LOGISTICS AND TRANSPORT DISINTERMEDIATION

Nice to see others join LTD's discussion on logistics/transport disintermediation. Causes run from technology to Amazon. Challenge is BigA does it for Supply Chain velocity. How do providers compete against that for retailer & manufacturer customers? 

https://www.truckloadindexes.com/data-commentary/amazons-disintermediation-strategy-what-it-means-for-carriers?utm_content=89286927&utm_content=71708911&utm_medium=social&utm_medium=email&utm_source=facebook&utm_source=hs_email&hss_channel=fbp-179175252108775&utm_campaign=Daily%20Newsletter&_hsenc=p2ANqtz-8xdzcV-8JD3cnBWP2CiNqLUWqqfak8fDlw-TMzpQNY0Hx2Q0ZvMMVXlE_Nkdk_e_zgrKbwCXJnRct9iqMBbA5Iffq6PA&_hsmi=71708911

NEXT GEN SUPPLY CHAIN

Next gen? Many retailers, manufacturers, and government agencies are lagging with the New Supply Chain.

Economist study: OEMs create new revenue streams with next-gen supply chains

Posted on March 12, 2019

Jaishree Subramania Sr. Director, Azure IoT Marketing

Original equipment manufacturers (OEMs) make the wheels go round for the business world. But demand for faster, cheaper, and smarter products and components put major downward pressure on profit margins. Successful OEMs are always on the lookout for opportunities to drive down costs and differentiate their brands and the rise of the Internet of Things (IoT) offers a golden opportunity to do so by embracing fundamental supply chain transformation.

To get a better understanding of the benefits, best practices, and current state of play in supply chain transformation, we enlisted The Economist Intelligence Unit to survey 250 senior executives at OEMs in North America, Europe, and Asia-Pacific. Our learnings from those conversations drove insights for the basis of the new study, Putting customers at the center of the supply chain. Here are some of the intriguing highlights.

Creating the intelligent supply chain

According to the study, 99 percent of OEMs believe supply chain transformation is important to meet their organizations’ strategic objectives. The vast majority, 97 percent, consider cloud technology to be an essential component of that transformation, which makes sense given that cloud offers the unprecedented ability to collect and analyze data at scale. To date, just 61 percent have embraced cloud across their organization—meaning that for many, cloud remains an obvious and notable opportunity.

Beyond cloud, IoT presents a significant opportunity for OEMs. IoT is the fundamental technology underpinning smart products and components, like embedded sensors that monitor performance, or telemetry systems on connected vehicles.

IoT-enabled products and components can effectively extend the supply chain to include the customer, enabling the delivery of software updates directly, while providing ongoing access to data about how offerings are being used. This adds supply-chain complexity but also delivers significant new business opportunities.

This extension of the supply chain gives OEMs the ability to get a far deeper understanding of customer behaviors and needs and to better serve customers via add-on services based on that deeper understanding. To optimize the value of the customer data they collect, some are even embracing entirely new business models.

Armed with real, data-based insights into exactly how and when their products are being used, OEMs can become service providers, and shift from selling products to customers to charging them subscription or per-use fees. Rolls-Royce, for example, charges a monthly fee for customers of its jet engines that is based on flying hours. Industrial machinery makers like Sandvik Coromant are also now charging customers based on use.

Other emerging technologies that OEMs are turning to for assistance in transforming supply chains include robotics that generate valuable data while performing tasks like product assembly and order picking faster and with greater accuracy than humans, artificial intelligence (AI) that’s used in smart products for things like predictive maintenance, and blockchain which enables supply-chain stakeholders to share an immutably accurate record of deliveries. These technologies can supercharge the collection, management, analysis, and security of supply-chain data. And like IoT, they can drive the creation of brand new ways of doing business.

Best practices in supply-chain transformation

In a world where a growing number of things around us collect data about us, forward-thinking OEMs are increasingly embracing fundamental changes in their supply chains. With the goal of achieving operational excellence informed by a closed feedback loop with the customer, OEMs can deliver better service and products by better understanding and anticipating exactly what customers want and need.

To achieve this vision, they’re turning to technologies like cloud, IoT, AI, robotics, and blockchain. Learn more about the specific steps and approaches being taken in the full Economist report.

