Retail Supply Chain Disruptors

The retail supply chain is certainly going through a disruption period now for a while from a few factors including the Internet of Things and changes to consumer delivery practices.  There are many other results of this period of disruption and it certainly seems at this point that we are entering into a period of continuous disruption in the supply chain. There are many factors driving these changes and is see the latest ones as coming from Amazon and third party logistics providers and the collaborative network.  Amazon is a continuing disruptor that has developed a culture of disruption in the retail market that people have been chasing since it entered the marketplace. Third party logistics providers and the collaborative network are the new players in the continuing disruption and it will be interesting to see how this plays out in the future.

Third party logistics providers have been around and developed a strong catalog of services and capabilities to support the retail market that have allowed retailers to outsource their needs effectively and quickly.  The 3PL market enables their partners to quickly achieve capabilities that would have cost a great deal of time and effort to develop on their own. The 3PL provides the service and takes on the risk of fulfillment for product types and demands and the retailers can take advantage of the service for a fee.  This type of fulfillment model is ideal for this disruptive retail market to provide the services to retailers based on their demands at the time. The benefits to the retailer are speed to market and reduced risk. This is delivered by the 3PL through their network of locations and services that the 3PL has been developing for many years.  This model was an early precursor to the collaborative network and essentially proved the concept and the benefits of the collaborative network.

This brings me to the collaborative network and the growing and potential benefits of the network to support and drive the continued disruption of the retail market.  Similar to the third party logistics partners, the collaborative network provides the foundation and the framework for the partners in the network to collaborate to develop new services and also supports the extension and growth of niche service providers to flourish and quickly support the changing demands of the retail market.  These services and demands are the result of both market demands and the experimentation of partners in new services to support the retail market, very similar to the 3PL providers. This collaborative network provides the benefits of the services and capabilities from partners in the network without the efforts and time to develop the services themselves.  This network provides the environment that encourages and supports experimentation while sharing the cost and the risk across a broad spectrum of partners.

The combination of 3PL partners and the collaborative network provides the basis for a continuous disruption pattern and delivery across the retail market.  In the past this type of disruption was driven by large players such as Amazon and they were very successful for a long time. Now though the collaborative network partnerships present this same ability and potential that Amazon developed internally for the partners in the network.  This is no small feet and the potential and relative risk to the partners in the network negligible as it relates to the potential rewards.