COVID-19 Disruption Demands Supply Chain Elasticity

The time to react to an extreme disruption such as the COVID-19 pandemic is not when the pandemic is imminent, or in the midst of the pandemic. The time to react is before the pandemic, or the disruption event, to prepare reactions based on the potential. This enables your organization to identify and evaluate potential reactions prior to the event and this dramatically reduces reaction and also ensures appropriate and effective reaction. Reaction to a disruption requires elasticity in the process and the organization in order to bend and stretch rather than break. Reaction to disruption also requires the ability to sense the disruption in time to react.

Recently there is a great deal of bluster focused on the dangers of the global supply chain that suggests the only way to eliminate the risk is to move manufacturing back to the US. This sounds great in a sound bite but is really not feasible and would never move forward. There are a few significant challenges to moving manufacturing back to the US starting with the challenge of an increased cost resulting from

products manufactured in the US. The US has been addicted to the cost savings delivered by global manufacturing and it will be next to impossible to wean off that drug. The other challenge is the people and manufacturing capacity that would be required to meet the consumer demand.

The appropriate solution involves a flexible and nimble global supply chain that incorporates backup and alternative options for both raw materials, manufacturing plants and even transport options to reduce the risk of disruption. The issue is not a global supply chain, the issue is the deficient risk identification and mitigation to react and address disruption. This requires a focus on analysis and reaction to respond and resolve the disruption. The supply chain must be able to react to difficult situations and conditions best described as VUCA (Volatility, Uncertainty, Complexity and Ambiguity) that requires the continuous ability to sense and react to disruption as it materializes.

As an industry we have implemented the process and the tools to respond to disruptions to ensure business continuity and now the use of these tools must be extended in order to react to the VUCA earlier in order to limit the business disruption. The challenge for the industry is the early planning and preparation for VUCA events so the reaction can be predetermined and practiced so the disruption can be limited. This requires robust tools and capabilities to sense the disruption earlier to allow time to implement the business continuity procedures.

The business continuity procedures must be predefined and practiced regularly so that they can be executed quickly and efficiently in response when the disruption is identified. This is standard operating procedures for businesses in the supply chain. One of the new factors to this continuing challenge is the types of disruption and the ‘surprise’ of the disruption. I think sensing and responding to VUCA must be the key starting point to business continuity. The definition of business disruption must be expanded to focus on VUCA and the analytics must be improved. The business continuity is not all or nothing and should be viewed as modules that should be engaged depending on the situation.

We must accept the fact that we have entered a time of extreme disruption and must focus on the ability to sense the disruption and quickly implement the response to the disruption. This means the business continuity procedures must be extended to be utilized in response more efficiently to the disruption. The first step though is focus on sensing the disruption! This is where tools and technology will play a key role, including advanced analytics and artificial intelligence and even process automation.

Disruption Driving Transformation Of The Supply Chain

 

Disruption displaces an existing market or industry to produce something new and more efficient and worthwhile. It is at once destructive and creative. Disruption in the marketplace is driving a transformation of the supply chain into a more efficient and flexible framework that can support the continuous disrupting forces. This transformation of the supply chain is driven not only by reaction to disrupting forces in the marketplace but also from the enabling technologies developing at a breakneck pace.

Historically, supply chain disruption has been described as a major breakdown in production or distribution nodes that comprise a supply chain. This definition of disruption implies an event within the supply chain that interrupts the normal process and flow that must be overcome to return to the pre-event state. However, technologies, especially eCommerce technology, coupled with improvements in network capabilities that are driven by consumer lifestyle demands have redefined disruption into a break that will never return to the pre-disruption normal, the disruption creates a new normal.

NOTE: The COVID-19 disruption is another example of disruption driven by consumer demands, in this case though there are additional disrupting factors that add to the equation. These factors include disruption in the manufacturing capabilities and also, more importantly, business continuity disruption that has highlighted the brittle nature of the pre-COVID-19 extended supply chain.

This process of recovery into a new normal is what makes up innovation and new capabilities for the market. Rather than a recovery to the pre-disruption state, the disruption produces a recognition of a need for innovation and change based on the market demands for innovation in the process. Disruptive innovations tend to be produced by outsiders and entrepreneurs in startups, rather than existing companies. This innovation cycle is now driven by consumer lifestyle demands colliding with the existing market practices creating an innovation cycle. This innovation cycle disrupted the continuous improvement cycled to a continuous innovation cycle and the market leaders recognized and adjusted to the change.

Currently, the waves of innovation in the market are driven by supply chain participants recognizing and developing features and functionality designed to meet customer expectations, partner needs and financial requirements. Supply chain disruption is the repurposing and realigning of existing capabilities to support changing consumer lifestyle demands. Then, just for good measure, the great disruptors add new supply chain capabilities to enhance the innovation.

The best change agents in the extended supply chain implement these features and functionality before the consumer recognizes the need. This drive to experiment based on sensing a market shift that creates the demand for goods and services is the actual driving force of disruptive innovation in the market. Disruptive innovation in the supply chain is a leading influence in remaking the market to meet consumer demands. Consumer demands are being driven at an enormous speed and this velocity of change requires robust tools and practices to react. I believe the supply chain is particularly ready and capable to develop these required tools and capabilities because of the history of disruption within the supply chain.

Shifting demands from all corners of the market—ranging from product and consumer services to supply chain partners—contribute to supply chain disruption and in turn are driving innovation in the supply chain as a reaction. Consumers as the ‘Great Disruptor’ in the marketplace and are driving the supply chain to innovate in capabilities and flexibility in order to react to the disruption. The supply chain innovators are driven by a spirit of experimentation that in turn allows them to innovate in the face of the discontinuous disruption. The best of the innovators incorporate the continuous improvement (PDCA - Plan, Do, Check, Act) practice to support the innovation cycles driven by the disruption.

This transformation will only increase in speed as disruption drives new disruption. We have entered an age of disruptive transformation driven by the demands of the market that is no longer accepting the status quo. In order to survive in the age of disruptive transformation the market partners must also embrace a practice of experimentation based on flexibility.

Supply Chain Reshaped By COVID-19 Disruption

There is no question that the Coronavirus has disrupted the world and in the face of all this disruption, the supply chain is being reshaped in reaction to the waves of disruption started by this pandemic. It is safe to say that the world social and economic order has been turned upside down during this time in reaction to the speed and the range of disruption driven by this virus. There has been no area left untouched at this point and the focus is on reaction and adjustments in reaction to the disruption. This requires more than ever extreme flexibility and robust collaboration and communication to sense and respond to the disruption.

