose the responsible brand over the irresponsible one.

Environmental Responsibilities

Twenty years ago we said that continuing the social responsibility theme, customers, consumers, shareholders, non-govermental organizations, and governmental bodies will all increase their scrutiny of corporate environmental practices in all regions of the world and demand that companies take environmentally friendly actions. Companies will be forced to meet the environmental expectations of the general populace. Environmental issues will become brand-related issues and influence how companies are viewed in the marketplace. And with the exception of the United States, which is rolling back environment legislation faster than Walmart is rolling back prices, ESG laws have continued to be rolled out … and with the damage that “AI” data centers are doing, in most countries, expect another round of legislation to come later this decade or early next decade.

To meet environmental requirements, if you still don’t have across-functional team with executive leadership to monitor environmental concerns in the extended supply base, it’s time you get one. Carbon restrictions are going to come into effect in (more) countries, water restrictions will emerge, and other pollution control acts will also come into play. An organization will need to keep tabs on what’s being proposed, because, in many countries, proposed legislation eventually becomes reality (although it usually takes longer and gets watered down). It’s always cheaper to be in compliance before an Act comes into effect than scrambling later.