As David Kiger has said before on this blog, a supply chain is a process dedicated to moving a product or service from the supplier to the customer, involving different people, organizations, information, resources, and activities. This process depends on the transformation of raw materials, components, and resources to finished goods that should be delivered to a final consumer. In other words, supply chain management is the process of coordinating the flow of goods from the point of origin to the point of consumption.
Historically, this process has taken place since the first commercial activity appeared on earth. Humans have always found materials and transformed them into goods they could give in exchange for something they were interested in. Therefore, the concept of the supply chain has evolved with humanity and is expected to also have a future within different industries. This future is currently defined by a set of predictions that include some that are already happening and others that are about to come.
Digital Supply Chains
Every process related to supply chain management is now affected by technology. Most financial and business-related processes have been digital to enhance productivity. This has lead organizations to become part of digital communities of business peers and collaborators who are able to coordinate and execute business processes in a more organized and informed way.
Digitalization of business and financial information is starting to have a direct impact on the supply chain management. Even though many processes are still being tested and are expected to be sharpened in the near future, today we can see how many traditional operations have been changed for digital operations. Most businesses will need to reshape their supply chain strategies to open to this new way of operating businesses.
An E-commerce Revolution
E-commerce refers to the process of selling and buying products online. This type of business has become quite common during the past three years. Statistics show how customers prefer to buy things online during holidays instead of physical shopping. The entire supply chain management process is affected by this trend since having a physical store has been replaced for an online store. Products don’t need to be moved from the warehouse to the racks, they only need to be delivered straight to the customers’ hands.
Marketing here has also an important role to play since most retailers have to propose sweet deals at their stores to attract clients. However, the physical store is not yet condemned to disappear. There is a new trend called “click and collect” which allows customers to buy online and pick up their products at the store. Here the supply chain will end at a booth or window where customers can pick up their products whenever they want or can.
As many cities are being urbanized very fast and traffic complicates, every process related to the supply chain management is being affected by the lack of mobility. Both raw materials and finished goods are having a rough time being on time where they need to be.
This presents a huge challenge to supply chain management since companies and industries of all types will need to develop innovative solutions to deal with crowded cities with complex addresses and hideous traffic. These solutions will need to be ecologically responsible and the final customer should not be the one affected by some potential costs or inconveniences related to the delays or improvements of the delivering systems.
Big Data Importance
Big Data is the name given to large volumes of information generated by people who interact with software. Big Data is constantly being generated in an unimaginable nowadays. Most businesses have started to see a huge commercial potential in Big Data and they are buying and selling it to trace and identify consumers’ behaviors and preferences.
Most big data is never analyzed, but when companies take it seriously, they can identify what they customers want. This gives the industry the necessary information of what they should produce and sell and how they should do that.
Some experts believe that the supply chain is already being affected by big data and this pattern will continue to happen in time. Companies who use technology and analytics will energize their algorithm-based business with big data able to give them encapsulated knowledge about their customers. There are many companies that, even today, are obsessed with big data and they collect it and sort it like it was gold. This happens because big data empowers the industry with information about the external marked and their internal processes.
However, it is not about collecting and sorting the data. Businesses are starting to find themselves paralyzed by the quantity of big data they have already collected. It is important to design alternatives that can solve this issues in order to give a freeway to the well-informed supply chain.
* Featured Image courtesy of Nestlé at Flickr.com