Heraclitus, the pre-Socratic Greek philosopher, is attributed with the revelation that “Change is the only constant in life”. The meaning is to highlight the need for us to plan and prepare for change in every aspect of our lives. Supply chains have always evolved and changed by their nature. However contrary to Heraclitus it is appears that even change is not constant. In the recent years the complexity and the pace of Supply Chain change has gone into overdrive and we should expect this exponential rate of change to continue.
When Change was constant
To get a perspective of the true magnitude of recent change, one does not have to think too far back to when supply chains were actually linear chains with firm established links. Trading partner relationships were long standing. However modern supply chains look more like global fragmented networks of known and speculative supply, demand, and capacity.
There was a concept of brand loyalty and many consumer products lived long static lives. My parents had the same phone in their house for twenty years. Now phones are changed like last season’s fashion. Consumer expectations are now very different. The number of product varieties much smaller. 1965 Colgate made one type of toothpaste. In 2012 they make 17 types. Longer life cycles and less variety meant that higher inventories could be maintained without concern of cost or obsolescence. Life was simpler.
However all of this change is relatively constant compared to the current day of disruptive digital technologies and the effect they have on modern supply chains.
Supply Chains are no longer chains.
The “Internet of things” is growing at a rate of 330 million connected devices every month. This provides real-time information about alternative supply, demand, and capacity opportunities. As a result our supply chains have becoming interwoven networks where flows of information and materials perpetually change from one day to the next. The proliferation of trading relationships available in the Cloud reduce barriers to new market entrants. A new product concept no longer requires significant upfront investment. A start-up can outsource operational activities online such as manufacturing, logistics, and marketing.
Consumer behaviour is changing as they become more informed. “Virtual Assistants” acting as a consumer buying intermediator focuses the purchase on the capability, not necessarily the brand.
As the volume of real-time decision supporting data at our fingertips increases dramatically, so does our ability to digest it using machine learning and augmented analytics techniques. Supply Chains practitioners can identify and response to trends and exceptions to maximise the effectiveness of their supply chain.
Change of this scale is set to continue.
Defend or Attack.
Digital disruption doesn’t just happen, there is always intent. To effectively future-proof your supply chain one must both defend against disruption whilst exploiting the opportunities that disruption presents.
The future-proof supply chain will defend against disruption by becoming more agile and adaptable. It will be able to readily identify risks and opportunities in a timely way. It will be able to rapidly simulate and measure possible responses and execute the most appropriate for the enterprise. This will require end-to-end Supply Chain visibility. Not the traditional silo’ed picture of demand, supply, and capacities. The future proof supply chain will have end to end visibility across demand signals from the Customer’s customer and supply signals from supplier’s supplier. In some supply chains this means also a vertical visibility. A local supply chain needs global visibility and a global supply chain needs local visibility. The future proof supply chain will require visibility of more than just the numbers. It must be exception driven, not just identifying and resolving potential risks, but also potential opportunities.
Disruption invariably presents opportunities. To quote Sun-Tzu (The Art of War) “In the midst of chaos, there is also opportunity”. The future-proof supply chain will exploit disruption by adopting the customer centricity mind-set of future supply chains. A consumer goods supply chain may include consumer self-service portals and provide access to consumer aligned information. An example could be a mobile app to scan a consumer barcode showing the source of ingredients.
I am sure our supply chain forefathers of Eliyahu Goldratt and Oliver Wight never had worry about supply chain cyber-attacks or the impacts of quantum computing.
What digital disruption is your supply chain encountering? What strategies are being used to defend against and exploit the disruption?