I firmly believe that one of the key strengths developed over the years on the extended supply chain is the ability to sense and respond to disruption in a manner that efficiently identifies disrupting factors and resolves through a robust process of continuous improvement. The baseline tools, practices and procedures are in place to respond to the disruption and these have really been the foundation framework that has helped the supply chain to respond and continue to support the market.

The question now is - What process and procedures should be incorporated to allow the extended supply chain to support the multi-faceted waves of disruption that will continue?


These are some key factors that will support the velocity and impact of disruption:

First and foremost is robust, open and holistic collaboration practices. This is key to the ‘sense’ process in sense and response to the disruptions. This requires open sharing of information collected from all quarters in order to better understand relationships and impact of the disruption. Without the collaborative practices the response portion of sense and respond runs a great risk of reaction to the wrong cause of the disruption.

Data collection and analysis provides the information and identifies the relationships that are driving the disruption. There is really nothing new to the level of importance of data in the ability to first sense the disruption and then determine the cause and identify a reaction to the disruption.

Define and implement actions and change based on the data analysis in response to the disruption. One key to the implementation of change is the realization and acceptance that there is no silver bullet that will address the disruption. The disruption is fluid and the changes and reaction must be fluid as well!

The reaction in the system to the change must be reviewed and validated to confirm the response to the change provided a positive impact. This is starting the process over again.

Finally, the most important factor now is speed of reaction! This means multithreading reactions and actions with the analysis of the data. There are two key tool in this time to analyze reactions; the use of Artificial Intelligence and robust collaborative practices.

The guiding factor in this time of disruption must be ‘Don’t Panic and Respond to Data’! This will be the most difficult and greatest time of disruption and when you add the cultural and health disruption to this business disruption the impact can initially seem overwhelming. In order to overcome this feeling we must identify a program that includes a process of actions to address the disruption. We should be using the experience gained over the recent years driven by business and consumer disruption in order to meet the demands of the current disruption.

Robotic Process Automation And You

Robotic process automation is a capability segment that is growing quickly in large part because of the speed in which it can be delivered with limited risk. This is a natural progression to the growing autonomous automation capabilities including robotics. This next logical step of business process improvements combines business process analysis and improvements with software robots identified and driven by artificial intelligence tools and workers. Combine the potential benefits with the limited risk and the robotic process automation provides a very alluring opportunity to quickly add benefits and efficiencies to processes in the operation.



The challenge in the operation is continuous pressure on improvements in efficiencies; to do more work with less human interaction. Unfortunately for the operation, and logistics in the supply chain, robotic implementation can be very disruptive because of the dramatic change to the operation. This is where robotic process automation can bring value to automate the existing process without dramatic disruption. This will provide the opportunity to improve efficiencies while the disruptive projects can be implemented. In fact, I would suggest that robotic process automation be viewed as the first step in a robotic strategy because it provides the first step to proving the automation.



Within the operation the greatest disruption is brought about by the dramatic and sudden change that is demonstrated by physical robotic implementation in the warehouse operations. Robotics not only disrupt the operation and the process and flow of people and operations, it also disrupts the physical layout of the warehouse resulting from the robotics implementation. While there have been dramatic increases in efficiencies, volume and accuracy this must be tempered, initially at least, with the disruption in the warehouse. Don’t get me wrong, I’m a strong advocate of automation to improve the operation, I am only saying you must go into this with eyes wide open to understand and plan for the holistic impact to the operations.



Robotic process automation allows for a trial at increased automation to improve the efficiencies of the operation without dramatic change. This is a benefit not only to the operation, it is also a benefits strategic planning by providing a point of validation for the automation. This is a critical benefit because of the investment required for increased automation with autonomous robotics. The resulting increased efficiencies delivered by robotic process automation allow for a refocus by the operation to more complicated processes that may be more difficult to automate or require autonomous robotic automation.



Automation is a multi-faceted opportunity for improvement and must be viewed as such in strategic planning and strategic initiatives. The organization and operation especially must evaluate options based on the process and automation opportunity, all processes will not achieve improvement from the same automation tool. This is why it is so important to implement a robust and forward thinking strategic planning process to help identify the improvements.



Automation is another flavor of process evaluation and improvement that brings a new set of tools to the toolbox. It must be remembered that these tools excel in different scenarios and situations and the strategic planning process must be a focus to incorporate these new tools as appropriate. This incorporation of new tools is critical to the long term success of an organization and especially now considering the velocity of disruption. There is no time to wait and see how others use the tools. The key to success is embracing a strategic process that experiments and looks toward incremental change to stay ahead of disruption. Disruption is the tipping point of incremental change, unfortunately it is tool late to react to disruption and best case scenario is creating your own disruption.

Generation AI Influence On The Market

Artificial Intelligence has greatly impacted the supply chain and ‘you ain’t seen nothin yet’ as they say. The market disruption is driven by the combination of consumer embrace of technology and the growing embrace from technology savvy, older generations in the market and the workforce. These converging influences are driving the supply chain now to incorporate these same new technologies in combination with artificial intelligence in order to sense and respond to the disruption. Disruption in the market will only increase because of technology capability improvements and the imagination of the consumer. This imagination and experimentation will increase the disruption as the new generations increase their involvement in the market.

We are seeing now a dramatic increase in market participation by millennials and gen-x and in turn the market must be prepared to incorporate their reactions and demands. As for sensing the demands, there is so much information available now in the market based on the online habits that there is really no way to sift through this vast amount of data to succeed in reacting and meeting the demands without Artificial Intelligence. We are seeing now the results of poor the poor sense and respond capabilities in the marketplace with legacy brick and mortar retailers struggling with the disruption and lurching from one attempt to react to another. The market itself and the consumers have moved on before these retailers can react. This is essentially a real time demonstration of the disruption in action and this will only increase in velocity.

The key disrupting factor now is mobile technology and how the younger generations are using this technology to support their lifestyle demands. This disruption has increased in velocity as the concepts are proven by early adopters and then spread through other consumer groups. Based on the embrace of mobile technology, what was once a strategic weapon is now almost a strategic albatross, I’m speaking of the number of brick and mortar stores. This embrace of mobile technology requires an equal embrace of the omni channel shopping experience by the large retailers. The current major disruption rolling through the retail market is related to the demands of consumers for a true omni channel experience. The retailers struggling are the larger retailers that have been slow to invest in technology to develop the experience.

