The Future Supply Chain models

The Future supply chain models will need to focus on serving consumers in a sustainable way.

Current supply chain designs are primarily aimed at improving on-shelf availability, reducing cost and supporting sound financial figures (like ROI or return on brand equity). In the future, the industry must design for additional parameters like CO2 emissions reduction, reduced energy consumption, better traceability and reduced traffic congestion. The impact of these new parameters on the current bottom line may not yet be substantial but will grow in the coming years and efficiency improvements will almost certainly be realised.

Supply chain strategy needs to look ahead and give priority to these parameters. All stakeholders in the supply chain will need to play their part to accomplish this change. Consumer awareness and demand for new products and services will also accelerate the adoption of new practices.

How should the industry build the future supply chain and what are the components?

To answer that question, four key elements must be taken into account: Solution areas:

The solution areas cover existing challenges and those anticipated for the coming decade. The solution areas are focused on physical supply chain innovation. Seven key solution areas were identified:

1) In-Store Logistics: includes in-store visibility, shelf-ready products, shopper interaction

2) Collaborative Physical Logistics: shared transport, shared warehouse, shared infrastructure

3) Reverse Logistics: product recycling, packaging recycling, returnable assets

4) Demand Fluctuation Management: joint planning, execution and monitoring

5) Identification and Labeling

6) Efficient Assets: alternative forms of energy, efficient/aerodynamic vehicles, switching modes, green buildings

7) Joint Scorecard and Business Plan

Leading practices: Examples of existing leading practices are integrated into the model to show how they help to address these solutions areas. These leading practices make it clear that benefits are real and achievable.

Application to example supply chains: Simplified supply chains are used to demonstrate how the new supply chain model can work and how it can be adapted to individual companies. In each case, appropriate new solutions are posed, taking into account the main characteristics of the example supply chains.

Characteristics of the Future Supply Chain

The future model will be based on multi-partner information sharing among key stakeholders: consumers (the originators of the demand signal, either from home or from a store), suppliers, manufacturers, logistics service providers and retailers. After production the products will be shipped to collaborative warehouses in which multiple manufacturers store their products. Collaborative transport from the collaborative warehouse will deliver to city hubs and to regional consolidation centres. Warehouse locations on the edge of cities will be reshaped to function as hubs where cross-docking will take place for final distribution. Non-urban areas will have regional consolidation centres in which products will be cross-docked for final distribution. Final distribution to stores, pick-up points and homes in urban and non-urban areas will take place via consolidated deliveries using efficient assets. New ways to calculate the impact on the supply chain: These calculation models, using the new parameters, are an essential element of the future supply chain in determining the impact of the leading practices and solutions.

A New Model for Enhanced Collaboration Integrating these improvement solutions together with collaboration concepts into a cohesive model will provide the future supply chain architecture that will help bring new efficiency and cost reduction for the industry. This analysis demonstrates how the different solutions should be considered in relation to each other, and makes it clear that a big impact on the parameters can be made when the following concepts are merged and implemented: Information sharing – driving the collaborative supply chain Collaborative warehousing Collaborative city distribution Collaborative non-urban distribution

The Future Supply Chain in Emerging Markets

History has shown that many of the emerging nations follow the trends set by Western markets and that they often do so by moving there more rapidly than was done in established markets. New technology often leads to leapfrogging developments, skipping the evolutionary phase. A good example is the widely accepted use of satellite technology in some developing markets over the more traditional land lines. At the same time, established markets may be hampered by existing legacy systems. Readers are encouraged to assess what the changes discussed in this report might mean for both the established as well as the developing markets across their distribution channels.

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