Haslam College of Business - Future proofing your supply chain

Global supply chains are witnessing an unprecedented shift in power. The age old phrase “The Customer is King” was more lip service than reality until now. The advancement of technology has led to the empowerment of consumers – “the ultimate customers”. They want it all and they want it now! In the absence of brand loyalty and affiliations, today’s consumers are quick to satisfy their need with swiftly available substitutes. As a result, producers, manufacturers and retailers face significant challenges when it comes to integrating supply with demand. This has led experts to acknowledge that modern businesses are now competing on supply chains rather than on products.

In the coming decade, major cities will see their populations both double in numbers as well as age considerably. National and State boundaries will continue to dissolve transforming the globe into “mega-regions”. The traits of generation Y & Z will fuel the growth of high rise urban living. The economic strains on governments will see a rapid deterioration of infrastructure. As a consequence traditional modes of transport which are environmentally unfriendly and infrastructure dependent will no longer be fit for purpose.

In this evolving climate, agile supply chains that can flex in response to production and consumer behaviour will drive organisations to success. It is paramount that businesses focus on building and managing supply chains that operate effectively and efficiently. This will enable the final product or service to be delivered to the end user rapidly, economically and in a seamless manner.

The good news is that the technologies shaping consumer behaviour are part of a bigger wave of technological change that is also reshaping manufacturing, warehousing and transport. Manufacturing has already begun to move from offshoring to nearshoring, aided by technological advancements in 4D printing and Cobotics (collaborative robots). Increased congestion and transport costs have begun to justify the investment for urban high-rise warehouses located within metro districts. Automated trucks are on the horizon and will allow supply chains to operate with greater efficiency. Advancements in artificial intelligence in last mile deliveries will see new technology reach market readiness this decade. Drones and autonomous ground vehicles (AGVs) have already been trialled and commissioned in many parts of Europe and the USA.

As supply chains transform to cope with these new challenges, information will become a critical success factor. Businesses will need to invest in predictive analytics and artificial intelligence to enable multi-dimensional analysis. Business partners will need to develop trust in establishing “total supply collaboration”. Raw material suppliers, manufacturers, retailers and logistic service providers will need to work collaboratively passing real time information to each other both downstream and upstream. 3PL’s will need to change focus from customers to industry verticals, deploying new technologies and servicing industry verticals from upstream to customer.

The future will present some unprecedented supply chain disruptors. Those who build capability to embrace these challenges will be rewarded with immense opportunity. Whilst the changes are inevitable, the timing of investment in these technologies will differentiate the winners from the followers. The greatest fear is being ready too late and missing the revolution or investing too early on premature technology. We at Linfox are already investigating, and continue to invest in ensuring our agile supply chains remain future ready.

Afsal Rauf was sponsored by Linfox for the Executive MBA program in Global Supply Chain at the Haslam College of Business, The University of Tennessee. The programme is rated in the top 2 by Gartner 2017.