21st Century Supply Chains: Evolution and Change

• Lesson 1 is on shaping the supply chains of the 21st century, focusing on evolution and change, taking place on February 14, 2025.
• The lesson aims to help in recognizing the potential role of supply chains in private/public/non-profit organizations' success.
• It also aims to discuss prominent forces driving change, the development of supply chain management, and major supply chain challenges.

Informally Discussed Topics

• Systems thinking was a topic in the Wednesday lecture.
• Sub-optimization was discussed.
• Change was discussed.

Six Major Change Drivers

• The Six Major Change Drivers are technology, organizational consolidation and power shift, sustainability, government policy and regulation, globalization, and empowered consumers.

Globalization

• Globalization is frequently cited by business leaders as a factor of change, replacing the post-World War II Cold War era as the dominant force in world economics.
• Globalization represents the concept of a global marketplace or economy where time and distance have been compressed, leading to increased connectivity.

Rationalizing Global Network Questions

• Where to source?
• Where to manufacture?
• Where to store and distribute?
• Where (and how) to market & sell?

Challenges of Globalization

• Globalization creates more economic and political risk.
• Shorter product life cycles are a challenge.
• The blurring of traditional organizational boundaries occurs.

Business Environment Volatility

• There has been increases in acts of terrorism, such as ISIS and pirate attacks on ships.
• Climate change and pandemics, like hurricanes, floods, and Covid-19, are factors.

Inventory Management Challenges

• There is faster duplication of products and services taking place.
• There is faster reduction in demand.
• Requirement of new pricing policies exist.
• Higher risk of obsolescence.

Complex Supply Chain Challenges

• There is growth and an increased scope of outsourcing.
• There is a need to maintain financial visibility and value-adding services.

Technology and Supply Chain Transformation

• Technology is a facilitator of internal processes and supply chain transformation, and a major force in changing the dynamics of the marketplace.
• The Internet offers a "Connected" 24/7 environment.
• Social networks are factors that impact customer demand and the speed of information transfers.
• Technology provide a world "knowledge pool" and connection via apps and interfaces, fostering opportunities for collaboration in supply chains.

Organizational Consolidation and Power Shifts

• Economic power and the driving force in supply chains have shifted from product manufacturers to the retail end of the supply chain since post WW2 in the 1980s/90s.
• There is more collaboration among organizations which leads to improvements in services such as scheduled deliveries, "Rainbow" pallets, advance shipments notices (ASNs), and shrink-wrapped pallets.
• Sharing of point-of-sale data helps mitigate the "bullwhip effect" through information sharing, allowing for more efficient operations and economies of scale.

Empowered Consumers

• Empowered consumers have expanded access to product sources and related information, increasing their buying power due to high-income levels.
• Supply chains face increased pressures due to increased demands at the retail level, including competitive prices, high-quality products and services, and tailored or customized products.
• Demographics, convenience and responsiveness with 24/7 availability, and flexibility with omnichannel distribution strategies effect supply chains.

Government Policy and Regulation

• Government policies, regulations, and taxes impact businesses and their supply chains.
• Important sectors have been deregulated since the 1970s, including transportation, communication, and financial institutions.
• Transport regulations were due to protecting railways, which meant certain products had to be transported in certain ways.
• KWV and Capespan also effect businesses and the products being transported.

Sustainability

• Sustainability entails awareness of who you source from and what they are giving.
• Society: Focus on people is a significant concern in the area of sustainability.
• Environment: The objective of being “green” is a key element of making positive contributions to improving the environment.
• Economy: Continued economic and financial sustainability are essential to making future positive impacts on society and the environment.
• The pursuit of sustainability is widely recognized as a key element of successful supply chain management, critical for effective risk management and achieving competitive advantage.