Proximity: The supply chain revolution every distributor needs to lead
Distributors have a unique opportunity to embrace a revolutionary vibe, navigate breakthroughs, and transform the supply chain from the ground up—if they are willing to become bold changemakers.
I've discussed the powerful new book Proximity: How Coming Breakthroughs in Just-In-Time Transform Business, Society, and Daily Life many times, and in this edition, I hope to make the case that it is a must-read for every supply chain practitioner, leader, innovator, and founder. Defined as a concept, "proximity" is the use of digital technologies to enable the production of value ever closer to the moment of demand in time and space, meaning that products, services, and experiences are created not in anticipation of demand but when they are actually needed, wherever they are wanted. Proximity is 3D printing, vertical farms, solar panels, streaming media, remote healthcare, and more. However, as the book explains, proximity is more than a trend; it is a revolution. Proximity is transforming every industry, reshaping business and society, how we work and live our lives, and how a reimagined supply chain serves us. For distributors, proximity is the missing North Star for guiding innovations, creating new and radical value, and carving out a new, earned reputation as changemakers. By embracing Proximity, distributors can see the future, make it their own, and lead a supply chain revolution. Leadership is a choice, and change is only a mindset away.
Proximity: The future of all industries
I was thrilled to hear Proximity co-author Rob Wolcott explain its concepts and applications on the excellent podcast Changemaker Mindset, hosted by Greg Satell and Roifield Brown. Satell, a world-class expert on evidence-based innovation, and Brown, a podcast producer par excellence, delve into the core of proximity to understand the ongoing evolution of every industry. Together, they discuss Wolcott's mindset as a uniquely gifted changemaker, charting a path through his youth, education, research, work, and founding of two organizations: Clareo, an innovation-savvy consultancy, and The World Innovation Network (TWIN) a community of innovators dedicated to creating connections, sharing ideas, and collaborating to make them happen. Every moment is rich with an abundance of insights for everyone seeking to imagine, design, invent, and build next-level business models in the digital age. Click now and listen here.
Asked to provide a brief introduction to Proximity, Wolcott explains what proximity is—and what it isn't:
… When I started thinking about what became Proximity, I was asking a simple question, which is, what is it about digital?
By the way, when I say digital, I mean all kinds of digital. It could be 3D printing, it could be AI, it could be mobile apps, it could be rooftop solar, which you often don't think is digital, but it's digitally enabled. I was asking the question, what is fundamentally different about digitally enabled technologies compared to the industrial age?
What's underneath the hood? What we recognized fairly quickly was that digital allows us to compress all sorts of capabilities in smaller and smaller packages and distribute them all over the economy ever closer to each moment in time and space. And because of this, digital pushes the production and provision of value, product, services, experiences, ever closer to the moment of actual demand in time and space.
And just to be clear, I'm not just talking about a little better supply chain management. When I first started talking about this in 2015, 2016, that's what people thought I meant. They thought I meant using digital to be a little better at supply chain.
That's a great thing. But that's not what we mean. We mean literally ripping things apart, changing your business model, your technology platform in order to procrastinate, in order to wait as long as possible before adding any value until you have an actual customer ready to pay for and use that product, service or experience.
That's Proximity. … [it] is the direction of all industries for the rest of our careers.
I find this exchange especially helpful, and even challenging, for supply chain leaders and innovators. It is helpful because it clearly defines proximity and offers examples, pointing to technology-enabled change happening every day in every industry and calling for a creative reformation of business models to create immediate, local, and fresh value. It is challenging because it obliterates the supply chain's traditional mindsets, capabilities, structure, and operation—if not in so many words.
To repeat, Wolcott says only, “And just to be clear, I'm not just talking about a little better supply chain management.” But then he explains, “We mean literally ripping things apart.”
I repeat these words because I do not want them unheard or brushed aside. Proximity’s message is about opportunity, abundance, and going on offense. In my experience, the vast majority of supply chain-centered innovations harness digital technologies not to invent new business models but to defend what exists, aiming to squeeze out a few points of margin, efficiency, or productivity. In this way, leaders strive for resilience, seeking to bounce back from catastrophe—but defined as getting back to the status quo, not becoming fundamentally better than before.
And no one expects otherwise—mostly. Manufacturers diminish distribution by using digital technologies to bypass distributors. Vendors offer what they can sell, not what might be achieved, knowing that the distribution industry is cautious and risk-averse. Advisors do the same, proffering “catch-up” solutions with supposedly proven ROIs. Private equity achieves scale through acquisition, attaining deeper pockets for technology investments, but seldom budgeting for R&D. Venture capital and founders mostly look elsewhere for unicorn opportunities.
