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The Future of Supply Chains: Preparing for the Next 10 Years

Posted by Kristi Montgomery on Nov 28, 2018 8:35:00 AM

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If you could tell a warehouse manager back in 1980 that someday robots would be working alongside humans in the racks, or that individual items could be tracked and traced in real time, they would have laughed it off as science fiction. Every day, innovations that weren't even conceivable a decade ago are used without a second thought. It's a humbling thought and one that raises some incredible questions about the technology that awaits the industry in the years ahead.

Can you possibly prepare for a supply chain future that may be completely inconceivable right now? The answer is not only yes, but definitively so. Just like any business opportunity, the spoils of a market "war" will go to the company that has best prepared, and that has aligned itself to face the unknowns. This practice rewards forward-thinking—quite literally, in this case—supply chain and warehouse management teams that accept and embrace the change will revolutionize workflows many times over between now and retirement.

However, this strategy involves more than parts of your supply chain watching for simple leaps forward in tech evolution. It's a holistic approach and one that needs to be adopted supply chain wide. Much like the most successful business philosophies (lean, six sigma, Total Quality Management (TQM)) a handful of individuals acting alone won't—and can't—affect company-wide changes for the better—it takes an organizational shift.

Bracing for "Doomsday Situations" in your Market

Progress has a way of suddenly and rapidly upending entire swaths of the marketplace. Consider the approach disparity between Kodak and rival Fujifilm: while Kodak waved off the concept of digital cameras replacing analog versions, Fujifilm saw the writing on the wall. They began brainstorming alternate uses for their film components. Collagen, which is known for its health and beauty benefits, was a component of their film. By switching gears and planning for the day when film no longer thrived, they now reap the benefits from a newly-formed skin care/Biomed division. Kodak, conversely, struggles to remain relevant in an unapologetically digital world and has seen their stock prices tumbled more than 90% in only four short years.

What is your industry's analog camera story? What fundamental aspect is poised for a jolt of tech disruption?

Specifically, if the work that forms the core of your brand were completely digitized or automated tomorrow, would your unique offering survive the transition?

Would your product simply become just another mass-produced item, easily lost in the shuffle, or would it maintain its distinctiveness and therefore its enticing market position?

These are difficult, oftentimes unpleasant questions to consider, but they're absolutely crucial thought experiments if you're aiming to survive a sudden paradigm shift.

Prepare for: Major Changes in Manufacturing and Warehousing

The very structure of supply and demand is changing, and supply chains along with it. On-demand manufacturing, ordering, shipping, and even custom creations are the final frontier for impressing jaded customers; speed and precision are more important than ever before. Consumers are more demanding. They don't just want an order confirmation in their email—they want a push notification from a dedicated app on their smartphone, a clickable tracking code that tells them precisely when an item is due to arrive. Rather than focusing solely on getting items out the door, your warehouse teams now have to be concerned with the entire product journey, not to mention reverse logistics.

Rather than try and reinvent the wheel at hundreds of warehouse locations across the country, companies are learning to compartmentalize customized aspects to stay lean and efficient. There's a valuable lesson to be learned there. The base units may all come from a large factory nearby or attached to brand headquarters, for example, but certain components (features/options, different color choices, tailored sizes) are applied or paired up closer to the end consumer's location. This keeps overhead low and plenty of flexibility in the supply chain. warehouse-robots-pallet

Warehouse labor is changing as well: rather than "routine work" moving pallets in and out, the hardest physical labor is being shifted to robots. This minimizes a great deal of the injury risk—no heavy lifting or repetitive motion is necessary—and frees up associates to do specialized work and more value-added functions. The supply chain system as a whole benefit by leaving skilled labor to non-mechanical team members, and vice-versa.

Prepare for: Disruptions in the Way You Sell Your Products

Whether it's buying in person, buying online, or even buying through apps on a mobile device: omnichannel is living up to its name. Despite Amazon's best efforts, brick-and-mortar stores won't vanish anytime soon, but don't be surprised if emerging technologies become commonplace in your favorite local shop. Interfaces like augmented reality available through wearable devices as well as phone apps can make everything from browsing to price-checking to inventory visibility a breeze. As same-day and rapid delivery services become the norm, it's entirely possible that buying items that "aren't in stock" and getting them the same day anyway may become equally commonplace. Blockchain technology behind cryptocurrencies like Bitcoin may also be used to verify identity in purchases and sales.

Evaluate your current shipment processes. Can they be modified for unique third-party delivery services, such as drones or couriers in urban areas? If not, it's a good time to start looking at product development through a different lens so you can take advantage of new delivery modalities as they arise. Likewise with returns: are you prepared to determine if an item came from your warehouse, how to assess any damage, and how to determine a refund to an impatient consumer? Ideally, the way you handle returns will define your brand concept just as strongly as your initial product offering.

Prepare for: Changes To Your Workforce

robot-engineerYour incoming workers will have skills that, again, weren't even conceptualized a decade ago. Are you poised to use them, or are you doggedly focusing on "classic" skills that may or may not be of actual use in your future workflows? With college courses and concentrations in big data and business analytics growing at a fantastic rate, your company could be in an enviable position to snap these vibrant graduates up as soon as they start looking for work. If you want to deliver a competitive advantage, make sure to stock your team with data IT experts and automation engineer professionals to avoid e-commerce issues throwing a wrench into the works. If you add robotic or automated processes to your supply chain teams, make sure you back them up with robot "handlers" on the same team. A human element will be necessary to make sure human and machine "play nice" with one another, particularly in a competitive industry. Robots and systems will also need to be upgraded and maintained periodically to remain in working order, so hiring an individual who is capable of doing so will save you many headaches later on.

To Sum It Up

Change is good, as the saying goes, but it's certainly not easy. Keeping your eyes on the future will help you make decisions for your company that aren't just positive and helpful today, they'll be "future proof" as well. Don't be an analog camera in a world of high-definition smartphone snaps: ask, learn, research, and most importantly, do when it comes to your supply chain. To find more actionable insights, don't miss our Supply Chain Innovation eBook, a look behind the scenes, as well as a roadmap for supply chain success.

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Kristi Montgomery

Written by Kristi Montgomery

Vice President, Innovation, Research & Development