Jan 26, 2010 1
SC Digest has a recent article: A decade in Supply Chain Timeline illustrating a decade in the supply chain timeline. What astonishes me about the decade is how quickly the mighty have fallen. Or rather how quickly some of the no-brainer trends seem to go quite limp.
The stars from the report in my opinion are:
1. Blue jeans icon Levi’s announces it is shuttering all its US production and moving to Asia – as do others throughout the decade.
If anything this move has probably been one of the most important signals of the decade.
2. Yellow Freight announces plans to buy Roadway express, its larger LTL rival. That plus other acquisitions soon bring financial trouble to new YRC Worldwide.
A telling example of how the golden boys gamble and fail.
3. Walmart announces plans for RFID tag mandate, later says it expects all vendor pallets and cases will be tagged within a few years
and later towards the end of 2009
Walmart’s RFID program seems to go into total limbo.
Now, that’s an example of how the go it alone mandate may not be the best way to introduce far reaching changes in the supply chain. Is that also a signal that the supply chain has exhausted ways of making things cheaper and in the next decade of inflation and rising commodity prices, these costs are going to find their way through the supply chain directly to the consumer.
4. Mattel becomes poster child for concerns about offshoring generally and product safety for goods made in China specifically as it has to recall millions of toys due to lead in paint and other issues.
An idea of the true costs of offshoring begins to emerge as unit cost is balanced by risk related costs and soaring transportation costs. No free lunch indeed.
5. Independent truckers going out of businesses by the thousands as slowing freight volumes and soaring fuel prices take their toll.
The driver shortage reported by American Trucking Association earlier in 2005 was most likely filled by independent truckers capitalizing on the shortfall. But the onset of the recession rearranges the marketplace again.
And the cake on the icing:
6. Dell pulls big surprise by announcing in April (2007) quarterly earnings call presentation that it is entering the retail market and largely abandoning its legendary build-to-order supply chain model, saying it is too costly.
If you survey the history of manufacturing management, you’d obtain a sort of cycle that comes and goes. The form of the cycle is centralization and de-centralization of the operations ostensibly for cost savings and better efficiencies and what not. Ergo, it behooves me to make the obvious prediction that Dell would go back to the make to order business before the end of this decade. But that is predicated on a recovery in the general economy.
7. Factory utilization reaches post-Depression low of 65% in the US.
After a decade of outsourcing and offshoring and, thus climbing up the value chain, we begin to appreciate that the perch up the value chain can only accommodate a few and the rest have to be paid for my debasing the medium of value i..e money. Fortunately and unfortunately, this game can only go so far.
8. Everyone looks forward to 2010 – perhaps most difficult year to forecast in decades.
Au contraire mes amis, this is the easiest decade to forecast let alone year. This decade is going to be the lost decade – perhaps, I should wait at least until the first year is out. Maybe not.