Game Changing Trends in Supply Chain

Editor’s Note: The University of Tennessee has released a major white paper exploring ten game changing trends in supply chain management. The white paper, sponsored by Ernst and Young, and Terra Technology was written by nine faculty members at the University of Tennessee. This article consists of an introduction to the material, and will be followed by additional releases exploring each game changing trend in more detail.

Many opinions exist regarding the mega trends or game changing trends in supply chain. It seems like every month a new article or conference lecture presents a fresh set of ideas on the major issues and forces faced by supply chain professionals. Most consulting companies, academics, and even individual companies have their own views. Often these mega trend lists do not match, and instead reflect the backgrounds and experiences of the people who compile them. a major So, what makes our report any different?

The ten game changing trends discussed in this white paper have their foundations in a landmark study done 13 years ago in 2000 and co-authored by Ted Stank on our faculty. Based on our interaction with literally hundreds of companies annually (the largest industry network in the academic world), we absolutely believe that those trends can still serve as a foundation. But the supply chain world has changed a lot over the past thirteen years. We think you will find it fascinating, as we did, to reflect on the changes made in each of the original dimensions. However in this white paper, we’ll discuss the game changing supply chain trends that you need to squarely face today, and we’ll suggest how to make progress toward the desired end state. We’ll also use plenty of examples along the way.

When a student asked Albert Einstein if the questions on this year’s physics exam were the same as last year, he responded, “Yes, but unfortunately for you the answers are very different.”  It’s the same with our game changing trends. We still see some of the same supply chain trends, but the real world approaches to dealing with them are reaching a dramatically higher plane of sophistication.

Nine members of our supply chain management faculty collaborated in identifying ten game changing trends and in writing this document. The ten trends align perfectly with the research being done by these faculty members. (The University of Tennessee is ranked number one in the world in supply chain management research.)  In addition we leveraged the extensive knowledge base of our two sponsors, Ernst and Young and Terra Technology. And we tapped our wide ranging experience with industry leaders through our global forums, executive education, and consulting.

This document will give you a brief synopsis of the leading thinking today on ten game changing trends in supply chain. The ten trends we have identified are:

1. Customer service to customer relationship management
2. Adversarial relationship to supplier collaboration
3. Incremental change to a transformational agile strategy
4. Functional focus to process integration
5. Absolute value for the firm to relative value for the customers
6. Forecasting to demand management.
7. Training to knowledge based learning
8. Vertical integration to virtual integration
9. Information hoarding to information sharing and visibility.
10. Managerial accounting to value based management

We recently (November-December 2012) completed a survey of over 160 supply chain professionals to assess the state in industry today of these ten trends, as well as the change from the past. The survey also highlighted the changes made over the past 13 years on each of these game-changing trends and those changes are fascinating. We’ve listed below some highlights of that survey which we’ll expand in the body of the white paper:

• Firms have made significant, and in some cases, surprising progress in the last decade plus in each of the ten areas.
• Some companies have achieved top levels of performance in certain individual categories, although no firm has done it in all categories. It is intriguing that no one reported a top level of performance 13 years ago in any category.
• There are laggards in each category as well. These firms still appear to be fighting the same battles in the same way.
• Respondents feel that most progress has been made in customer relationships and cross-functional integration. Firms seem to be getting much better at focusing on their customers outside the firm, and shoring up the focus on cross-functional processes inside the firm.
• Although companies have made the most improvement in cross-functional and cross-organizational processes and activities, they also remain the keys to further progress in the areas of greatest opportunity for improvement. Those five areas with the greatest opportunity for improvement according to our survey are:
• Managerial to value-based accounting
• Absolute to relative customer value
• Vertical to virtual integration
• Adversarial to collaborative relationships
• Information hoarding to sharing
• In addition to these five, Talent Management clearly emerges as the linchpin required for advancement in all areas.

Four Future Articles in this Series

We’ll explore each of these game-changing trends in future weeks in more detail. There will be four more articles in the series organized as follow:
1. Supply Chain Strategy and Performance
• Customer service to customer relationship management
• Absolute value for the firm to relative value for the customers
• Managerial accounting to value based management

2. Supply Chain Relationship Management
• Vertical integration to virtual integration
• Adversarial relationship to supplier collaboration

3. Supply Chain Planning and Execution
• Forecasting to demand management
• Functional focus to process integration
• Incremental change to a transformational agile strategy

4. Supply Chain Enablers:  Talent and Information
• Training to knowledge based learning
• Information hoarding to information sharing and visibility

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