What’s Top of Mind for Industry Leaders in 2015?

I have been fortunate for the last 6 years to be involved in an organization called Supply Chain Leaders in Action (SCLA) – an organization of over 60 of the largest distribution-oriented and logistics companies in the US. Every year, these senior supply chain leaders get together in January. One of the sessions is a polling exercise to gauge their opinions on a number of key business and supply chain questions. The answers to several of the questions got my attention and point to a changing mindset for industry executives.

One of the more interesting questions asked the executives present what they would do to their supply chains to drive growth of their business. The largest response, by almost 2-1, was “provide value-added services.” Another interesting question asked the executives where they would focus their time. The most frequent answer was “developing and implementing strategy” followed closely by “improving the velocity and agility of operations and capabilities.”

There was no surprise that “strategy” was important to the executives — that’s what they are supposed to do. Achieving growth has always been a tough question for supply chain executives, but here there was greater consensus that value-added services are the way to do it. Equally, it should not be a surprise that “velocity and agility” were also a top focus as they are critical to create value-added services, especially differentiated ones.

The implications to me for all supply chain executives are clear:

1. If your organization is only focused on cost reduction and “optimization” of your existing supply chain processes, you are leaving the door open for your competitors to use their supply chains to innovate additional value for your customers and take them from you.
2. For the people, process, and technology strategies and tactics that create the value-added services, you cannot await for the “grand plan” of systems, infrastructure, and organization to emerge over a period of years. What you believe is value-added today, will be commonplace by the time you are ready.
3. From a supply chain technology investment perspective, the focus will be on more “customer-facing” supply chain applications and applications that drive customer, as opposed to enterprise, value. Last year, companies such as USLBM and Woolworths demonstrated the power of making their supply chain transparent to their customers. The focus on value-added services will also include experimenting with supply chain applications and technology-enabled specialty logistics services providers to get to customers in new ways. One example comes from the recent Wall Street Journal article “AB InBev Joins Beer-Delivery Market With New App” mentioned by Adrian Gonzalez where beer companies are experimenting with home delivery to drive growth.
4. The leading technology enablers will be cloud-based, heavy with mobile-enabled content, and leverage real-time optimization. Cloud enables more rapid adoption and supply chain agility. Mobile helps gather supply chain information and put it in your customer’s hands. Finally, real-time optimization provides more and better options for customers at the point of contact while maximizing the effectiveness and efficiency of supply chain resources.

If the sentiment of the SCLA executives holds true, the role of the supply chain value-added services in 2015 will continue to increase in their importance to companies as part of their growth strategies. More than ever, the digitization of the supply chain will provide companies with the services to create that differentiated value. The challenge for all supply chain executives will be to leverage the right technologies to keep pace with the customer-facing supply chain change that will be coming from industry leaders.

Chris Jones is the Executive Vice President for Marketing and Services at Descartes. He has over 20 years of experience in the supply chain market, holding variety of senior management positions including: Senior Vice President at The Aberdeen Group’s Value Chain Research division, Executive Vice President of Marketing and Corporate Development for SynQuest and Vice President and Research Director for Enterprise Resource Planning Solutions at The Gartner Group.