Challenges and opportunities for future ‘value chains’

Science fiction intrigued me as a child through TV programs such as “The Jetsons” and “Star Trek.” While I don’t claim to have Yoda-like clairvoyance, research leads me to make some predictions that might help your company begin preparing for the future.
One of the evolving trends is the phrase Supply Chain – it is transitioning to Value Chain and eventually Value Network, as it’s not just about the process from your supplier to your customer, nor is it a linear process. Value chain/network is a complex, global web from your suppliers, supplier’s supplier to your customers, customer’s customer … which could ultimately be consumers, like you and me. Let’s take a look at the top trends that will influence value chains/networks in the next 10 to 25 years:
Global growth
Today more than half of the world’s population lives in cities, and there is no end in sight regarding urban growth. By 2050, roughly 70 percent of the world’s population will live in urban areas and the term “mega-cities,” defined as populations of 20 million people or more, will be a reality. By 2020 (less than seven years from now) Mumbai, New York, Mexico City, Sao Paolo, Jakarta and others will earn that title. What that means to you and me from a value chain and consumer perspective is:
• Stores will shift to a smaller footprint because of the price of real estate. Therefore there will be no room for unproductive inventory – giving new meaning to the term “just-in-time.”
• City living will result in smaller-footprint living spaces, resulting in downsized furniture that’s multifunctional, more use of public transportation and a transition from owning to renting. This will impact other service businesses, including insurance (auto and home), as well as convenience services such as dining out/take-out and home delivery (i.e., food and dry cleaners).
• All industries will face significant supply and logistics challenges, and new distribution infrastructures will be required, which need to be planned and built starting today.
Economic equalization
The middle class, particularly in developing regions, is rapidly expanding and the population of low- and middle-income countries with purchasing power is expected to triple by 2030. Though this rise will lead to increased consumption, which will impact the availability of food and resources and ultimately affect pricing of commodities, what it also means for you and me is the new global middle class will be the source of growth for manufacturers and retailers bringing manufacturing jobs and growth back home to the United States. • Changing consumer expectations.
The exponential growth and adoption of consumer technologies will drive new levels of service demands. Expectations will not only be 24/7, but same day … even hours. For Internet shoppers like myself, imagine ordering something online in the morning and it arrives later that day or evening.
• Carbon-footprint regulations are expected to significantly increase as people look to governments and businesses to play a major role in combating climate change. According to the National Marketing Institute, the green marketplace in the U.S. is predicted to grow from $240 billion to $845 billion by 2015. For those companies offering “green” products and services, this is your opportunity to seize.
• By 2030, the world’s population will reach 8.3 billion, with demands on food and energy increasing by 50 percent and fresh water by 30 percent. This growth will put pressure on natural resources like energy, water and food, resulting in increased utility and food costs. Opportunities exist as an energy revolution could occur, making wind and solar viable sources of energy in some parts of the world. Additional challenges, such as accessible drinking water in arid areas around the world, will spur innovation to convert seawater to drinkable water in the future.
Technology expansion
Over the next 10 years, consumers like you and me will continue to become more empowered through the use of new communications technology. Data Analytics or “Big Data” will be key in capturing trends and opportunities for business. Improved collaboration, together with information transparency, will enable a more synchronized value chain with greater visibility and traceability.
These predictions will happen at the speed of light. And you can see how they are interrelated, so as one or two become relevant they will initiate other circumstances. Now is the time to get ready. •


Cheryl W. Snead is co-founder of the Supply Chain Management Summit held annually at Bryant University and is president and CEO of Banneker Industries Inc.

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