What We Get Wrong About Digitization and Supply Chain's Future

    Posted by Sean Elliott, CTO on Jan 6, 2020 9:00:00 AM

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    Whereas traditional growth models can be summarized in concepts of “more”— more racks, more servers, more space, more workforce — the future requires a shift towards leaner, smarter strategies focused on business agility. Digitization represents this shift in mindset and technology. Businesses need to learn how to operate within smaller footprints; process high-volume, low SKU orders; manage inventory in fluctuating markets, and execute across a wider, interspersed fulfillment network. This requires proactive planning and the technological means to pivot at the speed of customer expectations.

    The old ways are becoming less effective in today’s economic climate, pushing businesses toward the next thing. Yet, there’s a flaw in how the supply chain industry generally talks about digitization and the supply chain of the future.

    The Digital Lifecycle of Supply Chain

    Adoption and market penetration takes some time, but you would be hard-pressed to find a supply chain manager that doesn’t buy into the value of digitization. So, where do we get it wrong? The mindset toward the technologies and point solutions within digitization leave some businesses vulnerable. Some may look to robotics. Others may think about artificial intelligence (AI) or myriad solutions under the digitization banner. However, we can’t look to solutions as the end—there needs to be a mindset of continual evolution.

    The supply chain of the future has no endpoint. The digital lifecycle represents the stages leading businesses through the acquisition of new solutions, identifying the next wave of challenges proactively, and repeating this process of improvement to stay ahead. If success was defined by having technology faster than the competition, our bosses would have replaced all of us with robotics by now. The ultimate goal is to meet customer demand and win share through profitable supply chain process. A programmatic approach to supply chain keeps you forward-looking. A project-based approach will always be reactive.

    Watch Sean Elliott’s views on the supply chain of the future, originally appearing in SupplyChainBrain

    Eye on the Supply Chain Prize

    Why does a project-based approach fall short? The simplest answer is the same reason why businesses launch these projects: customers. As much as we love them, today’s consumer creates chaos. You can’t blink. Habits and trends in consumer appetites change far quicker than most supply chains can handle. This puts operations in an upheaval and can tear down forecasts overnight (for good, bad, or otherwise).

    Traditional supply chain strategy lays out a five-year vision that forecasts cost, consumer demand, throughput, and other parameters as needed by the business. These cycles offer valuable far-sighted roadmaps, milestones, and KPIs. But, consumer trends change on far shorter cycles. Building in a short-horizon layer to compliment a long-term vision helps businesses react to market conditions that come in three, six, or nine-month windows. This requires predictive demand planning and warehouse management systems nimble enough to pivot with the market.

    First, you build the roadmap. Then, you build a culture and DNA of responsiveness into your supply chain operations. This not only achieves operational excellence for today’s challenges—you also build resiliency and agility into operations that lasts.

    Topics: Warehouse Management Systems (WMS), supply chain