Can Your Supply Chain Keep Up With Technology?
New technology has rapidly impacted our everyday lives. Consumer technology advances are having a profound impact on the art of supply chain management, requiring constant evolution and rethinking of the way products are marketed, sold, produced, and delivered.
The Tesla Effect
In the automotive industry, customers will soon expect to be able to configure their vehicles to exact specifications and not wait over 45 days to receive it. Tesla is disrupting the way people buy cars with its high-end, zero inventory dealerships located inside malls.
When the Tesla supply chain catches up with the demand it has created for the Model 3, the rest of the industry could be on its heels. Imagine what happens when Tesla finally completes production and delivery of the over 420,000 orders that were secured with $1,000 deposits. If the average consumer can walk into a dealership and get a brand new Model 3 that same day, like they can do for a Honda Civic, or F-150 Pickup, that will put the industry on notice and force changes as a matter of survival.
Now, imagine all the B2B companies that supply parts for the automotive OEMs that will be dragged into the ‘I want my custom car now’ world. They have been living in a just-in-time, lean inventory world for years. What kind of challenges will they face if they are required to have all their SKUs readily available, across the street from the automotive assembly plant, so that Mr. Smith’s white leather steering wheel can be dropped into his custom car order, based on a mere 24 hours notice? If you are a CEO at a B2B-focused manufacturer, this kind of change should be keeping you up at night.
Logistics at the Cutting Edge
As we approach the vital last mile segments, new innovation is taking place.
IoT-enabled devices are capturing more granular information through cellular networks. Mobile apps empower anybody with a vehicle, creating a new class of delivery assets based on the Uber model. And autonomous vehicles are not far off. Could my next-door neighbor’s garage become the next Amazon mini-warehouse that is fully technology enabled through an Airbnb-like, crowd-sourced, DC solution?
Logistics will continue to play a key role as consumer behaviors continue to evolve. People are shopping from vast assortments of products and the expectation is that those products will arrive as ordered, rapidly.
When I recently ordered my electric drill through Amazon Prime, it arrived within 36 hours, as expected. But when the delivery driver showed up in a faded silver 2007 Toyota Camry that was stacked to the roof with Amazon Prime boxes, I realized the world of logistics is evolving just like retail. No more UPS or FedEx needed. Those expensive, proprietary parcel package scanners can easily be replicated and improved with an iPhone. But new technology, while amazing, is not going to replace existing systems overnight. Most large and mid-sized companies have invested billions of dollars and decades of time evolving their supply chain systems and processes. The key is marrying new technologies with existing systems in a way that extends those investments quickly.
In logistics, supply chain visibility represents an early opportunity, because data is the fuel that drives any tracking solution. Mobile devices, sensors, and GPS systems can all infuse robust visibility systems with additional sources of information without the need to hard-wire partners and various technologies via Electronic Data Interchange.
Stepping Into the Future
Regardless of which technology becomes a true disruptive force and what turns out be an over-hyped IT blip for the history books, one thing is certain. Innovation has moved beyond simply improving and automating processes. Entire new business categories are emerging and will continue to change our personal and professional lives.
As supply chain industry practitioners, the biggest challenge will be figuring out what is real, where to start and how to avoid being disrupted into bankruptcy. The barrier to entry is dropping, and there are literally thousands of new companies ramping up and stealing market share from the established players. Supply chain can be an area of defense for established companies, but if crowd-sourced manufacturing and logistics becomes readily available in the near future, all bets are off.