Sustainable Supply Network

I believe ‘supply chain’ is no longer an appropriate description because the combination of market demands and disruptions have fundamentally changed the supply requirements and now demands networked capabilities to meet the normal course of business. The pandemic has highlighted this new reality in a dramatic way through the waves of disruption that have been crashing on the supply chain. These disruptions have been systematically breaking the links in the supply chain and as a result demonstrated the importance of a ‘Supply Network’ in order to sustain the supply. It is too easy to call out the initial disruption of the pandemic as a black swan, a once in a lifetime, event and we would be foolish to think this will be resolved into a ‘new normal’. The new normal will more likely than not be made up of waves of disruption that demand a new sustainable supply network to provide the framework and foundation required to support the market going forward.

The disruptions we experience regularly and with increasing frequency have highlighted the need for a resilient and sustainable supply network that can flex and connect based on the current availability and capability in real time. This has quickly become a base requirement that a significant challenge to the technology and the culture of organizations and especially the marketplace. The disruption and the resulting changed demands on the supply network require agility and resilience to respond along with the tools and methods to swiftly sense the disruption and then just as swiftly determine the appropriate reaction, or series of potential reactions, to the disruption so the network can swiftly and efficiently execute the most appropriate reaction(s). There is no longer an option to perform deep analysis and study the disruption, the market now demands immediate reaction in order to implement a repair to the network from the disruption.

This is where it gets difficult, how does your network first sense the issue and then quickly and efficiently react? The simple answer is that without a real time networked solution that incorporates artificial intelligence tools to sense the issue and then machine learning to analyze the options there is really no way for a human to react is the necessary timeframe. The key to success in this global market is a resilient and sustainable supply network that can work collaboratively across nodes and partner to react and repair the issues. The challenge is overcoming the limitations of the legacy batch processes and practices.

This is something that requires a concerted and coordinated action plan across the global supply network in order to support the market demands. The answer is definitely not bringing manufacturing back to the local market because the global supply cannot support the demand effectively or efficiently. Unfortunately, there are really no ‘easy’ answers to the challenge and on top of this, the response requires a continuous analysis is real time in order to sense and respond in a manner that addresses the issue or the disruption. Disruption in the global market is never the same reason and always requires a combination of multiple responses from multiple supply partners. This is difficult and requires a network response in real time to support the market.

Our goal should not and cannot be to build a new normal, our goal instead must be building a resilient and sustainable network of partners that collaborates to support the changing demands. This is a difficult goal that will not get easier with time. Our current supply chain tools are not architected to support a network and this must be the first step in the journey. This will be a complicated challenge that requires a significant level of collaboration to achieve. Delay will only make the transition more difficult though.

Conversational Commerce

Conversational Commerce

The retail omni market, along with the entire retail supply chain collaborative network, is being driven by consumer demand towards a significant disruption that will transform the legacy consumer focus into a social commerce, or conversational commerce, marketplace. I think the conversational commerce name is highly descriptive of the transformation and provides a highly descriptive name to the next transformation wave. The next transformation wave will be focused on the two-way interaction between customer and retailer or customer and service provided or retailer and service provider, I’m sure you get the drift, creating an eComerce network market. The next transformation will eliminate the hierarchy across the retail marketplace and replace the hierarchy with a network of direct connections to the appropriate partner at the appropriate time in the retail transaction. The benefits of this model are dramatic for all parties involved and provide the framework for interaction through the next transformation wave.

Conversational commerce is the next logical step in the transformation of the social commerce marketplace network and provides a great way to frame the transformation. The focus of conversational commerce is a network of two-way interaction between consumers and partners to support shopping and purchasing in the omni market. This is a further clarification and more importantly an enhancement to shopping and purchasing in the marketplace. This creates a virtual shopping capability that incorporates virtually the interaction that normally occurs in the physical retail shopping trip. It provides the ability to interact across all of the parties involved in the shopping experience to provide the value-added services and products during the shopping experience that would be difficult in the current standard eCommerce or omni market shopping experience. The two-way interaction is a very powerful tool that will improve the shopping experience and increase the opportunities for additional sales and add-on services.

