Is the Supply Chain Undergoing an Existential Shift?

Posted by Buck Devashish on Aug 13, 2019, 8:59:36 AM

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It’s often been said that business process changes precede technology and software. Companies would first define their frameworks and then seek out software to support those established practices. However, much has changed in the 21st century. The rapid evolution of supply chain software and technology has transformed the industry landscape into a far more complex, fast-paced, demanding, global, and networked ecosystem. To keep up with these changes and to seize upon new opportunities, practitioners have begun shifting their approach to acquiring and implementing emerging supply chain software and technology. Rather than apply new technologies and other innovations to existing frameworks, successful and far-sighted practitioners are increasingly thinking about what new possibilities these innovations hold and how their use might help them pivot to more effective processes.

How Software & Technology Precede Process

The iPod has long been regarded as one of the most revolutionary product innovations, but few have stopped to consider what secured its success in a way that prior generations of Personal Digital Assistants (PDAs) and portable MP3 music players couldn’t manage. The real unsung innovation was iTunes, which provided people with a means to start buying one song at a time rather than committing to a full album just to acquire the three songs they enjoy. In this case, the iTunes technology was deployed first, and the industry shifted around it, cutting out and upending unnecessary physical elements of the supply chain. Ironically, streaming options like Spotify would then further upend iTunes and its digital supply chain as well, and even catch Apple off-guard.

supply-chain-software-order-centricNASA’s innovative application of 3D printing for its International Space Station program is another example of technology preceding process. One of their greatest challenges in maintaining the station has always been optimizing the payload for food and supply deliveries to the astronauts, as well as maximizing precious cargo space and planning for rocket failures that could result in failed deliveries. NASA devised a clever way to address one of these critical challenges: They used 3D printing to change their process. By furnishing the space station with a 3D printer, they no longer have to worry about sending timely assortments of spare parts, like screws, nuts, and bolts; now, they simply send blocks of material from which these various parts can be printed on-site, on-demand.

Outdated Processes That Hold Businesses Back

There is a similar, subtle, and overlooked opportunity that has the potential to transform supply chain operations and revolutionize how business is done.

For far too long, supply chain execution has been occurring in functional silos. Customer and order management, transportation management, supplier and purchase management, returns management, and other such systems operate as independent entities and are only tenuously tied together through connective interfaces and integrations. Some ‘visionary’ vendors have at least gone so far as to cobble together suites of solutions that allow customers to obtain all these siloed capabilities from a single vendor. However, the issue of each process operating in its silo persists.

supply-chain-software-order-centric-highwayThe problem of highway expansion offers a good analogy to why this approach to supply chain software is problematic. It has been found that adding an extra lane to an existing road only offers short-term alleviation to traffic problems. Eventually, more vehicles start using the highway to take advantage of the additional lane, again leading to congestion. The only sustainable solution is to consider a fundamentally different approach, such as introducing mass transit through commuter rail and subway lines.

The supply chain is at a similar cross roads. Businesses tend to focus on incremental changes to supply chain systems which, like adding lanes to a highway, offer only short-term or sub-optimal benefits. In other words, this kind of narrow attention misses out on far more rewarding opportunities.

A Revolutionary Approach to Supply Chain Execution

What fundamentally links those disparate capabilities together is the order. Whatever the ‘type’ – from sales to a purchase orders to return material authorizations – they all exist in a continuum. That is, each order type may spawn or merge into other orders, like transportation orders, manufacturing orders, shipments, refurbishment processing, and inspections. Most connective software and suites don’t realize the supply chain as a complex ecosystem and therefore artificially repeat data and impose boundaries between flows, preventing greater optimization opportunities.

Order-centric platforms allow businesses to revolutionize how they manage and leverage their networked supply chain by spanning across it. Those who work in silos can optimize their inbound flows and optimize their outbound flows separately, sometimes to the disadvantage of one or the other flow. Alternatively, order-centric supply chain software integrates inbound and outbound streams to create one smooth and continuous end-to-end flow. This way, companies can leverage every opportunity to optimize and better serve the market – all while enhancing customer service, maximizing revenue, and reducing costs.

supply-chain-software-order-centric-flowsFor instance, unified flows allow companies to consolidate and merge orders with different delivery requirements and enables seamless, multi-channel operations in which every touch point with a customer – whether while placing a new order or processing a return or service part – offers an opportunity to improve, optimize, and earn sustained customer loyalty.

Unified flows can thus enhance the end-to-end execution process, rather than merely optimize one leg to the potential detriment of another upstream or downstream element.

The peril of siloed operations is evidenced by the recent pressures posed on e-commerce providers to offer multiple delivery options, including next day and, in many cases, same-day, delivery. Unless the systems-enabled process works holistically, by dynamically determining cost of fulfillment and weighing that against the value of the order and its profitability, e-commerce operations can become money-losing businesses.

The Potential for a Paradigm Shift

This convergence of technology with the supply chain, as well as companies’ growing desire to proactively leverage technologies to maintain competitive supply chains, are promoting professional roles that increasingly incorporate both the technological and business aspects of what high level positions now demand. The commerce sector has adopted “digital officers” who represent both sides of the coin: technology and commerce. These changes foreshadow the future of the industry: They point to the growing likelihood that companies will recognize how vital it is to anticipate the value of technological innovations, like order-centric supply chain solutions, and to design their processes around them, so that they are differentiated and competitive for the foreseeable future.

 

Topics: Supply Chain Trends, Order Management, Supply Chain Orchestration, Supply Chain Transformation, Order-Centric

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