Now we are seeing the results of this shopping disruption, especially in the large department store sector, where the early adapters are succeeding and the late adaptors are struggling! The struggling retailers are seeing the results of previous strategic practices to hold off on investment until the market settles and the winning technology has been selected by the market. As a result of the velocity of change in technology and use of the technology the winning technology is not selected by the market, instead the technology is embraced and usage of the technology modified and enhanced based on the users of the technology.

I see that the most significant disrupting factor in the market now is not related to technology use by the marketplace but related to the technology use by consumers within the market. Consumers have now turned the table on the market by developing methods that must be adopted by the market and retailers rather than the market pushing capabilities to the consumer. This is really where consumers are driving the market and this is also the most significant opportunity for a retailer such as Amazon or now Wal Mart to really reshape the relationship with the consumer and in doing this reshaping the market itself.

Data Analytics And Artificial Intelligence Driving Disruption

One of the most critical capabilities to responding to change and disruption in the marketplace is the ability to sense the change in a manner and, most importantly, timeframe that allows a response to be identified and executed. The frequency and discontinuous nature of change rocking the market requires a robust process that takes into account as many factors as possible to identify the change. This process then must describe factors and relationships to allow them to be analyzed to develop the response. The difficulty lies in the volume of data, both new and old, that must be taken into account to first identify the change and second to guide in determining a response. This is where data analytics practices utilizing artificial intelligence comes into the equation to support the business.

The two challenges; data for analytics and the actual analytics require a thoughtful strategy and approach that will allow you to sense the demands from the market in both a manner and a timeframe that will meet the velocity of change requirements. These challenges go hand-in-hand as two sides of the same coin; you cannot sense the change without a great deal of data to analyze and you cannot analyze the amount of data without the artificial intelligence to process large amounts of data.

From the data perspective it is very fortunate that the big data tools and storage technology has advanced to the stage were the collection and maintenance of the data is no longer an issue. This allows the collection of vast amounts of data available from all points of the supply chain and especially from the eCommerce channels. This data along the supply chain can now easily be captured for detailed analysis and because of the volume of data available the results of the analytics can be more accurate and more informative of trends. The important point here is the collection of data from the viewpoint that the more data the better because you never know where the analysis will take you and in order to come to a conclusion you must have the data to analyze and also prove the concept.

Ten years ago, in the early growth stages of big data, the challenge was the ability to collect and store the amounts of data for analysis and the analytic query tools to quickly perform the analysis. This required careful review of the data available to select the appropriate elements that you believed were necessary to produce the analytic results. Then the data collection required over night collection and the analytics were run to produce large reports in a daily schedule. Everything took time and you had to be careful to analyze the expected outcome. Now though because of the dramatic improvements in the technology the process and results are much more robust and immediate. Now there is no concern about the amount of data and the queries themselves are also much more interactive.

The analytics of the data presents the challenge in this equation and this is where the focus should be placed now. Artificial intelligence tools really come into play from this perspective to provide a value add to the equation. Artificial intelligence and machine learning will be a baseline requirement to allow the market to sense and then determine how to respond to the changing demands. These tools will are necessary to first sense and understand the demands of the market and then these same tools will provide the means to analyze the potential solutions and even forecast the impact to the market of change.

The key benefit of these tools is the speed of analytical results and then combine that with the delivery speed of a solution. Speed of sensing the demand and then speed of response are the objectives that must be front and center for the market and the participants in the market. All indicators based on technology lead to increased speed of demands and resulting disruption in the market and market participants will not have the time required for any manual analysis of these trends. In addition, only failure will come from participants that wait for the market to deliver a solution that they can adopt.

The participants that embrace artificial intelligence combined with machine learning will be the players that succeed and prosper in the market. The rate of failure that we have seen in the market will only increase as the velocity of changing demands increase. The good news is the building block tools to quickly and efficiently sense and respond to the increased velocity of changing demands are already available. The bad news is that the market participants must embrace the tools to develop their own practices to use the tools.

Social Networks Driving Supply Chain Disruption

Social network collaborative technologies have left a mark on the personal communications world in the way that the technologies encourage both immediate connections and in the communications capabilities between connections. You can see the impact across all areas of interaction and these tools and the new collaborative capabilities they enable have disrupted not only personal social interaction but also the retail marketplace and the extended supply chain network. The disruption in the supply chain network can be seen in all aspects of the supply chain that thrive on collaboration and interaction, in other words these capabilities have disrupted the supply chain network practices. The resulting waves of discontinuous disruption will continue to be felt across the supply chain network for a long time to come.

Social network technologies and the resulting collaboration technologies are founded on open and efficient communications through networks and across technology platforms. The extended supply chain and partners processes and procedures require open and efficient communications through networks and across technology platforms so this has been a match made in heaven. This embrace of technologies was simply waiting for the right moment of technology and extensions of network technologies and frankly imagination to rise and disrupt the supply chain.

The pieces and practices have been in place in the supply chain for a long time and really waiting for someone with the imagination and will to define and deliver the potential. The tools for communication between have been available through EDI technologies, for instance. These technologies have been enhanced though to support extended connectivity demands via improvements in network and wireless technologies. The Internet of Things (IoT) has played a key role in the disruption of the communication. These technologies continue to disrupt process and practices as capabilities are developed to support the demands.

The areas of focus and disruption change based on reactions to demands and imagination in delivery and capabilities. The LTL market, for instance is in the throws of a major disruption now based on shared ride technologies. This has flowed into freight forwarders and also customization demands to support inventory management for last mile deliveries. This is a great example of consumer demands driving the market to incorporate social technologies, in this case ride share technologies, into the business process to improve the practices. Another example of technologies and network capabilities impact on supply chain is the Iot tools and capabilities utilization to improve tracking and planning capabilities that has been a continuous improvement process for quite some time.

Blockchain tracking and tracing capabilities are incorporated to support demands of lot trace and date management for food products to provide historic product pedigree information accuracy. These capabilities were initially slow to acceptance and now the combination of market demands (read consumer demands), regulatory requirements to support recalls and improvements in technology and network capabilities are driving this to mainstream usage. Blockchain technologies already provide a great deal of benefits and while already delivered significant impact in the supply chain it is really still in its infancy and I expect the capabilities and usage to expand with new imaginative demand.

