Jason Busch Scenarios – Global Supply Chain Intelligence will Dictate Winners and Losers

Today, we’re looking at the fourth of Jason Busch’s future scenarios, and what they mean for procurement. If you’re following this series, it’s worth saying that they’re not mutually exclusive. So they could, possibly, all come true.

Anyway, this one focuses on how Global Supply Chain Intelligence will Dictate Winners and Losers in the next procurement decade. And it's in two parts, here and here.

In order to illustrate the importance of global supply chain insight for risk and operational management, Jason considers a scenario where natural disasters combine with severe economic conditions in Europe perhaps. In such a case,

those organizations with early insight into the situation on the ground are those most likely to be able to respond by putting contingency plans into place, which may include on-site supplier development efforts, loans/early payment to suppliers, shifting sub-tier spend to other markets and related efforts. In short, rapid visibility and action will be rewarded, as the bulk of the market responds after those with early visibility have moved quickly. Decisions that are delayed even hours in such a case (e.g., buying up capacity elsewhere) could provide the difference between a massive P&L hit -- or not”.

As well as the supply disruption case, there’s a commodity market side to this as well – should an organisation buy ahead, and hedge, or even commit to production capacity from source in order to secure access to scarce commodities? Or buy spot and hope that price changes might make this a more attractive strategy?

An organisation that focuses on underlying commodity intelligence gathering and analysis will be best placed to manage risk and perhaps gain some upside if the markets move in the “right” direction. But that will also need organisations to understand their own requirements, down to sub-component and raw material level, so they know where the risk / opportunity areas lie.

So Jason sees that this will require “a new focus on both technology as well as talent”. Leading organizations will be looking to make dramatic investment acceleration (he says) in areas such as:

  • Supply chain risk/supplier risk management tools, services and content
  • Closer linkages between information services/content providers and enterprise application investments (e.g., D&B, Thomson Reuters, LexisNexis, etc.)
  • Analytical tools that step outside the world of traditional BI by providing integrated context and visibility (e.g., inventory alerts, news alerts, lower-tier supply chain risk alerts) within a core application rather than having to launch into a reporting module
  • A new type of integrated commodity management skills/teams (coming from procurement, finance, operations, etc.) that have the similar awareness and skill sets of trading organizations but with the organizational knowledge and empathy of those on the shop floor (e.g., materials planners)
  • Collaboration tools and capabilities that enable planning efforts both internally and with key suppliers

Of all his scenarios, this seems to be the one that is pretty much unarguable and inevitable – it is hard to see the general supply china environment getting simpler and less risky over the next few years! So focus and investment in these areas will, I agree, be potential competitive differentiators.

And we’ll feature Jason’s fifth and final scenario shortly.

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