Multiple business influences mean that managing global supply chains in a digital economy requires a new perspective and skill set not yet robust in many firms. Achieving this end state requires transformation of key supply chain activities – one of which is transportation. -Karl B. Manrodt, Professor of Logistics and Supply Chain Management, Georgia College & State University; and Mary Collins Holcomb, Professor of Supply Chain Management, University of Tennessee
At a conference sponsored by project44 this past fall, Kurt Cavano of GT Nexus spoke about changes impacting the world around us. A naval yard near his home printed a stainless steel manifold for one of the ship’s engines. And the start-up in New York that Kurt advises can knit a dress in under 30 minutes. Artificial intelligence is growing rapidly in several areas. This digital environment must be connected as supply chains are challenged with increasing complexity, shorter product lifecycles, and escalating pressure to reduce costs while increasing service. The conundrum is this: technology is making it possible for businesses to operate at digital speed, but will the supply chain be able to keep pace?
Cavano’s presentation collaborates much of the findings from our 26th Annual Study of Logistics and Transportation Trends. Companies are adopting new business models as customer requirements and speed become more critical parts of winning the order. Firms are adopting a mix strategy (be all things to all people) at a higher rate than ever before. In 2017, roughly 75 percent of the participants adopted this strategy, compared to 51 percent in 2016. We believe the growth in this strategic approach reflects a competitive response to managing multiple distribution networks, including the increasing e-commerce channel.
Creating a supply chain that is capable of operating at digital speed means all activities must also move at digital speed. Transportation is one of those activities. It begins from the outside in with a fundamental understanding that customers are making buying decisions on both price and availability. Price is the order qualifier, but availability along with speed are the order winners. Today’s customers expect availability, and in many cases are willing to pay for this convenience in addition to shorter and shorter order fulfillment times. Does Amazon Prime Now ring a bell?
What should shippers and carriers work on as 2018 starts to unfold?
Start the discussion. Both shippers and carriers need to jointly plan how they will create a shared competitive advantage asking questions. Which customers will grow? What future needs will different customer segments have? What capabilities will we need separately and jointly? What role will transportation providers play in managing autonomous fleets? What supply chain and transportation skill sets will we need in five years?
Get a better understanding of the resources you’ll need to make the transformation. Transformation won’t happen overnight. It requires a single-minded focus on the desired end state with input from suppliers, customers, consumers and experts.
Map a direction forward. It isn’t the direction forward, but one of many. Flexibility and adaptability will be key as the rate of change suggests that transformation will become a continual course of action in a digital economy.
The increase in companies adopting a mix strategy suggests that supply chains are complex systems where efficiency is usually not effective, and effectiveness alone ignores the creation of differentiated value leading to increased profitability. The winners in this digital economy will be integrated supply chains that jointly plan for continuous transformation. Transportation is a logical starting point to move this forward. Will you lead or be left behind?
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