Retail disruption has combined with technologies to produce a discontinuous disruption in supply chain to support changing consumer demands. Disruptive forces have always been around and the big difference now is the speed of the disruption. This speed has been increased as a result of technology and network capabilities available to the consumer more than any other factor, the key factor to the discontinuous disruption is the embrace of technology by consumers. The technology, combined with the improvements and growth in networks allowed the consumer to drive change into the market. Then social networks and social network technology encouraged the spread of consumer and business use of the technology. Putting technology into the hands of consumers is driving the rate and size of disruptions.

The challenge for the market and the supply chain is the identification of important and key disruptions, in other words what disruption will have legs that allow the disruption to grow and expand in usage. Unfortunately, there is really no way to determine the winners and losers and so the supply chain must act on all. This is where social networks and collaboration really show their value. Social networks provide the means to sense the disruption and measure the speed of growth along with clarification of the disruption. Collaboration and collaborative development allow the supply chain to respond and react to the disruption.

Retail Renewal

The retail market is in a process of renewal as a result of the disruption brought about by the omni market change by consumers to the marketplace. This is a good thing and a necessary thing that drives the market forward to support consumer demands. This time though the renewal is in part driven by consumers through technology and collaboration and in part driven by consumer focused Internet retailers like Amazon that are themselves encouraging and experimenting with consumer changing demands. I believe though that this renewal cycle is different from previous cycles in that the renewal will be a continuous cycle of disruption and renewal in the market. This is the key theme coming through in this cycle of renewal and this is one of the key differences i this new cycle from previous market cycles.

During the market renew driven by eCommerce and essentially lead by Amazon there was a theme carried through the disruption and the market renewal; the consumer demands to simplify their shopping via the Internet and eCommerce. This theme carried retailers into the next generation of the marketplace to produce and omni channel shopping experience. This was comforting to the market players as well because it was a proven direction that they could copy to produce results. The challenge to this cycle in the marketplace is that there is no common theme that carries through each example of disruption and renewal.

There is no visible common theme that can be reproduced for success, the success of one retailer cannot simply be reproduced by others. There are two key differences in the current cycle of disruption:


There is no common thread of success in the market. At odds with previous cycles of market disruption and change; the success from one cannot be copied by another. One retailer thrives and grows because of the strength of their brick and mortar outlets while another succeeds because of their online presence.


The disruption comes in a discontinuous cycle that does not give the market a chance to really settle. This presents a struggle to maintain the pace of the change and also does not allow for the response to be duplicated for across the market. Almost as soon as a disrupting force is recognized and addressed the next disruption is sweeping the market

This cycle of disruption is driven by consumers rather than by some retailer, as in the past and this is a very important difference in this disruption cycle. The last major disruption to the market in my opinion was the explosion of Amazon on the market. This disruption, like previous disruptions, was driven by a retailer with a vision that was embraced by consumers. This disruption, also like previous disruptions, spread through the market quickly with the concept, in this case the drive for the lowest price combined with ease of purchase and vast selection, was accepted and extended by other retailers until it seems to be embedded in the market DNA. This disruption is also in many ways at the root of the current disruption.

This current disruption started with the concept and the drive for the selection, price and ease of shopping. In the beginning, consumers' focus on low price was supported and driven by the opportunity of Internet retailers to cut prices. This was the result of retailers reacting to consumers and these same retailers attempting to gain market share. This drive from Internet retailers was borne of the drive to succeed and the ability of these new Internet retailers to take advantage of the market and cut costs dramatically because of their reduced overhead. Now this lowest price concept and drive has become the foundation of the retail market in many ways has also in many ways now bitten the creator of the concept.

Now the combination of technology and the growing ability of the consumer to direct and even change their shopping is also disrupting the market in a series of discontinuous changes that are driven by the imagination and the demands of the consumer. Now this new renewal is all about the consumer ability redirect and direct their shopping in ways that support their individual lifestyles along with their desire to spend less and get more in return. This new discontinuos disruption cycle also is creating a model for continuous renewal with technology providing the means and consumer lifestyle demands providing the direction.



This new market driven by continuous disruption requires each participant in the market to sense and respond to the disruption in a manner that is based on their own imagination and capabilities. This is the change that is impacting the market in the greatest manner because in previous cycles there was always time to confirm the most effective response and then this response would be reproduced by others. Now when the most effective response for a particular retailer is identified the market has already entered the next disruption cycle which changes the success factors. Retailers must change their culture then in order to succeed in this discontinuous disruption cycle.

Disruption Driving Transformation Of The Supply Chain

 

Disruption displaces an existing market or industry to produce something new and more efficient and worthwhile. It is at once destructive and creative. Disruption in the marketplace is driving a transformation of the supply chain into a more efficient and flexible framework that can support the continuous disrupting forces. This transformation of the supply chain is driven not only by reaction to disrupting forces in the marketplace but also from the enabling technologies developing at a breakneck pace.

Historically, supply chain disruption has been described as a major break down in production or distribution nodes that comprise a supply chain. This definition of disruption implies an event within the supply chain that interrupts the normal process and flow that must be overcome to return to the pre-event state. However, technologies, especially eCommerce technology, coupled with improvements in network capabilities that are driven by consumer lifestyle demands have redefined disruption into a break that will never return to the pre-disruption normal, the disruption creates a new normal.

This process of recovery into a new normal is what makes up innovation and new capabilities for the market. Rather than a recovery to the pre-disruption state, the disruption produces a recognition of a need for innovation and change based on the market demands for innovation in the process. Disruptive innovations tend to be produced by outsiders and entrepreneurs in startups, rather than existing companies. This innovation cycle is now driven by consumer lifestyle demands colliding with the existing market practices creating an innovation cycle. This innovation cycle disrupted the continuous improvement cycled to a continuous innovation cycle and the market leaders recognized and adjusted to the change.

Currently, the waves of innovation in the market are driven by supply chain participants recognizing and developing features and functionality designed to meet customer expectations, partner needs and financial requirements. Supply chain disruption is the repurposing and realigning of existing capabilities to support changing consumer lifestyle demands. Then, just for good measure, the great disruptors add new supply chain capabilities to enhance the innovation.

