Supply chain is getting a tremendous amount of attention lately, and deservedly so. The supply chain (plan, source, make, deliver, return) encompasses a significant amount of most organization’s budget, has a direct impact on cash use and availability, and has a significant impact on sales and customer service. There are many books discussing supply chain management focused on current trends and technologies. In this blog, i want to focus more on what’s next. There are three key areas that I see as disrupters; 3D printing, Omni-channel fulfillment, and the demand-driven supply chain. Prepare now, or perish later!
3D printing printing will significantly disrupt supply chains. The ability to print items on demand at a store, in the home, through a kiosk at a mall, etc. will finally achieve the holy grail of retail…mass customization. Organizations will have to re-think the design of their networks, their inventory policy/placement strategy, rationalize SKU’s based on margin/predictability/customer expectations and segment supply chains accordingly. As 3D printing technology evolves in terms of size/material compatibility, and as the prices of printers/materials decline this technology will gain traction. This technology will reduce capital requirements, support the demand-driven supply chain, and have far-reaching implications across the supply chain. Organizations need to think through those implications and prepare now to mitigate the impact and leverage the technology to their advantage.
Omni-channel fulfillment is the ability to fulfill an order from any supply chain node (supplier, store, DC, etc.) to any destination (home, store, locker, etc.) the customer requires. This will have a significant impact on inventory management, order management, distribution, and transportation. Global inventory visibility across all channels will become a requirement. Order management systems will need to be intelligent enough to route the order to the appropriate node based on cost, speed, labor availability, demand/markdown potential, etc. Distribution centers will need to fulfill multiple channels from the same DC footprint. Stores will need to act as mini fulfillment centers to pick/pack/ship orders to end customers. Transportation networks will need to be revisited to support higher parcel volumes due to ECommerce orders and to support same-day delivery requirements demanded by customers and to stay competitive in their markets. The time to act is now or risk being a footnote in the annals of history similar to Circuit City and Borders.
The demand-driven supply chain has been discussed for quite some time, but recent advances in technology have made it a reality. Connecting all points in the supply chain from demand back through planning/sourcing, and leveraging real-time sales data through POS integration and other technologies allows organizations to rapidly identify shifts in demand patterns. The first piece is detecting demand. The much more difficult piece is creating an adaptable and fluid supply chain that can shift to match demand. Leveraging technology such as control towers is one possible solution. Connecting all nodes in the supply chain, seeing inventory and shipment moves at every point, and creating algorithms to shift orders, shipments, and production points real-time will be a requirement to create a truly demand-driven supply chain. The benefits of executing successfully will be higher sales, faster order-to-cash cycle, reduced working capital, and reduced operational costs. There are many moving parts to creating a truly demand-driven supply chain, and the time to act is now!
The three areas identified above will disrupt organizations supply chains significantly. Disruptive practices have a way of creeping up slowly and quietly before they get loud enough for organizations to hear and react. Don’t wait for that noise; react now! Organizations that take this advice to heart will thrive. Organizations that do not will suffer and struggle to compete in tomorrow’s world.