Discoveries: More ideas for radically reshaping the supply chain

Change is possible, but only if we embrace new ways of doing business and delivering value to customers. Are you ready to do things differently?

Making progress

Welcome to my second Discoveries edition, a space where I report on progressive actions toward the future of distribution and the global supply chain.

In my first Discoveries newsletter, I urged distributors, trade magazines, and industry associations to band together and build a wide-reaching media narrative around #reintermediation—putting forth distributors as reborn intermediaries focused on helping customers innovate for the digital age. I shared five transformative business models and discussed The Atlantic writer Derek Thompson’s advocacy for what he terms the abundance agenda, a non-ideological framework for solving society’s most challenging problems. Building on that theme, I’ve since applied Rabbi Irwin Kula's work on human flourishing to show how B2B companies may step up to help their employees, customers, and partners thrive and grow.

In this Discoveries edition, I share progress as ideas emerging from my conversations, workshops, networking, and research with global and local supply chain leaders. These ideas are hypotheses—works in progress published here for comment and debate. I’m working on my remarks for CSCMP EDGE 2022, the Council of Supply Chain Management’s annual industry conference, scheduled for September in Nashville. My two sessions at the event—The supply chain isn’t broken. It’s reborn and Innovation stories from the leading edge—will offer bold and bright foresight, share experiences from the front line, and announce a project for working with supply chain professionals to usher in the future. My sessions are about reporting on progress and pushing for more.

Changing the way the system works

In many previous editions, I have referred to the boldest and brightest ideas as game-changing. No more. The work ahead is hard, and uncertainties abound. Mindsets, practices, and policies are entrenched and will forcefully resist change. And change is neither trivial nor amusing. Change will come from the middle, driven by reinvented roles for intermediaries, but only if the overall system wakes up to embrace new commerce methods.

The test of the most potent new ideas is that they achieve results outside the normal range of what is achievable by the established system. System-changing ideas will reshape the global and local supply chain and, by doing so, usher in a new era for our societies and economies in local communities and all around the world.

Working downstream of orders

The incumbent supply chain operates upstream of customer orders, meaning that when an order is placed the supply chain mobilizes to ship products from near and far locations, often moving them through intermediaries, until they are delivered to a customer’s preferred location. Increasingly, sophisticated use of data, analytics, and artificial intelligence optimizes supply chain operations. But because the supply chain operates upstream of orders, supply chain algorithms act mainly on data about product identity, quantities, locations, prices, and occasionally value created through assembly, kitting, cold storage, and so on—end of story.

But some innovators are writing a new story. One way for the supply chain to create system-changing value is to work downstream of orders, where businesses operate and workers work, collecting new data and solving new problems. This concept is not new. Distributors have always sought to create value for the companies that buy products and the users that use them, often measured as the total cost of ownership, worker productivity, and the quality of the products and services to the ultimate end user. What’s new is the realization that doing so can be an extension of the supply chain, with offerings not based on vague value propositions but through the value created and measured by new, more comprehensive data.

An example: Some progress is happening in the design and deployment of wearable technology. Imagine that a skilled worker—a trucker, technician, baker, or waiter—could capture information related to customer engagement, worker effort, or environmental conditions like safety, mood, wellness, or weather. Wearable tech embedded in gloves might capture that new information through sensors, cameras, microphones, or hand gestures. When added to product information and performance data, such details might help customers measure new metrics, make better decisions, and deal with uncertainty. If not wearable technology, sensors might add new data from smart vehicles, equipment, buildings, and cities. No matter what the delivery mechanism, supply chain companies are at the center, providing this capability.

Distributors are progressing in this direction, offering application programming interfaces (APIs) to integrate with the customer’s critical business processes, and evolving from operating as a warehouse that fulfills orders to functioning as an integrated business enabler. As they do so, distributors are reconfiguring the supply chain to work downstream of orders.

Your discoveries?

My suggestion above that supply chain companies might step up to “help customers measure new metrics, make better decisions, and deal with uncertainty” is offered as a frame for driving progress, one that I learned from Warren Powell, professor emeritus, Princeton University, and co-founder of Optimal Dynamics. I frequently argue that the best B2B innovations will flow not from defensively innovating distributor business models but by helping customers innovate in their business and then acting on progress to reimagine and reinvent the supply chain. Focusing on metrics, decisions, and uncertainty is an actionable frame for achieving incredible progress.

Do you agree? What are you doing? Can you do more? How can I help? Please share your comments below or reach me