At the close of each calendar year IDC Manufacturing Insights produces a series of Top 10 Predictions documents. They are certainly fun to produce and while we try to be a bit provocative, they are serious efforts to gauge change in the marketplace for the subsequent year: what is going to be ‘hot’, where is spending going to be focused, what trends will we see.
The predictions also become one of the primary drivers for our writings and research for the year. Given the fact that we are through the first half of 2009 and approaching 2010, we'd like to revisit the Supply Chain predictions and identify the ones one got right, but also to understand why some of our 2009 predictions don't appear to be correct, or did not materialize as we had expected. In this blog, I'll focus on the risk related predictions, but for those who are interested, access the full document as a complimentary report here in the Resources section of this site. (You must be a member of the Community to access Resources.)
Risk Prediction #1: Economic uncertainty, particularly for smaller suppliers in emerging economies, causes manufacturer 'brand owners' to consider strategic investments at critical supply points and financial support for key suppliers.
Original Top 10 Report: Outsourcing continues unabated in Supply Chain, and as we have observed in recent articles on the U.S. economy, given the increasing focus on cost control in a down economy, it may even pick up speed in 2009. This is not without risk, however, as the global economic slowdown will inevitably affect many smaller suppliers in emerging economies – to the point where many of them experience severe financial distress. We would certainly expect manufacturer 'brand owners' to consider strategic investments at critical supply points and/or targeted financial support for key suppliers
Interim Update: 2009 has been the most challenging year this century for procurement professionals. While actual supplier 'bail-outs' have been somewhat less common than we predicted, the focus on supplier risk management has intensified. Procurement executives we spoke to have been focusing on better supplier transparency, more regular engagement, and, where necessary, strategic investment or even acquisition. There has been a more practical assessment amongst leading companies of their key supply points – driven either by the proprietary nature of an ingredient/component, or the sheer volume of the relationship.
Risk Prediction #2: As global economic pressures mount, outsourcing opportunities proliferate and global supply networks become more complex, risk management becomes both an increasingly significant capability and a key differentiator for the Modern Supply Chain.
What do people think? How would you assess these two predictions?
Original Top 10 Report: The proliferating use of outsourcing, both off shore and near-shore, has resulted in highly distributed supply and manufacturing networks that require multiple partners, both direct and indirect, to bring products and services to the global market. They have become highly complex, involving a myriad of touch points that range from raw materials to the delivery of finished goods. These global supply networks must exhibit a high degree of adaptability, responsiveness and collaborative capability, or they quickly become chaotic with poor service levels and high inefficiency costs. In this context risk management becomes much more important.
Interim Update: We have written in our 2009 research that this is the year risk management comes of age, and while there are notable companies taking a much more strategic view of risk, there remains a large population of manufacturers who do not have a good sense of their exposure. We continue to believe this is a critical area of focus for the supply chain, and while it may have been a short-term casualty of the economic conditions, we expect renewed focus in 2010.
Access the full document as a complimentary report here in the Resources section of this site. (You must be a member of the Community to access Resources.)