Executive Briefings

A Supply Network for the Amazon Age

The biggest companies by market capitalization 15 years ago were deeply rooted in the physical world. No. 3 Exxon sold you the gasoline to drive to no. 5 Walmart back in 2001. Even Microsoft, the no. 2 company, dealt largely in the OS and software for your notebook or desktop PC.

Financial markets today favor the virtual. Today's leaders by market capitalization — Apple, Alphabet, Microsoft, Amazon and Facebook — are all tech companies, mostly operating in the online world where you search Google on your iPhone or PC for product information, and buy it on Amazon or Facebook.

These are also the primal forces at play in a new dynamic of supply chains. Young suppliers, particularly in apparel, can now use the globalized, connected world to work with contract manufacturing and logistics providers, and tap online marketplaces, which allow them to grow from nothing to multi-million dollar competitors in a matter of months, not years.

They could not grow exponentially (or even exist) under the old world order that required building a supply chain largely from scratch. Sourcing material and manufacturers was more difficult than today's connected B2B ecommerce world. Developing markets meant clawing their way into retail chains and siloed sales channels.

A new kind of supply

Technology has created something that might be deemed a supply network, as opposed to a supply chain. A supply network includes multiple channels and multiple ways to distribute. It's the obviation of the need to run one's own system of warehouses, and the ability to sell beyond one or two channels. The supply network is holding stock not just in warehouses but with 3PL partners, including whatever you sell through Amazon.

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Financial markets today favor the virtual. Today's leaders by market capitalization — Apple, Alphabet, Microsoft, Amazon and Facebook — are all tech companies, mostly operating in the online world where you search Google on your iPhone or PC for product information, and buy it on Amazon or Facebook.

These are also the primal forces at play in a new dynamic of supply chains. Young suppliers, particularly in apparel, can now use the globalized, connected world to work with contract manufacturing and logistics providers, and tap online marketplaces, which allow them to grow from nothing to multi-million dollar competitors in a matter of months, not years.

They could not grow exponentially (or even exist) under the old world order that required building a supply chain largely from scratch. Sourcing material and manufacturers was more difficult than today's connected B2B ecommerce world. Developing markets meant clawing their way into retail chains and siloed sales channels.

A new kind of supply

Technology has created something that might be deemed a supply network, as opposed to a supply chain. A supply network includes multiple channels and multiple ways to distribute. It's the obviation of the need to run one's own system of warehouses, and the ability to sell beyond one or two channels. The supply network is holding stock not just in warehouses but with 3PL partners, including whatever you sell through Amazon.

Read Full Article