The best change agents in the extended supply chain implement these features and functionality before the consumer recognizes the need. This drive to experiment based on sensing a market shift that creates the demand for goods and services is the actual driving force of disruptive innovation in the market. Disruptive innovation in the supply chain is a leading influence in remaking the market to meet consumer demands. Consumer demands are being driving at an enormous speed and this velocity of change requires robust tools and practices to react. I believe the supply chain is particularly ready and capable to develop these required tools and capabilities because of history of disruption within the supply chain.

Shifting demands from all corners of the market—ranging from product and consumer services to supply chain partners—contribute to supply chain disruption and in turn are driving innovation in the supply chain as a reaction. Consumers as the ‘Great Disruptor’ in the marketplace and are driving the supply chain to innovate in capabilities and flexibility in order to react to the disruption. The supply chain innovators are driven by a spirit of experimentation that in turn allows them to innovate in the face of the discontinuous disruption. The best of the innovators incorporate the continuous improvement (PDCA - Plan, Do, Check, Act) practice to support the innovation cycles driven by the disruption.

This transformation will only increase in speed as disruption drives new disruption. We have entered an age of disruptive transformation driven by the demands of the market that is no longer accepting the status quo. In order to survive in the age of disruptive transformation the market partners must also embrace a practice of experimentation based on flexibility.

Market Technology Transformation

Disruption in the market is now being driven to a very large extent by technology and this technology transformation is being led by the demands on the supply chain from consumers on the market. In all aspects of the market we are seeing a transformation that is being driven by the changing lifestyles of consumers. These changing lifestyles are, to a very large extent, enabled by technology that is available to consumers in every aspect of their daily activities. Consumers have embraced technology in every aspect of their daily activities and the impact on their lifestyle has been dramatic in the opportunities to meet their changing demands. This presents a challenge to the extended supply chain partners to support the market transformation that is driven by changing technology.

The most obvious example of technology that has dramatically impacted consumer lifestyles is the smartphone. Consumers have embraced the smartphone in every aspect of their daily activities to enable them to meet their changing lifestyle. These demands have transformed the methods in which they communicate, shop, pay bills and share experiences. The smartphone, in combination with improvements in wireless network technologies, are key factors in the market transformation and this transformation is only increasing in velocity. I know in my own activities that this technology has transformed my ability to meet the daily demands of family and career to allow me to blur the line between all activities; I can shop any time and then plan for delivery to meet the immediate demands, I am available for response any time the need arises whether personal or work related and the technology allows me to react based on the demand.

Technology has become pervasive across all activities and this has transformed the consumer market into an expectation of 24/7 shopping and delivery to meet the demands at the time. These demands have required the transformation of the extended supply chain to quickly and efficiently address the demands first and foremost. Most importantly this has required the transformation of the extended supply chain to develop the methods and processes to quickly and efficiently sense and respond to the changes. The transformation requires not only efficient response to new demands but experimentation with capabilities to create new consumer demands. The velocity of transformation has reached a level where the ability to react to demands is not enough to maintain share in the market participants must anticipate demand before consumers realize in order to maintain share.

Experimentation can be frustrating because of the potential for mistakes and failures. However, the market is changing at such a velocity that there is no choice but to experiment with creating future demands. This is especially difficult in the retail market because the culture and accepted practice is at odds with leading edge experimentation. We are seeing now though especially with Amazon and niche eCommerce retailers the rise of experimentation as a key capability. This transformation has dramatically impacted large legacy retailers causing failures and a struggle to keep up with the changes. The market is now seeing early signs of leading retailers such as Target or Walmart finally transforming their practices to leverage the multi-channel marketplace to transform their business.

Change has been supercharged into transformation and consumers are driving the retail market into continuous transformation that requires new methods and processes to anticipate demand rather than react to the demands. These processes must support faster and more flexible adjustments that are driving continuous transformation of the market. We have reached a point with technology where the speed of change requires anticipating and adjustments rather than sense and respond. This will further shake out the market and drive transformation in the supply chain.

Collaboration In Time Of Disruption

I see conversational commerce as a major disrupter coming to the retail marketplace and while the retailers that have been focused on AI and data analysis will be the retailers that are best prepared sense and respond to the changing demands of the market, there is also no question in my mind that collaboration is critical to the ability to execute on the demands. Collaboration will increase in importance in the future markets because there is no way that a single partner can respond to all of the changing demands of the consumer. The extended supply chain is probably the key to the success of supporting the market demands. These demands can only be met through a robust collaborative network in the extended supply chain.




The extended supply chain is in a unique position in this disruption because of the previous work building a collaborative network that supports the ability to sense and respond to the changing demands in a global marketplace. This experience has forced the extended supply chain network to develop a strong collaborative network of partners that support the demands and provide a connected network of partners that provide point solutions to meet the demands. This is the ‘secret sauce’ of the supply chain collaborative network. This collaborative network provides the framework for point solution providers to flourish because the connectivity framework is already available for the solution providers to market and deliver services. This was an unintended benefit from the work to develop a robust collaborative network; the framework to support share support of the global supply chain demands and encourage point solution development to rapidly deliver solutions to the partners.




The disruption of the global market demands was a precursor in the extended supply chain to the disruption the retail marketplace is beginning to experience now. This disruption will roll through the retail marketplace in a manner similar to the global marketplace disruption on the extended supply chain and the smart players in the marketplace will be incorporating the lessons learned from the global market disruption to build a collaborative network that supports the speed of change necessary to meet the demands. This means embracing network capabilities that encourage and support the point solution model developed in the supply chain. I believe this is the single most important key to supporting and even encouraging the disruption in the retail marketplace.

Disruption is not a point that impacts only the retail market or only the extended supply chain.  Disruption is a cumulative effect that builds on past change and disruption to redefine the market and I believe that we have reached a ‘perfect storm’ point in time where the demands and expectations of consumers, and market partners are being driven by technology and the converging of technology capabilities, embrace of the capabilities and lifestyle demands imagination of consumers and market partners to build a new marketplace that eliminates channels and the lines between channels to produce a new marketplace. 

Market Collaborative Forces

The supply chain partners realized a long time ago that they would need to collaborate across the entire extended supply chain in order to support the demands of the global supply chain. Retailers are now slowly coming to the realization that they will need to collaborate across the entire marketplace in order to support the demands of the retail omni marketplace. These retailers are dragged into the ‘new’ world of collaboration ultimately across all partners that participate in the market and we see many failed and failing retailers across the marketplace that have either failed to recognize the signs or more often than not have simply refused to recognize and embrace the collaborative practices that can help to maintain their viability. Now retailers are stuck in their legacy practices of waiting for technology and practices to solidify before choosing a path and more wrong-headed view of the importance of individualism in retail practices.




