Tuesday, March 1, 2011

Supply Chain Innovations Add to GDP Growth

While this article from McKinsey is about the relationship between productivity and jobs growth, one of the graphics caught my attention. See below the exhibit from the referenced article which is available at: https://www.mckinseyquarterly.com/Why_US_productivity_can_grow_without_killing_jobs_2748.
McKinsey believes that the biggest potential growth in GDP, to the tune of 1.2%, can come from “Next-wave innovation – e.g. enhanced supply chain integration, cloud computing”. While innovation would have been an expected GDP driver, as always in the US economy, the special mention of supply chains within the context was somewhat unexpected. This makes two things explicit: Innovation can come from anywhere including things as mundane as supply chains, and the potential of such supply chain innovations towards contributing to the GDP.
What could these supply chain innovations look like? RFID, geo-location based services, optimization across processes conventionally planned in silos, integrated process control systems capable of detecting & isolating exceptions, automated exception resolution and escalation, supply chain modeling real-world using probabilistic modeling capabilities, real-time visibility into supply chain process data & statuses, and so on. In fact, what most companies have achieved in managing their supply chains just happens to be just a good start – there is still a lot of runway left to cover and costs to cut while doing so! Happy GDP growth.
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© Vivek Sehgal, 2011, All Rights Reserved.

Want to know more about supply chain processes? How they work and what they afford? Check out my books on Supply Chain Management at Amazon.

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