We are at the beginning of a completely different era in the history of global trade: the era of the digitized real-time supply chain. In the 30 years I have been teaching students and conducting research in the field of supply chain management, I have never seen the degree of change we are currently experiencing. These changes are unparalleled in scope, and their implications for the way humans work will have a significant impact on our daily lives.
This new era is enabled by the rapid digitization of the communication infrastructure, cloud-based computing, mobile technology, and the rise of the digital ecosystem. But these changes have less to do with technology than our mindset and understanding of how to adapt to this new reality.
This is about developing and sustaining a deep understanding of the components of customer value while making pre-emptive strategic plans that can better respond to sudden shifts in customer requirements and market conditions.
This nimble response will be enabled by a series of dramatic shifts in the way we monitor not only the explicit needs of customers for materials, information, services, knowledge, and capability but also to the intangible elements that drive the cost to provide this level of service. We are moving to the era of real-time supply chains. That involves understanding and predicting what internal users and customers will need right now, even before they themselves recognize that they need it.
Digitize the supply chain to increase visibility and maximize velocity
Response velocity is the next capability that will define competitive survival. In a single-digit growth world, velocity will become the only thing that matters. Velocity is the ability of an organization to drive working capital rapidly from suppliers through end customers.
To improve velocity, we require visibility. Visibility requires transparency, which in turn can be leveraged through the new technological capabilities of inexpensive cloud-based computing, distributed computing “at the edge,” and the growth of a digital ecosystem.
In concert, these elements move supply chain activities towards a frictionless and sustainable future. Visibility allows individuals to see what is going on, and empower these individuals to interpret information and rapidly make decisions in response to data.
Those who harness these technologies through collective innovation with their supply chain partners will win. These principles are not new. Many of the concepts around “lean production systems” have emphasized flow and visibility; however, in the context of supply chain digitization, these concepts have a new meaning and importance.
Digital disruption is coming to the supply chain
Velocity and visibility are only possible to the extent today because of the evolution of technology. Clearly, the establishment of the Internet spurred the explosion of information and the plethora of supply chain management tools and applications now harvesting data, driving the evolution of “cognitive” computing.
Yet this disruption has not fully matured; in fact, it is really only just beginning. As organizations begin to engage and mediate impacts upstream and downstream, the power of this force will become evident. Companies that can fully leverage technology to increase visibility and maximize velocity will not only survive but thrive.
For more insights from Rob and other transportation experts, read “Transforming Transportation for the Intelligent Enterprise.”