How The Digital Economy Is Blurring Industry Boundaries

Richard Howells

Part 1 of the “The Digital Supply Chain of One” series

In a digital economy, customers are in control. They have access to information like never before. They can shop around for the best product at the best price in an instant. More than ever, they understand exactly what they want – and they know how to get it.

Companies leading the way in attracting these connected consumers are adapting by delivering highly personalized products and services that comply with unique customer specifications.

And these seismic shifts are turning industries upside down. Today, businesses of all industries and sizes are adopting innovative supply chains to differentiate themselves from the competition, move into previously inaccessible markets, and compete in new and disruptive ways.

New Business Models enabled by digital supply chain

Consumer products companies think like retailers

To get closer to customers and their needs, manufacturers are moving away from wholesale distribution in favor of selling direct – either online or in brick-and-mortar retail stores – enabling a more personalized experience.

For manufacturers blazing this new trail, success requires digital supply chain capabilities that allow them to sense and quickly react to demand fluctuations. And these changes in demand are increasingly detected through social media analysis and usage data from connected devices and products.

This real-time information creates a responsive supply chain that quickly adjusts plans, reroutes deliveries, modifies production runs, and offers individualized goods to serve segments of one.

Retailers move into the logistics game

For retailers seeking to provide superior customer satisfaction, logistics is emerging as a vital factor.

Online retailers like Amazon and Alibaba are increasingly looking to upgrade their logistics operations to better meet buyers’ high standards for quick shipping. Meanwhile, more and more traditional brick-and-mortar retailers are embracing in-store delivery and repurposing their retail outlets, either partially or fully, as distribution centers.

By investing in next-generation digital logistics, retailers are gaining greater end-to-end control over their supply chains, empowering them to meet increasing consumer demand for fast and accurate delivery.

This strategy has forced a foundational supply chain transformation that enables 100% visibility into inventory – anytime and anywhere. And it requires modern retailers to focus on the “segment of one” in order to meet growing customer expectations for same-day, or even same-hour, delivery or pickup.

Logistics companies look to manufacturing for differentiation

To remain relevant, logistics companies are constantly searching for ways to provide value-added services. One trend is 3D printing, which is helping businesses move from physical to digital inventory.

Take UPS, for example. One of the largest logistics companies in the world, UPS recently launched a distributed, on-demand manufacturing network using 3D printers at more than 60 retail outlets across the United States.

Customers place their 3D printing orders online. Using additive manufacturing techniques, UPS either prints the orders in-store or sends them to a UPS 3D-printing center and ships to the specified location – sometimes as quickly as the same day – for customer pickup.

By embracing 3D printing technology, UPS has gained a leg up on the competition within the logistics industry, while at the same time entering the manufacturing space as a proven brand.

From manufacturing a product to delivering a service

Many companies that make products and assets are moving toward an “as-a-service” model, enabled by software, connectivity, and intelligent supply chain capabilities. This presents exciting new opportunities to capture customers looking to pay for usage rather than own an asset or product.

For example, we see equipment manufacturers who are billing based on usage, uptime, or throughput rather than selling a product, and coatings producers who are working with automotive companies to bill based on the volume and quality of coated automobiles coming off the line.

Of course, this requires complete visibility of assets at customer locations – knowing when they’re running, understanding their usage or throughput, and detecting and predicting when they need to be serviced.

Supply chain innovation and adaptation can make this a reality. With real-time insight into how your products and assets are performing, you can offer customers “as-a-service” models that create new revenue streams for your business.

Digital supply chains drive disruption, innovation, and profit

Surviving – and thriving – in the digital economy requires nimble and intelligent digital supply chains that predict and respond to changes in the ecosystem. Highly agile supply chains offer companies the capabilities they need to quickly capitalize on new opportunities and break down old barriers, helping them drive disruption, innovation, and profit.

To learn more about how to create a digital supply chain for today’s digital economy, register to read this free IDC Infobrief

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.