This is the time of year when many blogs, industry analysts and media reporters comment on their outlooks and predictions for the upcoming year. In my previous Part One post, I shared for Supply Chain Matters readers the first three of my five 2009 predictions for global supply chains. In this post, I will share the remaining two predictions.
Prediction 4: A changed offshore and near-shoring strategy framework- During 2008, many manufacturers began to re-look at their individual sourcing strategies for materials and production needs. There were many motivators, not the least of which was the unprecedented hikes in energy prices that caused transportation costs to skyrocket. Other concerns on the minds of sourcing professionals were the high rates of wage inflation as well as currency exchange rate in China. As we embark on 2009, energy prices have taken a dramatic downturn, but this phenomenon may be short lived when economies eventually turn around. More important, I believe, is a rationalization of sourcing to either growing an emerging market or source to a more predictable product cost area.
Right now, about the only geographic regions that show some growth for 2009 are the so-called BRIC countries (Brazil, Russia, India, and China). While growth may be in single digits compared to previous double-digit rates, it is nonetheless growth. Recent news that Procter &Gamble and others are investing in supply chain infrastructure to support growth in these regions is evidence that longer-term growth strategies lie in these markets. On the other hand, the U.S. and Europe are very large markets, and although these markets are currently demonstrating dramatic declines in demand, the year 2009 will provide ample opportunity to re-visit near-shoring sourcing alternatives. While Mexico and Eastern Europe will continue to be attractive near-shoring alternatives, high unemployment and political forces in the U.S. and Europe will cause some manufacturers to re-consider their near-shoring strategies.
Prediction 5: Singular leadership for the global supply chain– If you consider the sum total of my 2009 predictions, than you must also consider the need for manufacturers and retailers being forced to deal with the stark realities that more wide-scope decisions involving organizational restructuring, consolidated planning and operations execution, and budget cutbacks will more than likely require the need for one manager to assume leadership for the entire value-chain. My view is that supply chains in 2009 will become much more centrally managed.
The overall manager will be the most adept in a broad understanding of holistic supply chain business processes, risk management and the scope of information required to make timely and informed decisions. The skill level will, in my perspective, be broad and encompass product, business, technology and functional scope of strategy, and day-today execution. This person will clearly grasp the big-picture, be able to manage overall change among cross-company organizations, and understand that functional lines in supply chain will not cut it in this current crisis ridden environment. This manager had previous titles of operations, materials, manufacturing, procurement or information technology, both more importantly, can lead in crisis and rapid change.
So you have my five predictions for 2009. I will revisit these projections midway in the coming year to ascertain what might have changed. In any case, stand by for another year of challenge.