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By Milind Tailor, Director - Procurement & Supply Chain, Asia Pacific, Diebold Nixdorf
Supply chains today provide a key competitive advantage to the businesses. Companies like Amazon, who set new industry benchmarks are a testament to the role supply chains play in a company’s success. A climate of “innovate or die” is taking over, putting a microscope on logistics and the impact it has on earnings, growth, and customer loyalty. As a result, logistics is confronting and undergoing immense changes; and like all change, this brings both risk and opportunities. Traditional models will soon be extinct. There are many ways the function could develop to meet these challenges, some evolutionary, others more revolutionary. It is important to understand the disruptors driving this transformational change. Some are well underway and evolving towards maturity while some are in the early stages of the development. I invite the readers on this expedition into the future for their own future expertise.
1. SNEW Waves – Prepare to Reevaluate your Logistics Strategy:
Yes you read it right, its SNEW and not snow! SNEW, or social media, news, event and weather data, is the next acronym that’s either going to make supply chain managers sit up and take notice, or make them roll their eyes and groan. Either way, SNEW data promises to help improve supply chain capabilities and give companies even more data to sift through, digest, and make sense of. An existing forecast, for example, can be adjusted accordingly when accurate weather predictions are factored into the equation. The integration of social media, news, event and weather data into the supply chain process is also getting a boost from the ongoing digitization of the supply chains.
2. Demise of Brick & Mortar Stores?
With the rise of online shopping and the popularity of the ecommerce there has been speculation that the brick & mortar stores will soon be extinct. However, I believe that the traditional stores will complement the online shopping. Consumers will continue to enjoy the shopping experience on their devices but would also be looking for the same product on the shelf. This omni channel supply chain will require a rethink of the distribution model. Instead of keeping all products at one location, there will be a need to begin varying product availability, and the conventional 80/20 rule will not apply anymore.
3. Rise of Elastic Logistics:
There is a sale going on for everything and, it is not a coincidence. The lines defining peak holiday shopping seasons are blurring with traditional shopping. As a result, logistics will have the added pressure to have the flexibility to expand and shrink the capacities across geographies in response to market and demand fluctuations, changing consumer preferences, and socio-political changes. To achieve this, companies will have to think outside the box and leverage the power of collaboration and technology in innovative ways.
Elastic logistics is the flexibility to expand and reduce capabilities to accommodate changing demands within the supply chain. It’s the agility to handle sharply increased and decreased needs in production, warehousing, and shipping while controlling costs, efficiency, visibility and customer experience. The ability to scale operations as needed without long-term investments is the key attribute of this capability. With optimal utilization when implemented, elastic logistics could prove to be a sustainable strategy to enable companies to suitably deliver on-time whilst keeping costs to a minimum, despite a rise in demand.
4. Tomorrow’s Value Creation will be Continuous and Co-created:
The traditional mode of value creation—design, plan, source, make, fulfill, and service—will be swapped with a continuous and multi-directional mode— configure, operate, connect, and manage.
The key here is the move beyond functional silos and instead think about how to architect a solution through network of business partners and technology platforms. It’s a customer centric model in which the supply chain will work with the customers/customer facing organizations, R&D and engineering to design a best fit solution that meets the customer demands.
5. Technological Breakthroughs:
Technology is changing every aspect of how companies operate. ‘Digital Future-proofing’ will be a prerequisite for success: the winners will be those who understand how to exploit a whole range of new technologies, from data analytics to automation and platform solutions. Those who don’t, risk obsolescence. But with so many technologies competing for management attention and investment, defining a clear digital strategy that’s integrated into business strategy will be critical. The digital supply chain of tomorrow will be leaner, faster and most importantly, self-orchestrated. This unprecedented pace of change will be driven by a few radical technologies that will have to be proactively adopted, rather than expensive reactionary methods. It means in the future digital realm, the rewards will be tremendous and companies will gain significant advantages.
It is self-evident: Taking action is better than waiting around for something to happen. However, only those who are aware of the prospects for the future can proactively plan. The capability to respond to changes in the future depends on knowing what is expected to happen in the future. Shakespeare called the future “the undiscovered country“, but it doesn’t have to remain so! Supply Chain Leaders should be prepared for more disruptions ahead. The trick lies in anticipating which areas will be impacted and what capabilities should be developed to ride the wave successfully.
When I look into the future, I see disruption, I see co-creation, I see transformation, but most of all I see opportunities.
What do you see when you look to the future?
The Best Way to Predict the future is to Co-create It! -Milind Tailor