Internet of Things supplychain OEM smart manufacturing supply chain automation The Economist

https://azure.microsoft.com/en-us/blog/economist-study-oems-create-new-revenue-streams-with-next-gen-supply-chains/

IMPORTANT QUESTIONS FOR RETAILERS AND MANUFACTURERS

Manufacturers. Retailers. Would be interesting to know Why you are not more aggressive with your end-to-end Supply Chain, What you are doing, When you will change (if not too late), & How you will change.

SUPPLY CHAIN MANAGEMENT AND SHAREHOLDER VALUE

For manufacturers & retailers. Supply Chain Management is strategic and powers new reality success. Interesting paper from U of Tennessee on SCM Excellence Drives Shareholder Value:

UT White Paper: Supply Chain Excellence Drives Shareholder Value

While supply chains are increasingly recognized as vital to corporate finance and risk mitigation, not all supply chain managers yet understand the need to be total business leaders and provide growth solutions.

In a new white paper, “Driving Shareholder Value with your Supply Chain,” the Global Supply Chain Institute at the University of Tennessee, Knoxville’s Haslam College of Business emphasizes the financial performance of best-in-class companies.

The paper provides strategies for companies to unlock their working capital to drive economic profit, says lead author J. Paul Dittmann, assistant head of the Department of Supply Chain Management at Haslam. In doing so, the links between shareholder value and supply chain excellence are explored through the lens of cost, cash and growth.

“We absolutely believe shareholder value is driven by supply chain excellence,” Dittmann says. “Supply chain plays in all the buckets of economic profit: revenue, cost, working capital and physical capital. If you believe that drives stock price, then supply chain clearly is a big factor in determining shareholder value.”

The white paper features self-assessment tools for analyzing whether companies are using their supply chains to drive shareholder value. It also includes best practices, case studies and the Total Value Optimization (TVO)™ Pyramid from supply chain consultant Maine Pointe, which sponsored the paper.

“Total Value Optimization delivers the greatest value to all parties in the end-to-end supply chain at the lowest cost to business,” says Steve Bowen, CEO of Maine Pointe. “In the white paper’s case studies, we can see how TVO best practices are used to find those value drivers, create an action plan to achieve growth and deliver bottom-line increases in profit and shareholder value.”

Dittmann says shareholder value is the language of the CEO and the board of directors. “If you want to be relevant in the overall corporate structure, you need to speak their language. Your career is tied in a major way to the overall health of the company.”

Although the white paper offers a number of definitions for supply chain excellence, Dittmann emphasizes the concept will vary between companies.

“What is it for your company, and how can your performance drive shareholder value?” he asks. “We encourage companies to come up with their own opinion on supply chain excellence and then think through how it’s going to drive shareholder value and how to communicate that throughout the company.”

Chad Autry, head of the Department of Supply Chain Management and FedEx Corporation Endowed Professor of Supply Chain at Haslam, says this research is a valuable contribution to the Global Supply Chain Institute’s library of approximately 20 white papers.

“The implications of supply chain management on shareholder value is an area that often goes unaddressed,” Autry says. “Best-in-class companies drive down their working capital using the techniques described in this paper so they don’t impede free cash flow through their systems and are able to beat analysts’ expectations for economic profit.”

Link to more content on this:

https://haslam.utk.edu/whitepapers/global-supply-chain-institute/driving-shareholder-value-your-supply-chain

E-COMMERCE, CLICK AND COLLECT, MILLENIALS, GEN Z

For CPG & FMCG retailers, does Click And Collect meet Customer Expectations? Especially for Millenials and Gen Z? Or are retailers going for low cost/cheap approaches for e-commerce—avoid infamous Last Mile? Comparative sales of C&C vs door delivery across retail? Result of not upgrading SCM.

PRIVATE TRUCKING CHALLENGE

Manufacturers & retailers know the financial return on Private Trucking increases as the percent empty miles decreases. Backhauls continue to be a challenge with overseas production, containers of imports with door delivery, and smaller lot sizes with lean.

