Research Uncovers Five Key Supply-Chain Trends

Compiled ByJill Jusko Four of five trends Pembroke Consulting Inc. says to watch for in the supply chain during 2002 revolve around technology and the Internet. The Philadelphia-based consulting firm produced the trends list following research for "Facing the Forces of Change: Future Scenarios for Wholesale Distribution," a study it conducted for the National Assn. of Wholesaler Distributors, and its own market research. The trends are:

Distributor consolidation continues overall and accelerates in electrical products, floor-covering products, foodservice and industrial supplies.

Suppliers fight reverse auctions, with suppliers opting out or developing counter strategies such as alliances or bundling value-added services. "We see these counter strategies being successful enough to slow the growth of online auctions by year end [2002]," says Adam J. Fein, Pembroke Consulting president.

Partner-relationship-management software will boom, but users will discover its effect to be less than anticipated.

The large e-procurement initiatives undertaken in the last 24 months will stall as corporate buyers discover the initiatives do not deliver unless coupled with a more strategic approach to purchasing. Therefore, buyers will concentrate efforts on reducing their numbers of suppliers, applying stringent supplier selection criteria and enforcing internal compliance with national supplier agreements.

Online ordering will continue to grow but will still represent less than 15% of transaction volume in most distribution channels. Instead, more than 50% of buyers will use the Internet "to communicate with existing suppliers for self service such as order tracking, inventory management, product information, and order accuracy," says Fein.