The supply chain players and partners have a distinct advantage in this new disruptive market because the supply chain went through a major disruptive re-awakening twice;


When the global supply chain came into prominence in the 80’s and 90’s. This was the first major wave that drove the supply chain into the collaborative network practices that allow them to quickly sense and respond to changing demands and disruptions in the supply chain.


During the great recession when the supply chain underwent major labor disruptions that disrupted the labor market as a result of cost reductions. This created a new focus on the third party logistics market as engineers were released by retailers and landed in the 3PL market. This move of expertise created a dearth of expertise in retailers and move of this expertise to 3PL providers.




The good news for retailers is that they can partner with their own supply chain to help in developing out the practices and capabilities that will help them to sense and respond to the disruptions that are now pummeling the market. The foundation to success in the retail market is the same formula and foundation the supply chain developed in response to the supply chain disruptions; collaboration, imagination and the extended network. The difficulty now for retailers is the need to accept the new model of collaboration to support the market.




This new or expanded model of collaboration for retailers will be a difficult change because it requires change to culture and generally accepted practices for the larger retailers. These larger retailers have spend many years focused on changes that have been proven and incremental changes that fit with their culture and practices. Now the tables have turned and the market demands sweeping changes in many ways that are so far out of the norm for these retailers that it leaves them struggling with attempts to acquire the capabilities. This is not a winning strategy though because by the time the retailer acquires and implements the new capability the market has moved on to the next two upheavals and the retailer continues to fall behind.

Supply Chain In Retail Disruption

The retail market disruption is being driven and supported to a very large extent by the capabilities and services supported by the extended supply chain. The long list of recent changes and demands on the retail market are implementations of supply chain services to support the demands of the consumer in remaking the retail market into an omni market that supports the varied demands of the consumer shopping and purchasing. The demands for goods from consumers has remained in the same pattern over time where the consumer fashion and hardgoods have remained relatively constant, colors may change or styles might change but these products have remained relatively constant. While appliance features have changed as a result of technology advancements, the microwave, the washer, the dryer have all remained relatively constant. The shopping and purchasing demands have, by and large, driven the disruption through the market though with new services to support consumer lifestyles.





The supply chain places a great deal of focus and dependence on technology to support and develop new services and one of the most important aspects of supporting and delivery of new services is the collaborative supply chain network. The supply chain extended network is a model of collaboration and the practices and services required to sense and respond to the changing demands of the market. This is evident in the network support of point solutions and collaboration to coordinate services and activities throughout the supply chain from the point of raw material forecast and delivery to the manufacturing plant to the point of deliver to the end customer. The supply chain has developed these capabilities to support a global services and delivery network that must quickly and efficiently react to changing conditions across this global network that cannot necessarily be planned in the beginning of the chain. Without the strong extended collaborative network that support quick and efficient flow of goods and services to support the flow the retail market would not be possible.





Now retailers must realize and accept the forces in the marketplace and collaborate more effectively and robustly with the extended supply chain to not only support their customers’ demands for goods but also to understand and embrace the collaborative network concepts and framework to help sense and respond to the demands a of the market. The supply chain network and partners realized a long time ago that they are not islands and they require the support of the network in order to meet the demands of the market. It is now time for retailers to also come this realization and make the moves to enable their participation in the extended network.

Shift Retail Focus

As the marketplace shifts and the velocity and impact of changes disrupt the retail practices across all channels retailers must now shift their focus from an internalized focus to an external and extended collaborative focus in order to help them sense and respond to the changes. In addition, retailers must not only focus on sensing the changes early on in the market, they must also shift their focus from reaction to action and drive the market change through experimentation. The two practices of extended collaboration to sense the change and experimentation to react to and even drive change must then be combined with a culture change that encourages experimentation and exploring the leading edge. Retailers that are ‘good enough’ will struggle to survive while retailers that push the limits and are not afraid to fail in experiments will succeed and drive the market disruption.




This shift in focus will be difficult form many of the large retailers and will require investment and perseverance to succeed, however, there is really no choice in the matter, the large retailers must change or die. We have seen over the recent years large retailers struggling and failing in large part, I believe, because of their hesitancy to change the culture. The key to this round of market change and disruption is the velocity of change and the discontinuous spurts of change pushing the market disruption. This is is why it is so important for these large retailers to change their culture in order to drive the change in practices required to meet the demand. Rather than reducing spend and closing outlets as a result of lowered sales the retailers may need to close outlets but they should redouble the spend to change and recoup the sales lost.




This is something that I see with JC Penney, they have been pummelled by sales reductions after having tried new strategies and now they have changed their focus to spend on leaders to change their focus in reaction to the market changes. This is probably the best chance for JC Penney to turn around and survive with this change in leadership that brings with it a change in culture. This will only be confirmed though with some time. There are others that have changed leadership that have only continued with the legacy culture with new some new faces. This is basically a retailer experiment in real time that will provide proof of concept for meeting the demands of the new retail marketplace disruptions.




Amazon is still at the heart of disruption and they continuously demonstrate the reasons they remain the leader. Many of the major disruptions continue to be started with Amazon, such as Prime, or the acquisition of Whole Foods, have shown the focus and culture of experimentation demonstrated in real time. This culture of experimentation and collaboration must be encouraged and implemented with other retailers now in order to meet the disruption.

Supply Chain Collaboration

Supply chain collaboration practices will provide the framework and the foundation for the retail extended collaborative practices across the marketplace including partners, service providers and consumers. This is how important these collaboration practices and framework are to retailers in the marketplace. The challenge for retailers is to recognize these capabilities for the critical nature that they represent in today’s retail marketplace and then to take the appropriate actions to embrace and integrate these capabilities as a critical aspect of their shopping and purchasing framework. This is where the partnerships and the culture of collaboration come into play and requires the retailers to recognize these trends and take actions to incorporate and remake their offerings in a way that incorporates collaboration with partners and most importantly with consumers to allow them to sense and respond to the demands of the marketplace.




