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Changing the 'Dominant Design' of Distribution

Chris Caplice, executive director of the MIT Center for Transportation and Logistics, discusses his research on identifying dominant designs in logistics and how these designs, in which companies are heavily invested, may be disrupted by emerging trends.

A dominant design occurs in products once a standard feature set becomes the status quo, says Caplice, who is conducting research on a similar concepts in logistics.

"We wanted to see if there are standard practices that could be considered dominant designs in transportation and distribution," he says, and then look at how such designs impact corporate behavior. One dominant design identified by evaluating throughput at various U.S. ports is that a large percentage of finished goods consumed in the U.S are now manufactured overseas and brought in through the ports, he says. Evidence that this has become a dominant design can be seen in the big bets that railroads have made on transportation infrastructure to move goods from the ports.

Because dominant designs usually result in significant investments by affected companies, the second part of Caplice's research looked at trends that could disrupt the dominant design. Researchers identified four possibly disruptive trends:

" Densification, or shrinking the size of packaged goods, such as P&G has done by removing most of the water from detergents like Tide.

" Miniaturization, which is driven by smaller, more powerful computing technology that enables a smart phone, for example, to hold computing power that previously would have taken up a whole table.

" Growth and blending of omnichannels and associated changes in last mile delivery.

" Decentralization of manufacturing coupled with the digitization of products, two related trends that are characterized by lower economics of scale for manufacturing and manufacturing closer to the point of consumption, using technologies like robotics and 3D printing.

These last trends have the most potential for impacting dominant designs in distribution, Caplice says, because they will result in more products being made locally, closer to the consumer. "Just don't ask me when," he says.

For transportation, the biggest change will be in the type and distance of goods carried - more raw materials for longer distances and finished goods for shorter distances. For manufacturers, the challenge will be to separate out intellectual property from the product itself, Caplice says, "because the IP will be the most important piece."

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Keywords: Supply chain, supply chain management, supply chain management scm, inventory management, inventory management it, value chain, value chain it, global logistics, transportation management, logistics management, logistics & supply chain, supply chain solutions, supply chain planning, supply chain risk management

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