Five supply chain challenges for 2012

To overcome the kinds of challenges they are likely to confront in 2012, supply chain executives working in manufacturing companies will need to focus on "speed and responsiveness across the demand and supply sides of the supply chain to support the intelligent economy," says Simon Ellis, practice director, Global Supply Chain Strategies for the research firm IDC Manufacturing Insights.

Ellis and coauthors Kimberly Knickle and Catherine White explain that assessment in detail in the recent report "Worldwide Manufacturing Supply Chain 2012 Top 10 Predictions." Here is a brief synopsis of five of their predictions:

Prediction No. 1: Manufacturers will focus on clock-speed alignment across the supply and demand sides of their supply chains. Manufacturing companies have long known that the demand side of the supply chain operates at a faster rate than the supply side, thus the need for buffer inventory. As demand cycles become more volatile and supply lines lengthen, it becomes harder for buffer inventory to compensate for mismatches. IDC expects manufacturers to address this issue by focusing on internal actions, such as improving inventory management or stepping up their use of demand signals to align supply and demand.

Prediction No. 2: The requirement for speed and the ubiquity of information will create a new landscape for IT support of the supply chain. Given the need for a more responsive supply chain that can react to changing business conditions, manufacturers will impose new requirements on information technology such as the adoption of cloud computing software and more mobile devices.

Prediction No. 3: Big data will create an even bigger data quality problem for manufacturing supply chains. With the growth in external data sources, manufacturers will have to work harder to ensure data quality. As a result, they will likely adopt master data management systems that can help impose standards to achieve information quality.

Prediction No. 4: Supply chain organizations will rediscover the need for differentiation. As consumers continue to bypass retailers and purchase products online, manufacturers will be forced to consider supply chain differentiation as a means of supporting direct-to-consumer initiatives.

Prediction No. 5: Risk management will mature as a focus area for supply chain segmentation. Because of the number of natural disasters that disrupted supply chain operations last year, manufacturers will make a more concerted effort to study and understand any inherent risks when they segment supply chains to serve a particular industry or customer.