Rethinking the global supply chain
Technology is transforming the world and today’s global market place is more volatile than has ever been. Supply chains have grown more global and interconnected with consequent exposure to increasing complexity and disruption. Supply chain speed and pressure to reduce lead time from source to the consumer are pushing businesses to treat the value chain as a whole and not as a sequence of separated silos.It is no longer enough to build supply chains that are efficient, demand-driven or transparent.
Technology, increased competition, globalisation and change in customer behaviour are threatening every business. With the adoption and use of rapidly growing new technologies by consumers and connectivity becoming more feasible than ever, almost every industry is at the edge of digital disruption and consequently supply chains are under the spotlight in search for innovation.Information that was once created by people is now generated by applications and systems.
The end to end supply chain is becoming connected and not just suppliers, manufacturers, consumers but also products, parts and other physical components. The world is being equipped with RFID tags, sensors and GPS. The time is approaching when inventory will count itself and containers will detect their contents, reporting if any misplacement and if they are damaged.
The digital and physical supply chains of our world are converging thanks to the falling price and reliability of sensor technologies, Moore’s Law will continue to scale the effects of new technologies in ways never seen before. Almost any activity or process can now be measured by smart applications, and advanced analytics are opening the way for businesses to evaluate alternatives thereby increasing responsiveness and limiting the need for human intervention in the name of automation. Flexibility in supply chain will counteract cost volatility and will be the key component to succeed in business and this means:
Plug and play new technology such as cloud computing, bid data and analytics
Build new partnerships and collaborations with all key stakeholders including competitors
Preserve raw material and other natural resources such as water and energy.
Re-defining the rules of competition through collaboration
The future will see a new era for industry collaboration and partnership. Technology is connecting every single step, process and object in the digital supply chain. In order to achieve this connectivity, collaboration is required in the physical world of the supply chain. Competitive advantage will come from embracing technology in the way companies do business and using that as a catalyst to create new collaborations which ultimately will result in creating new value.
Consider the value that can be created by sharing warehouses, distribution centres, 3PLs and technologies if, for example, two of the biggest food retailers in the world, Tesco and Walmart, were to start collaborating in their supply chains. The world population is increasing and this means that there will a sufficient number of customer for every successful business to serve. However, the world’s natural resources are reducing and a collaborative supply chain will result in reduced: food waste, water and electricity usage, distribution costs and footprint.Learning and pioneering new ways to compete through collaboration will be the key to business model innovation that will generate new value for business and society. As Eric Hoffer once said:
"In a time of drastic change it is the learners who inherit the future. The learned usually find themselves equipped to live in a world that no longer exists”.
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(To work with me or for more on topics of relevance to leadership, email me at andrea.frino@thinkethandco.com or follow me on LinkedIn and Twitter @thinkethandco)