Most retailers continue to focus on integrating and adding eCommerce type goods and services to their offerings and then integrating these goods and services into the brick and mortar outlets. This was a very valid action to allow these retailers to attempt to catch up to the the consumer in their demands. This practice highlights the fact though that the retailers are still following trends in the market and acquiring companies that have developed the service or offerings after the trend is identified. From this perspective these retailers have not changed their culture or their practices that have been ingrained in the culture over many years - wait for the trend to be proven and then move to incorporate or acquire the trend. The recent trend from retailers now, to acquire the goods or services, has shortened the delivery lead time, however there is still a longer lead time from initial trend to the retailer responding and delivering the goods or services.




These retailers that do not change their practices and culture to one of extended collaboration and add to this a culture of experimentation are doomed to repeat the same cycle of slow failure that many of the large legacy retailers are currently experiencing. These retailers must change their culture to encourage and drive collaboration as a means to support experimentation in both goods and services. The supply chain has experience in this type of market upheaval and can provide support and guidance, along with new services that will support the market demands, if only retailers embrace more open collaborative practices.




Retailers must shift their focus from internalized measures to external collaboration and experimentation in goods and services. These retailers will never catch up by chasing trends and acquiring companies that are supporting these trends and they will also never gain enough time by cutting costs, Retailers must go back to their roots of experimentation and invention rather than following the leader. This is exactly why Amazon has been able to disrupt one market after another, Amazon is the master of experimentation in the retail market and have shown over and over again that they are willing to experiment and fail in the marketplace in order to move forward.

Omni Market Supply Chain

The omni market renewal is a massive undertaking that will span years and will in all reality probably not end and the extended supply chain plays a major role in the success of the renewal. As a result of the market renewal, the extended supply chain is also experiencing and in turn also being driven by the same disruption renewal in the retail marketplace. The extended supply chain began to recognize and take actions much earlier in the cycle than the key retailers because to a very large extend the extended supply chain and partners experienced a major market disruption a result of the great recession and this disruption forced the supply chain partners to address extreme pressure on costs and capabilities with similar impact as the disruption currently being experienced in the retail marketplace.




I think the leaders in retail disruption and renewal have long recognized the importance of their extended supply chain in supporting demands and they have shown their understanding through their focus on working with their supply chain to incorporate new capabilities. As example, the key retail players in this current disruption and renewal cycle, Amazon and Walmart, have both been early adopters of supply chain services and capabilities and have shown their recognition of the potential of a robust collaborative extended supply chain. Their demonstration of this understanding has come across as a focus on the automation that can improve throughput and costs and most importantly efficiencies. Early on efficiencies in supply chain execution were a key focus and these were critical to support the retail model in a global supply chain.




Now we have entered into a time where the retail marketplace is highly dependant on their supply chain to support the consumer selection and delivery demands and the supply chain has stepped up in many imaginative ways to address these challenges. This extended supply chain is able to now only support these demands but also develop and implement new solutions to simplify the process and they are able to do all of this because of their historical drive to manage costs, and improve services. The extended supply chain partners may be uniquely positioned to provide guidance and support to their retail partners to help guide through the challenges and demands of changing a culture while flying at 800 miles an hour.




The solution and means to meeting the marketplace disruption are rooted in collaboration and partnerships. This requires an extended focus on changing the culture of both organizations and the market. The market culture really starts with the consumer and consumers now are driving the disruption through technology tools and services available to them and most importantly these tools and services are continuously changing and improving as well to provide new capabilities and combinations to consumers. We have seen that consumers can be impatient in their demands and require a continuous interaction and reactions from all retail marketplace partners to sense and respond to the demands.

Omni Market Strategy

Two of the largest players in the retail marketplace are now in the process of rebuilding their strategies to form the retail market in the image that meets their vision and the two strategies are very different because of where these retailers came from in their growth and development. The origins are driving their strategies to allow them each to leverage their base and also to leverage their customer base practices and expectations. Amazon and Walmart are these two giants in the market and they each bring a very different perspective and direction to their actions and capability delivery. These differences in perspective bring different strengths to their practices and this really sets the tone and the direction based on where the consumers are coming from; whether an electronic focus that bleeds into the brick and mortar or the opposite.




You can see from the differences in strategies and focus that were driven by the base customers allowed these retailers to build their strategic capabilities and now they are each trying to re-imagine their omni market strategy incorporating these baseline strategies and capabilities. This is an extremely difficult challenge for both because it pushes them outside of their comfort zone. This is easy to see when viewing the sales and marketing strategies; they both purchased capabilities in their expansion target channel to help move them ahead and they both are now working to integrate these acquisitions into their omni market strategy. These challenges and reactions by these two leaders showcase the value of experimentation and the willingness to fail forward. They both show a great deal of courage in these reactions and their willingness to spend to experiment.




You can also very clearly see where each of these retailers started and their base comfort zone, whether brick and mortar or eCommerce, and each of these starting points are driving interesting interactions and focus based on each of their starting points. As I mentioned earlier, the most encouraging aspect of these results is the willingness and even the excitement to experiment. Each of these retailers realize the importance of their actions and each have truly embraced the value and concepts of this experimentation to develop the new retail model. Each of these retailers realize they are building the the future and they see the value to being first in the development and delivery of this future.




There is no substitute for this experimentation and each of these retailers has embraced the challenge. They both realize that this experimentation is pushing the boundaries forward in the only manner that can be successful, they must experiment to determine what works and what will be accepted by the consumer. They must experiment in this manner because the market is moving so fast and the forward movement will more than pay for the failures and will provide the lead to allow them to maintain a healthy lead on the competitive advantage. There are many other retailers attempting to focus on their omni market strategy and they are facing these challenges in historical manner where these retailers are taking the safe path of change, waiting on the changes to be a little more solidified. This shows the legacy culture that generally waits for the change to solidify. This culture though will fail this time because of the velocity and breadth of change in the market, the retailers that wait run a significant risk to waiting too long to change and then being too late for success.

Retail Renewal

Spring brings a sense of renewal and the current disrupting forces in the retail marketplace should be viewed as a type of retail spring renewal. Rather than a focus on cutting and reducing expense as a reaction to this disruption retailers should be looking at a renewal of the marketplace into an image and ability to efficiently and effectively support the changing demands of the consumer lifestyle in shopping and purchasing demands. Renewal provides an image of positive change and improvement to deliver on the imagination of the marketplace and this image is important to foster and encourage as opposed disruption that brings the image of cuts and reductions to address a downturn is sales. It is important to view and engage as an opportunity to grow rather than a requirement to cut and wait for some magical upturn in sales to appear.




