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Biggest Supply Chain Trends for 2016
Author: Benjamin Wang
2016 is just a few weeks away and for the majority of retailers, an assessment of how to improve their supply chains have been completed. We are big believers in marching to the beat of your own drum, but you still need to keep an eye on what’s going on around to stay relevant to your customers. To make life easier we have brought together the biggest supply chain trends that experts think will have a huge impact on your business in 2016.
Customers will be driving supply chain
Customer satisfaction has become a standard measure of success and supply chains have to prove to be agile to meet demands. Manufacturing on demand can be scary business; what if no one has a demand? The business is over before it even starts. Businesses have gotten around this be reducing all forms of waste that includes stockpiling; if a product has time to sit in a warehouse, it’s not being sold. This means that manufacturers have more direct communication with customers, creating better lead time and usually better customer service. Experts believe that more supply chain managers will look towards to working this way in 2016.
Retailers and brands have taken giant leaps in 2015 to ensure that their supply chain is ethical and compliant. Consumers are more globally aware than ever before so they will investigate where their favourite products come from and if they were ethically sourced. In 2015 we saw more retailers begin to introduce transparency about their supply chains and in 2016; we think this is only to spread across different industries. Nestle announced in November that they had found slave labour in their seafood supply chain and were taking steps to eliminate it. To have such a huge brand openly admit their mistake is an amazing step in the right direction as it means that other brands can start opening talking about how to go about fixing forced labour when come across it in their own business. We really hope self-regulation takes off next year.
Digital will have a greater influence
Communications have already made processes in the supply chain easier to manage, be it from video conference calling or delivery tracking. In the next year, it has been suggested that social networks will play a bigger role in helping consumers to find the perfect manufacturer. This digital community will allow businesses to meet new partners much more easily, potentially removing travel and language barriers. The natural progression of online collaboration is information swapping that will lead to money saving innovation. Research has found that businesses who embraced digital saw boost in revenue and growth. Procurement will also be simplified allowing consumers to seek the best deal before making business decisions.
We will need to re-think the workforce.
The UK and US have a huge skills gap problem across technology, manufacturing and engineering. This is already having a massive impact on how supply chain managers are finding the right people to join their team. The current model of education in the UK is struggling with keeping up with what businesses need from graduates so businesses will have to take a more inventive and proactive approach in 2016 to find and keep talent. Apprenticeships were initially thought to be the perfect solution but unscrupulous training providers and low wages are pushing young people away from careers in technology/manufacturing. More businesses are by-passing recruiters and going straight into colleges and universities to source people which has not gone unnoticed by educators. Next year we expect to see more collaboration between universities and businesses to talent match and cutting out the middle men.
On the production end of the spectrum, labour laws are rapidly changing across the world and we expect to see a big global shift around in who will be the market leader as a result. With improved working conditions and increased transport costs, China has fallen out of favour of the ‘cheap and cheerful market’. Although India has become one of the best places to produce cheaply, their infrastructure cannot replicate the quality and speed of China. This is a strong indicator that retailers will need to consider a work force’s experience and loyalty rather than just looking at their bottom line.