May 23, 2012
Continuing from my first post: Predictions from Supply Chain Gurus – Part 1, I want to take a look at two predictions for 2012 by two noted Supply Chain gurus namely Bob Ferrari and Steve Gold.
First up, Bob Ferrari’s prediction
"The concept for “supply chain control tower’ coupled with more leveraged use of predictive analytics will come to the forefront, but in 2012 there will be a need for vendors and consultants to focus on market education and early adoption support," Ferrari says.
Read all of Bob Ferrari’s predictions here: 2012 Supply Chain Predictions : Is the End of the World nigh?
Second, Steve Gold’s prediction
Gold predicts continued inflation in raw materials and other input costs in 2012 (not all agree with him there, given slowing global growth), but regardless, more interesting is what he says companies must do about it.
Gold says hedging and demand aggregation strategies should be part of the approach that companies take, but that they must also to look at reducing those costs not by focusing on the price or rates they pay, but instead or additionally by "Trying to find a way of redesigning products or working with suppliers collaboratively to consume less" – which he says requires a new way of thinking and acting.
About the above predictions, they’re rather safe predictions – what I’d like to call, trend based predictions. We all know about Big Data and the impact that it’s going to have on every business. However, not all is so clear cut with this predictive analysis stuff – nothing new other than access (and the consequent ability) to a whole lot more information is happening right now. It’s like the old optimist child joke – when she saw a pile of horse manure, instantly jumped in saying that there must be a pony in here somewhere.
Gold’s predictions is also predicated on the widespread feeling that inflation (even hyper inflation) is about to break loose. However, the US Central Bank is operating under the assumption and expectation that inflation is muted. Compare that to my empirical observation from my grocery shopping that inflation is ~ 9-10% on the grocery budget. Of course, if you added say Hard Disk drives to that basket, it might average out things a bit but I’m not in the habit of eating bits and bytes for breakfast.
While commodity prices have been increasing in the past – let’s hypothesize that this is because of easy credit, the spectre of another recession has put the brakes on expected demand and this has consequently led to a fall in prices in the current. If the central banks of the world coordinate another round of easy credit, then we’d switch back to the former situation of increasing commodity prices. This is not looking like inflation or hyperinflation but stagflation. Furthermore, it suggests that stagflation is nothing more than ignorance-flation in the sense that no one really knows what to do and nothing seems to be working out.
More to come…