AMAZON THIRD-PARTY SALES

Amazon's third-party sales likely reflect that CPG manufacturers see Big A's e-commerce brand AND admission they cannot develop the Supply Chain to compete against Amazon. Can't fight them, join them. Part of new retail reality. Supply Chain Risk?

https://www.wsj.com/articles/why-amazon-needs-others-to-keep-selling-11555002984?mod=djemlogistics_h

SHOPPING FULFILLMENT CENTER, DOWNSTREAM SUPPLY CHAIN

Retail. Shopping Fulfillment Center. Interesting. Focus is the downstream part of the Supply Chain--fulfillment. It ignores upstream--where supply begins--of end-to-end SCM. Long-term solution or short-stream wait till I run out of inventory? Want to discuss further. 

https://www.insider-trends.com/is-shopping-fulfillment-centers-combined-retail-and-logistics-set-up-the-model-that-retail-needs/

CHALLENGE WITH DUAL USE WAREHOUSING

Retailers. Manufacturers. Have a duality challenge when using the same warehouse for cases and eaches. Cases are about vertical--fill the cube. Eaches are about horizontal layout. Adds to need to adapt to new Supply Chain with velocity.

SMEs AND UPGRADE SUPPLY CHAIN MANAGEMENT

Retailers. Manufacturers. Have deep pockets to spend on Supply Chain tech & other SCM issues. Part is easy answer approach. SMEs can compete by focusing on important upgrade issues. Need to:

*Recognize complexity

*Assess end-to-end

*Map

*Segment

*Prioritize

2020 OCEAN CONTRACTING--HIGH STAKES

IMO 2020.  BAF battle.  High stakes poker.  Container lines vs shippers--BCO and NVO/OTI.  And impact on the future of shipping!?  History of contract negotiations vs potential chaos.

MISDIRECTION AND THE NEW SUPPLY CHAIN MANAGEMENT

CPG. Manufacturers. Retailers. Grocers. There is much misdirection, such as Last Mile and over focus on logistics costs, that prevents needed Supply Chan transformation to handle the new reality. Unfortunate since growth and future are in play.

RETAILERS, GROCERS, AND THE ONE-SIZE-FITS-ALL BUSINESS MODEL

Retailers. Grocers. Last Mile cost is not the issue. It is undoing the one-size-fits-all business model of stores & band aid on e-commerce. Choice now is how to give customers what they want—delivery, not Click And Collect. Transform with Supply Chain Management. Build Inventory Velocity. Duality. Segment. A vs B vs C inventory. Different customers. Build back from customers. Choice--complain or transform.

CREATE, NOT IMITATE

The disruption in logistics and Supply Chain Management is creating new opportunities using technology and more importantly, fresh ways to define them and what they can do. This includes retailers, manufacturers, & grocers. Open up, create, not imitate.

CROSS PLATFORM BUSINESS AND LOGISTICS

The future for logistics providers, 3PLs, and other logistics intermediaries may be Cross Platform Business. Melding and hybrid to meet customer expectations and requirements. Think beyond the traditional.  

SMEs, SUPPLY CHAIN MANAGEMENT, TECHNOLOGY, BIG ISSUES

Deep pockets is a differentiator for manufacturers and retailers adapting to the new reality, including Supply Chain Management. Tech emphasis can miss deeper issues. SMEs can compete by addressing the bigger issues which are more important.  SCM

https://www.wsj.com/articles/walmart-is-rolling-out-the-robots-11554782460?mod=djemlogistics_h

TRANSFORMATION VS IMITATION FOR SUPPLY CHAINS AND LOGISTICS

Manufacturers, retailers, & grocers must understand that transforming their Supply Chains is not imitating what others do. That is a recipe for failure. It requires strategy. Same for logistics providers.

WEAPONIZE YOUR SUPPLY CHAIN

Leaders have made Supply Chain Management strategic and have weaponized it. SCM is a driver of their success. Manufacturers. Retailers. Grocers.

THE THREE SUPPLY CHAINS

There are 3 Supply Chains—product, data/information, and finance. Finance should be integrated with the upstream/inbound supply chain.
 Manufacturers. Retailers.

https://www.txfnews.com/News/Article/6717/Vodafone-SCF-Whos-supporting-who

PAST VS FUTURE FOR SUPPLY CHAIN MANAGEMENT AND LOGISTICS

A weakness with transforming Supply Chain Management by retailers and manufacturers & grocers and also by logistics providers--comparing with what was instead of what is and where it is going. Perpetuating the past.