Distribution suffers from a soft barrier of low expectations. The barrier is real because it exists, but soft because change requires only a mindset shift to gain momentum. But there is some evidence of traction and, therefore, hope. For one notable initiative, check out NAW's Innovators Summit. Now in its third year and powered by Applico, this forum seeks to “accelerate participants’ investment in game-changing solutions tailored specifically to America's largest distribution companies.”
The Innovators Summit is an excellent start, but the industry needs “Yes, and…” progress. What about the rest of distribution? Why can’t small and medium-sized distributors capitalize on their hard-won worker, owner, and community connections to create local, human-centered, tech-driven value? Can you name one distributor founded in the last 10 years by someone outside distribution? I've looked, and I can't. If you can, please let me know. ASAP.
Decades ago, distributors built modern distribution by stocking local inventory to meet customer needs and using their business connections and operational support to anticipate requirements. Today, some distributors use artificial intelligence to build personalization engines, aiming to achieve anticipatory shipping. However, these investments are only an attempt to catch up with Amazon's fast shipping strategy.
By embracing proximity, distributors might leap ahead, not catch up, aiming for the future where every industry is heading. The goal is to imagine and implement new business models designed to create value when and where customers need it, or as Wolcott puts it, “the production and provision of value, product, services, experiences, ever closer to the moment of actual demand in time and space.” Perhaps it would be better to work with customers to help them understand and adopt proximity in their business models, then work back to redesign the supply chain to offer new services, knowledge, and assistance for moving society, lives, and every industry forward.
In his discussion with Satell and Brown, Wolcott says that among the creative community at TWIN, “we say never leave serendipity to chance.” Distributors would be wise to make this mindset their own. Doing so means opening themselves to innovating with a wider lens, noticing unexpected discoveries, and embracing surprising outcomes. Distributors may find the future by competing as happy—even joyful—warriors. As an $8 trillion industry accounting for nearly one-third of the economy, distributors can lead the supply chain forward by embracing and enabling proximity, generating profits andhappiness, and building the future we want.
About the artwork
Let's have a little fun and maybe collaborate. This edition's artwork draws inspiration from these words on Proximity's official homepage: “Your GPS for the future. Make decisions based on where we're going rather than where we've been.”Inspired and with an assist from ChatGPT, I created this narrative and, from it, the image above:
Create an image of a futuristic digital landscape where a sleek, high-tech compass is prominently displayed, guiding a dynamic network of interconnected pathways. The pathways represent various industries and supply chains, all evolving and branching out toward a bright, expansive horizon. The horizon should symbolize the future—vibrant and full of potential. Incorporate subtle elements of innovation, such as gears, circuits, or data streams, woven into the pathways to evoke the transformative power. The overall tone should be forward-looking and inspirational, emphasizing navigating new possibilities and breakthroughs.
Here's the fun part. Load this narrative into your favored AI engine and make a better image that reflects your understanding of proximity and its potential as a North Star for innovating distribution. Or craft your own narrative. Send me the best of what you create and explain what it means. With your permission, I will write an edition about what you achieve and what it means for what we might achieve together. Do this. Do it now. Or at least very soon.
A way forward
I believe that distributors can be changemakers for the supply chain. Distributors are not the supply chain's last mile; they are something else, perhaps its heart and soul or its sherpa for building a supply chain worthy of our times. I first wrote about the power of distribution for building a better supply chain in Supply Chain Xchange, an official publication of the Council of Supply Chain Management Professionals (CSCMP.)
My article, Distribution, supply chain innovation, and a brighter a future, was published as we recovered from the COVID-19 pandemic. It introduced Proximity before it was released and offered this rationale for distributors—of every size and industry—as changemakers:
Making the supply chain resilient, responsive, and regenerative is a huge task, requiring a great deal of innovation and transformation, but supply chain professionals don't have to go it alone. Distributors can help. As an $8 trillion industry, distributors serve every company in every sector, working in local communities, side-by-side with customers in the real world where business happens. Distributors are innovating, creating new customer experiences, leveraging digital tools, and helping companies and communities thrive. Working together with supply chain professionals, they can build an integrated and innovative supply chain that can help create unprecedented value for every person and business.
What will it take for distributors to truly shape the future? Can every distributor in every industry make a difference? Can you make a change within your company, your industry, your community, or society? I've drawn inspiration from the Changemaker Mindset podcast. Their mission resonates deeply with ours. It's time to embrace proximity and turn distribution's potential into real impact. Let's figure out how to make it so.
Please leave your comments below or reach me at mark.dancer@n4bi.com.