CIOs and IT to Build the Future Supply Chain

The information infrastructure that will support the retail supply chain of the future is set to undergo a major reinvention. And IT people and CIOs from retailers and manufacturers will be playing starring roles.

By Mark Chillingworth
Thu, October 16, 2008

CIO UK — Wet summers and extreme floods, Tesco branded vans darting in and out of suburban streets like minnows in a stream and a Conservative Party stating it will tax companies on the impact they have on the environment. These issues are indicators of the pressures the supply chain of major retailers and manufacturers in the UK is about to endure from customer consumption habits and regulations.

Existing methods of haulage, storage, shop inventory and customer delivery are set to be revolutionized. As a result, the information infrastructure to support the supply chain will also undergo a major reinvention.

Management consultants at CapGemini have been studying the future landscape of the supply chain. Its 2016 Future Supply Chain report indicates that the complexities of the challenges facing the supply chain are not the sole responsibility of the supply chain manager. In the report, Roland Dachs, supply chain vice president at packaging manufacturer Crown Europe and Xavier Derycke, director of retail chain Carrefour say, "Until now, the most important parameters for supply chain designs have been related to cost efficiency and on-shelf availability," the duo warn of the challenges to come, "new factors are becoming increasingly critical, such as traffic congestion in urban areas, energy consumption, CO2 emissions and the permanent rise in transportation costs."

A raft of legislation has already come into force. In the UK supply chain managers now have to comply with the London Congestion Charge, which has drastically reduced the number of vehicles that come into the center of the city. Earlier this year the Low Emissions Zone was introduced, which places a £1000 (US$1,749) fine on haulage vehicles that do not comply with standards set down by Transport for London. The British Climate Change Bill, which came into force last November, sets a legal a target for Britain to achieve a 60 per cent cut in its carbon dioxide emissions by 2050.

In the near future CapGemini foresees water consumption regulations and increasing security regulations imposed not only information, but also on the warehouses the supply chain uses to store its inventory.

Consumers embrace these regulations as they believe they improve the quality of life, especially for those living in urban environments. Corporations have to convince their consumers that they are behaving responsibly towards the environment. CapGemini believes the 2007 Bali Treaty, as well as other legislative initiatives, are "challenging the industry to come up with breakthrough solutions by 2020. Preserving energy and raw materials and other resources like water will become a crucial aspect in future supply chains."

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