Supply Chain Management Operations Face New Challenges in 2012
Worldwide supply chain management operations experienced extreme stress and upheaval in 2011; between floods, hurricanes, earthquakes, tsunamis and new government regulations, many companies were left to ride out the stormy seas of a supply chain forced to adapt to an endless string of the unpredictable. Delays brought on by the disastrous after effects of Thailand's floods and Japan's earthquake and subsequent tsunami were perhaps the biggest headline grabbers of last year, adding economic tension to an already sluggish world economy.
This year, the companies that made it through the supply chain stress test are taking a second look at their operations and considering the steps they can take to respond better during the next global crisis. As a result, U.S. corporations are looking for solutions to help mitigate such risks in the future – thus far, backsourcing or nearshoring manufacturing appears to be the progressing trend. Bringing production closer to home lends to a more agile supply chain, more control over issues that crop up, and faster response to natural or man-made disasters that prove detrimental to the supply chain. All of this comes on the heels of reports of rapid wage increases in the predominantly Asian countries that have, in recent years, been the epicenter of much of U.S. manufacturing. Now, many companies are choosing to pull up stakes and either head back home or to closer destinations, such as Mexico or South America.
According to ProcurementLeaders.com, "The study from BDO USA, which polled 100 US technology chief financial officers, found that just 32% say they currently outsource services or manufacturing to companies outside of the US. This marks a “notable shift” from 2009 when nearly twice as many companies (62%) were outsourcing.”
This upheaval in supply chain management is calling for some pretty drastic changes in how corporations are approaching their supply chains; contingencies and backup plans are being implemented to mitigate damage due to large scale, unpredictable events. Materials are being sourced from new suppliers, typically closer to home. Part of that careful planning should include an overhaul of operations at the most basic level, such as comprehensive asset management, inventory management and transportation management – where shipments are, where've they been and where even the materials they were made from originated (thanks to new SEC regulations). It's a tall order, but agility, precision and technology are key to today’s successful supply chain. If you’re not sure yours is up to par, it might be time to find ways to secure your own operations and increase your competitive edge.