The rise of the Internet. Virtual reality. The end of the Cold War. The World Future Society's Outlook called them all. It also predicted a shortage of worms and the advent of all-day eating (a consequence of the vanishing distinctions between breakfast, lunch and dinner).
No subject is too arcane for the Outlook, a report published annually by the World Future Society since 1985. The Outlook features some of the more thought-provoking ideas that have appeared in the society's bimonthly magazine, The Futurist, during the previous 12 months. The predictions are based not on original research, but on observations by scientists, academics and business leaders on social and technological developments that may affect how we live, how we work and, yes, how we manage our supply chains.
Because the wide-ranging ideas come from all aspects of human endeavor—business, economics, demographics, education, the environment, technology and even terrorism—the Outlook tends to be an intriguing brew, not to mention a lot to absorb. But Timothy Mack, president of the World Future Society, sees that as a strength. By bringing a wide range of topics together, the Outlook spotlights how developments in one area affect others, emphasizing what he calls their "cross impact." It's important to get the big picture, he says. Failure to watch overall patterns because you're looking solely at your business "will come back and bite you."
What trends are highlighted in the 2006 edition of the Outlook? Predictably, they vary all over the map. Some will come as no surprise—like the rising demand for health care and biotech professionals, or the projected surge in wind-generated and tidal power. Others may be more startling—like the prediction that nanotechnology will be used for everything from monitoring the health of soldiers in the battlefield to transforming waste into edible material.
As for trends in business, it's all about technology—specifically, the information technology that will help to network workers, connecting both enterprises and individuals. "Connectivity will likely shift the way businesses are structured and how decisions are made," Mack observes. In that same vein, the Outlook forecasts the coming of the Digital Age—an era "characterized by inter-connectivity, complexity, acceleration of human activity, convergence of media, and rising significance of intangibles such as reputation."
Some of the trends hold out promise for solving society's ills; others are troubling. One of the more worrisome is the decline in the number of U.S. citizens enrolled in engineering programs in the United States. The World Future Society reports that by 1999, half half the engineering students in this country were foreign born, an indicator that the United States may someday face a shortfall of engineers.
The post-modern supply chain
At the same time the World Future Society is tracking big-picture trends, researchers at the Massachusetts Institute of Technology's Center for Transportation and Logistics are trying to do the same for a microcosm of the business world, supply chain management. A five-year research project known as the Supply Chain 2020 Project is currently under way, as researchers endeavor to find out how supply chains will look in the year 2020. The project's goals are to determine what makes a supply chain effective and to identify emerging trends managers should take particular note of in their supply chain planning. The year 2020 was chosen in part because of the double meeting—the year and the visual acuity needed to obtain a clear view of what lies ahead.
Those looking for predictions or advice will be disappointed. Larry Lapide, who heads the project, cautions that the research will offer no prescriptions; nor will it attempt to predict the future. The premise is that the future is unknowable but that understanding key drivers can help managers prepare for what may come.
Lapide, who was formerly a consultant at AMR Research, expects the five-year project to open a few eyes. As part of the groundwork, researchers analyzed existing studies on the future of supply chains. More often than not, they found, those studies tended to bubble over with optimism, portraying the kind of future that Mr. Rogers might have envisioned: where it's always a beautiful day, where global trade unfolds seamlessly, where highly connected companies engage in endless partnering and collaboration.
But Lapide's not buying it. "The problem with that is it's too utopian," he says. "It does not bring competitiveness into it." It also makes some assumptions that many would question. Will companies really share information? Is it realistic to expect to overcome the difficulties of crossenterprise integration when cross-functional integration within companies has proven so difficult?
Beyond best practices
In the face of all this uncertainty, how can businesses even begin to plan for the future? Lapide's advice is to select several possibilities and concentrate on their implications for supply chains. "We can't forecast the future 15 years from now," he says. "What we can do is consider three or four possibilities."
What Lapide describes, in essence, is a form of risk management based on understanding how various developments may play out, and understanding what "sensors in the ground" a business should put in place so it receives early warning of those developments. The idea is that companies have to look "beyond best practices," as the MIT researchers like to say. That is, changes in processes should be based on understanding underlying principles of supply chains, not simply on who is doing what well today.
In fact, the project's first phase concentrated on defining and understanding supply chain excellence. The researchers examined several successful supply chains, including Dell's and Wal-Mart's, to find out why they work so well. But their goal was not to use the findings to come up with a prescription for success. "What's best for each of those companies is not necessarily the best for everybody," Lapide points out. "We're trying to understand why it's the best for them."
As for what makes a supply chain excellent, Lapide points to four hallmarks: it is an integral part of a company's strategy; it makes use of a distinctive model to sustain its competitiveness; it executes well against measured objectives; and it focuses on just a few business practices that support the operating model. "You can't do everything well," he says. "Companies with excellent supply chains recognize this and concentrate on the few things they can do well."
In the project's second phase, the focus will shift to creating models for future supply chain operations. Lapide stresses that the 2020 project is not developing a quantitative model predicting how things will change; rather, it will look at the process of adapting to change. Business leaders first have to understand what factors are influencing change, says Lapide. Then they have to decide which of those factors they can exercise control over and focus their efforts there. The goal, he says, is to gain an understanding of how supply chains can react to the changes that do come.
What to watch
The 2020 project has already identified several factors that could have a major impact on business supply chains, for good or ill. Among them: a shift of economic and military strength toward China, India and Russia; technological advances that allow knowledge-based workers to be located anywhere; the imposition of tougher environmental laws around the world; and fuel price volatility.
Few would argue with that last choice, which has already forced companies to re-examine their business plans. "[O]ver the last several decades, most supply chains were predicated on cheap oil," says Lapide. But rising energy costs and the potential for supply disruptions, whether from terrorism, labor actions or something else, may require shifts in strategy. For example, just-in-time (JIT) manufacturing makes sense when energy costs are low and supply is predictable—that is, when the inventory savings offset the added transportation costs. But skyrocketing fuel prices will likely alter that equation. "JIT may not make sense in the future," he says. "The concept is still good, but we still may need just-in-case inventory."