New IBM report outlines supply chain challenges for 2011 and beyond

In few places is this more apparent than in the movement of goods and services.
By SCMR Staff
December 22, 2010 - SCMR Editorial

A new report by IBM Global Business Services observes that the current economic environment is increasingly more volatile, complex and structurally different than in years past. In few places is this more apparent than in the movement of goods and services.

The report, released earlier this month, is titled “New Rules for a New Decade.”

To ascertain the depth to which today’s uncertain environment impacts the global supply chain – what has been called the “lifeblood of economic and social progress” – the IBM Institute for Business Value surveyed 664
supply chain management executives in 29 countries around the world.

What they discovered, is that complexity exacerbates the host of challenges these executives must manage on a daily basis.

“Our findings, in fact, mirror in large part those of the 2010 IBM Global CEO study, in which top executives identified complexity as among the top organizational challenges they will face in coming years,” said report editor, Karen Butner.

According to Butner, global economic turmoil and uncertainty underlie the most significant challenges supply chain management executives identified in our study.

Chief among these challenges are fluctuation in customer demand and variances in customer requirements. She also noted that as the number of supply chain partners increases, the need for accurate, time-sensitive information becomes more acute.

“But lack of collaboration and integration between supply chain and product development partners continues to be a major concern,” Butner said.

There is, and seemingly always has been, constant pressure for supply chain management and operations to create enterprise value, the study noted. End-to-end supply chain cost and pipeline inventory optimization are predominant challenges, as well as the means for protecting margin and
decreasing working capital.

Butner said that overcoming the often-daunting obstacles that complexity and uncertainly introduce into the constant and seemingly relentless challenges of managing
the supply chain will require three new rules:

*Know the customer as well as yourself. Smooth volatility with predictive
demand.
Predict demand and be in a position to react to demand variability with rapid response and allocation of all global resources.

*See what others do not. Unveil visibility with collaborative insight.
Collaborate with visibility to events, with suppliers, service providers and customers in an open, action-oriented environment.

*Exploit global efficiencies. Enhance value with dynamic optimization.
Optimize pipeline inventory, the global supply chain network and cost structures. Create cost-efficient sustainable products and practices while hedging
risks with partners.

“Today’s global marketplace is going to become, if anything, even more competitive over the next few years,” she said. “As enterprises seek to optimize their
supply chains and respond to constant demand variance, adopting new rules to restore stability to supply chain operations is critical.”



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About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review. Patrick covers international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. Contact Patrick Burnson

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