There is a wide variety of purchasing capabilities that can be utilized to support the consumer lifestyle that have been developed over the years and there does not seem to be a limiting factor from the purchase capabilities. The limiting factor seems to be the transparency and combinations of shopping and purchasing and delivery capabilities available to the consumer from all channels in a true omni market view. This is where the retail disruption, or renewal, is focused and this is the key challenge to the larger retailers. These large retailers must overcome their natural tendency to fall back into the reaction methods from the past. They must overcome their reaction to reduce costs when faced with a downturn and must instead focus on the renew and an analysis to determine the reason for the downturn and then how to react to the downturn to recover the sales. This reaction spells the difference between success and failure in this new retail marketplace.




I saw a report that for the first time online sales have surpassed in store, brick and mortar, sales. This would seem to add weight to the retail marketplace disruption that should be driving renewal activities in the larger retailers. This news should be a little intimidating to retailers because it confirms the forecasts and the direction that has been assumed by many for a while. You could see the coming changes with the large players working to blur the lines between channels to support the omnimarket capabilities that are now coming together. You could also see the coming changes with the extended supply chain service offerings and especially in the drive to simplify the delivery based on the consumer lifestyle.




I see the differences coming together now in many ways and one of the ways is manner in which Amazon is experimenting with omnimarket retail. Amazon is playing their brand across channels and retail market segments to bring a shopping and purchasing experience that focuses on meeting consumer needs across product commodity. This is important and the only other american retailer with a similar type of market coverage would be Walmart and Walmart has been focused on growth in omnimarket to meet the Amazon challenge.

Collaboration Officer

Collaboration has become increasingly important over the years and this importance and increased in depth and breadth of collaboration partners and activities to the point where it is important to create the role of a Collaboration Officer to ensure the necessary focus within the organization. At this point collaboration coordination and activities are much too important to leave to the individual participants and requires a focused and coordinated strategy for both internal and external partners. The marketplace and demands are changing at such a velocity now that no single participant in the market can hope to support all of the demands, driving the types and volume of collaboration activities across the market in order to deliver and maintain new capabilities and services at a rate that supports the demands.




Collaboration as a concept has been in vogue for a very long time and it's been one of those concepts that everyone agrees on the importance while at the same time being challenged in living the concept. Many have talked the talk and found it difficult to walk the walk because collaboration, at least in my opinion, requires a partners to give up some control and this can be very difficult for some leaders. Control for many leaders has been key competency and allowed them to build the concept and brand that has been successful. Now, however, while the concept has not lost importance the implementation of the concept requires flexibility and collaboration to deliver.




I see a cycle in the maturity and success trajectory where the initial concept development requires a focus on the development that is driven by the leader to deliver on the concept. This cycle continues while the concept take hold to ensure the vision is maintained and the concept gains acceptance and traction in the marketplace. This changes though relatively quickly though after a wider acceptance though to require collaboration and new partnerships to retain the success trajectory and also ensure the continued growth of the concept. This change requires a shift in focus to partnership and collaboration and most importantly a shift to a shared success plan utilizing increased collaboration and partnership to continue the success trajectory. You see this type of collaboration and partnership in small businesses and support of the small businesses with a good example being the American Express initiative to support small and local businesses.




This is much different though for the large retailers and legacy partners where they must focus on change to meet the new demands. These entities must out of necessity focus on the collaboration and partnership concepts to maintain their own success trajectory. This is important because these retailers must realize they must sense and respond to support the changing demands on their offerings, shopping and purchasing practices which requires increased and robust collaboration with partners to meet the demands.




The retailers must pivot the majority of their focus on collaboration and partnerships and must build the capabilities utilizing these practices to develop new products in order to maintain their success trajectory. These retailers would do well to support a concept and type of skunk works that encourages and feeds new programs, products and capabilities in a lab type environment that allows and encourages failure in a manner that supports a concept delivery cycle. The large retailers have wasted a massive head start in both creativity and building the delivery cycle by focusing on reductions rather than identification of the next big thing.

Supporting Discontinuous Change

The current retail marketplace experience of discontinuous change causing disruption and in some cases extreme challenges to react should not be a surprise to anyone. In fact, I think the big surprise is the continued dependence of major retailers on historical reactions such as cutting costs to react to the market disruption. This type of marketplace disruption requires a new way of reacting and not just retrenching into more of the same tactics used during market downturns. We are not experiencing a downturn in the market, we are experience an overhaul of the market shopping and purchasing while the market is expanding. These are the most difficult conditions to address and requires investment in rebuilding the retailer business model.





The level of discontinuous change in the retail marketplace has disrupted this marketplace demanding of participants a transparent and cohesive shopping and purchasing experience. The waves of demands have not given the large legacy retailers much of a chance to catch up with the demands and the bad news is that these waves of demands and change will only increase in velocity and impact as they build on the previous changes. This requires a new paradigm from the retail marketplace of participants and partners to support both the level and velocity of the change.





This paradigm change requires a focus on increased and improved capabilities to sense change and, probably most important, a new increased focus on experimentation, especially in meeting change. What has become abundantly clear though is that this new paradigm requires a high level of collaboration across not only partners but consumers as well. This is requires as an integrated plan and partnerships to support not only the necessary activities and practices to sense change, it is also required to support the reaction to the change. Every single change and and especially change leading to disruption requires requires a coordinated response across a multitude of partner to react and support the demands.





In looking back and looking around I do not really see any marketplace disruption that required only one organization to drive, yes there was one leader that recognized the opportunity for change and market disruption, however, that leader then partnered with other participants to support and enable the disruption. The key issue that is see that absolutely must be overcome in order to survive is supporting a robust collaboration model and unfortunately this is the one issue that requires a culture change in the large legacy retailers to enact. In looking around I see many companies that speak about the importance of collaboration and are even taking steps to improve collaboration with their external partners, the issue that I see though is that many of the same larger legacy retailers are still hung up in internal silos that are slowing change through the controls to maintain these silos.





In order to truly support the discontinuous change and the market disruption that will only increase in velocity I believe that the market must create chief collaboration officer that is empowered to seek out and expand collaboration across internal silos while also seeking out and expanding collaboration across their market partners. This is a culture change that will require support of the organization leadership and the best way to broadcast the support and importance is through the creation of a chief collaboration officer that is empowered to make change. This chief collaboration officer will be charged with sensing and supporting the change and disruption in the marketplace and this officer will also be charged with the authority to experiment and the encouragement to fail.