The “Amazon Effect” On The Supply Chain

Richard Howells

Whole Foods shareholders approved its merger with Amazon on August 23, with the merger closing just days later, on August 28. With it would come sweeping changes, said Amazon:

  • Whole Foods would drop prices on a selection of popular items
  • Amazon’s Prime rewards program would be available for Whole Foods customers
  • Whole Foods products would be available on Amazon.com
  • Amazon lockers would be in Whole Foods Markets

You can only imagine that this will, at some point, be aligned with the recently announced beta version of Amazon Go, which heralds:

  • Checkout-free shopping experiences made possible by the same types of technologies used in self-driving cars: computer vision, sensor fusion, and deep learning.
  • “Just walk out” technology that automatically detects when products are taken from or returned to the shelves and keeps track of them in a virtual cart.
  • Automated payment that sends you a receipt from your Amazon account when you leave a store, allowing you to bypass the checkout aisle.

All of this brings a new era to not only omnichannel sales, but also the omnichannel logistics required to support these models. Businesses looking to compete with Amazon need to ensure their supply chain runs in real time and uses technology to provide customers with the services they are looking for.

The future is already here

There are several technologies coming to fruition that can help bring competitors to the next level and compete with Amazon’s new offerings. New technologies to run an efficient supply chain include:

  • Business-ready Internet of Things: With the emergence of smart products, assets, and always-on “things,” we now have access to unparalleled amounts of information. This means that every “thing” is connected, intelligent, and in the moment. As these “things” collect and exchange data, we can leverage the data they provide to make them smarter through built-in machine learning – and all of this is happening in real time. As consumers, we leverage omni channels to place orders, anytime, anywhere, and on any device. This ability to place orders “in the moment” has raised the bar in setting the expectation that the logistics and business processes of our vendors can deliver our orders almost immediately.
  • 3D printing: Seventy-one percent of U.S. manufacturers are currently using 3D printing in one way or another, according to a recent Manufacturing Institute study. Most use it to develop product prototypes, while seven percent of companies use it to create end products. 3D printing is a key differentiator for manufacturers that must quickly react to meet constantly shifting consumer demands.
  • Artificial intelligence: Eighty-five percent of organizations have already adopted or will adopt AI technology into their supply chains within one year, according to a 2016 Accenture report. Within five years, 50% of manufacturing supply chains will be robotically and digitally controlled and able to provide direct-to-consumer and home shipments, according to IDC Manufacturing Insights.

These technologies, and others such as blockchain and machine learning, are converging to make machines smarter and drive end-to-end digital transformation. Companies need to evolve supply-chain strategies to stay relevant in their industry. Amazon has set the bar high for its competitors and has changed the retail space. The current trend in the retail industry is to make sure that the customer experience is as seamlessly convenient as possible. If organizations do not adapt their business models and incorporate these technologies, they will lose even more business to Amazon.

Learn more about How Sensors Will Redefine Business and Our World.

This article originally appeared on Huffington Post.


About Richard Howells

Richard Howells is a Vice President at SAP responsible for the positioning, messaging, AR , PR and go-to market activities for the SAP Supply Chain solutions.