Challenges and opportunities for future ‘value chains’

Guest Column:
Cheryl W. Snead
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. More

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OP-ED / LETTERS TO THE EDITOR

Challenges and opportunities for future ‘value chains’

Guest Column:
Cheryl W. Snead
Posted 7/7/14

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.

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