The transformation definitely requires a means to coordinate and direct the communications across the involved parties and this is where the control tower concept and technology comes into play. A control tower framework is required to provide a plug-and-play framework for communication and collaboration with external partners and even consumers that allows the partners to focus on the business benefits rather than the communication requirements. The control tower framework must be embraced and implemented across all of the partners to maintain the communication and realize the benefits. This framework provides the basis for integration from a message perspective to allow the partner to communicate with a partner in the most efficient manner for the partner while maintaining a clean and stable interface with their own internal systems. The framework provides an externally facing tool that is flexible and robust to simplify the addition and integration with other partners, it does not eliminate the work to external partners, it eliminates the work on the internal integration though to the business applications.

Conversational commerce focuses on the two-way communication between partners, including manufacturers, transport, service providers and consumers. This model will transform the omni channel retail marketplace again based on the consumer lifestyles and the consumer embrace of technology to support the social network. Conversational commerce is another term for what I have been calling social commerce which is the two-way direct communications with all players or partners involved in the retail marketplace. Consumers view retail shopping as a social experience which is why malls were so successful and now the consumers are using conversational commerce to create a virtual mall.

Artificial Intelligence Improving Logistics

Over the last few years there has been a great deal of interest and development in the area of artificial intelligence (AI) and the potential to improve the supply chain and logistics. There is an immense amount of data available across the supply chain from a combination of Internet of Things (IoT) devices connected directly to supply chain partners and then also a great deal information from your partners across the supply chain network. In addition to the data produced internally through process actions and functionality, there is now an immense amount of data available from external customers to the supply chain network via direct interaction within the extended network through partner portals and direct interactions and integration with supply chain external customers. The Internet and online interactions from eCommerce (B2B and B2C) provide a great deal of this data and supply chain partners would be foolish not to use this data to improve their logistics capabilities.

The challenge for the supply chain network has been two-fold;

• How to utilize the data
• What data to collect for both analysis and use

Artificial intelligence starts with the collection of data for analysis and this is an important starting point. There is no way early on in the collection of data to determine what will be important. This is because the analysis must be performed first to understand the potential use and value of the collected data. The intelligence part of the analysis also requires a great deal of information in order to validate the hypothesis and then to determine direction based on this intelligence. Starting with the data you can see why it is so important to collect everything because the intelligence part of the equation will generally require additional data from the same periods to confirm and validate direction.

It is important to collect all data then because you cannot tell what may be important for the analysis when determining direction. The good news here though is that storage is cheap and the technology to analyze vast amounts of data has been improved through game-changing improvements in technology. These two points have probably done more for the growth and development of artificial intelligence than any other developments over the last few years. These improvements in technology allow the supply chain to refine and redirect logistics activities and practices based on facts and data rather than hunches and hopes. Combine these two technologies with the growth of the Internet of Things capabilities and related technologies and the potential for improvements is almost overwhelming.

These increased capabilities bring improvements and opportunities in automation as well, including warehouse location and slotting, along with drones and robotics to improve efficiencies and especially accuracy while reducing costs. These are not the only areas of improvement than can be achieved through artificial intelligence. There will be improvements in volumes, inbound and outbound forecasts for instance, that will bring dramatic change to the supply chain as manufacturers and transportation providers revise their processes to incorporate the analytics into their plans and procedures. The warehouse operation though will also be dramatically impacted as artificial intelligence brings analytics to the equation that allows the operation to understand and immediately adjust labor forecasts to changes in the operation during the date based on near real time events. Artificial intelligence is just another factor bringing transformation to the supply chain and the supply chain must start with a baseline of continuous improvements in the flexibility and continuous change practices in order to meet the transformations.

Tom Brouillette
Contact: tom.brouillette.@gmail.com

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Tom Brouillette discusses supply chain trends and provides strategic business & technology advice to his followers.