To start thinking about the impact of these macro factors on supply chains, we held two symposiums titled “SC2020: Building the Future Supply Chain Now.” One was conducted at MIT and the other in Spain in collaboration with the Zaragoza Logistics Center, an affiliated organization. To open discussions on demographics, Dr. Joseph Coughlin, the Director of MIT's AgeLab (a unit of CTL) gave a presentation at MIT titled “Disruptive Demographics: The New Demands of an Aging Marketplace.” I gave a modified version of that presentation at the symposium in Spain. To put it mildly, it was eye-opening to audiences on both sides of the Atlantic!

One chart that Dr. Coughlin showed depicts estimates of the world's population by age and sex for 1996 and 2025. The 2025 figure is ironically stouter than the figure from 1996. This is due to the fact that the world's population will grow substantially, largely as a result of the fast-growing less-developed countries. It will age significantly, too, especially in slow-growing more-developed nations. This means that the older and richer more-developed countries, such as in North America and Europe, will have the lion's share of the buying power for goods, while the less-developed will have the major share of the younger labor needed to supply them. Thus, an older, more affluent population than ever before will significantly drive the demand-side of future supply chains. This begs at least two questions. What would this future demand look like? And how should supply chains change to satisfy this future demand?

Dr. Coughlin's presentation was peppered with examples of companies that are already starting to define and deliver the new products and services needed by the Baby Boomer generation. Many of these companies need them to supplant the loss in sales from products that were tailored for a time when the boomers were young. Future products will need to be more personalized to satisfy these discerning, affluent consumers, that might include products tailored to the physically, hearing, and sight-challenged among them.

In addition, older consumers will want products and services that are bundled, looking for solutions rather than just disjointed products and services. In this regard retailers and drug chains are starting to morph into health-care service hubs. Smart technology will start to enter the home to monitor and provide dietary and health information to directly link in various service providers, so that they might quickly identify and respond to needs. Managers attending the symposium in Spain postulated a revival of the “Internet Bubble” home delivery concepts—in this case, the delivery of prepared meals and regimens of prescription drugs to home-ridden elders.

While conceptually the future production of goods can be outsourced to less-developed countries having a surplus of younger labor, those countries' products and services (especially personalized ones) still need to be delivered locally to centers of demand in the more-developed countries. So who will do the work in these aged, affluent countries?

One traditional answer for the developed countries has been immigration. The debates going in U.S. government circles these days should offer proof that immigration is only one part of the solution to tackling the potential labor shortages caused by an aging, increasingly retiring population demanding more sophisticated goods and services. Other parts of the solution might involve employing more older and semi-retired workers as well as the so-called “unemployables” with physical and mental disabilities.

Two recent stories in the Wall Street Journal are interesting in this regard. A note titled “Boomers Heed Road Calls, Semiretire as Semi Drivers” (July 23, 2007), discussed how the trucking business is employing more baby boomers as truck drivers to alleviate the driver shortages that we've been experiencing. Schneider National Trucking is quoted as stating that “the number of its drivers who are 50 and older has risen 46% since 2005”. In a story titled “Erasing 'Un' from Unemployable” (August 2, 2007), the author discusses Walgreen's formal program for hiring workers with cognitive disabilities, such as autism. Wal-Mart, McDonald's, and Home Depot were also mentioned as recruiting workers with disabilities.

These solutions to an aging workforce in developed countries signal the need to redesign supply chains to accommodate an older, language-challenged, and physically and mentally handicapped workforce. More automation will likely be needed in blue-collar manufacturing and distribution facilities. Trucks, especially their interiors, will need to be redesigned for older drivers. (Dr. Coughlin is already conducting research on dashboard ergonomics.) A potential shortage of white-collar supply chain managers could be alleviated by hiring part-time semi-retired knowledge workers.

We hope this column has piqued your interest in the topic and given you some pause to think about the ways that supply chains will need to be redesigned to prepare for the disruptive effects of changing demographics—some of which we are already starting to face as the boomer generation once again significantly alters business environments. If not, or if you are just interested in the topic, you can listen to Dr. Coughlin as he delivers a keynote address on the subject at the 2007 Council of Supply Chain Management Professionals (CSCMP) Annual Conference. He is president of the “Hot Topics” track being run by the MIT-CTL. Whatever you decide, do get ready for disruptive demographics to impact both the demand and supply sides of your company's business.