Quick Take: A bold, bright future

Together, can we create a supply chain that functions as a global resource for trading partners, society, and the economy at large?

Rebirth of the supply chain

I am excited to announce my presentation of a bold and bright future for the global supply chain at CSCMP EDGE 2022, the Council of Supply Chain Management’s annual industry conference, scheduled for September in Nashville. I will explore what distributors have to say about the supply chain as a global resource redesigned to create radical value for customers, manufacturers, retailers, society, and the economy. My session, The supply chain isn’t broken. It’s reborn, will cover new ground, and hopefully, inspire:

Distributors are an unknown and untapped resource for reinventing the supply chain as a digital-age, wealth-creating engine for global and local prosperity. Like all of us, distributors were severely burned by our near-fatal hyperfocus on just-in-time efficiencies. Now, distributors are acting on big ideas and building something new—a wealth-creating supply chain designed around connected businesses and human-first innovations. Distributors are no longer undifferentiated customers of the supply chain, but stepping up as supply chain champions, captains, and co-creators of an unimagined future.

In this Quick Take edition, I offer ideas for shaping the future of the supply chain, all in a “yes, and” formulation.  “Yes, and” is a pillar of improvisation—a call to build on a known truth, then do the unexpected, creating a result that is new, better, and surprising.

Global and local

Distributors are intensely local businesses, supporting every type of business in every country, working where customers live and work. Historically, distributors are customers of the supply chain, sourcing products directly from far away markets and through orders placed with suppliers for products manufactured overseas. Distributors are rapidly adding e-commerce capabilities, webstores, and occasionally marketplaces. However, this does not diminish their personalized and customized support delivered through local people and resources.

As co-creators of a reborn supply chain, distributors give voice to the local business and human needs of leaders, managers, skilled workers, product users, procurement and logistics professionals, and their communities—essential inputs for an emotionally intelligent, resilient, and responsive supply chain in touch with and driven by, local needs.

Network effects and community impact

The world’s most powerful technology companies, Amazon, Apple, Uber, and more, achieve market dominance by harnessing network effects—the simple fact that their products create more value as more customers use them. There is a science behind network effects, explained in depth by Andrew Chen, in The Cold Start Problem: How to Start and Scale Network Effects. Chen explores a subtle but critical duality:

A successful network effect requires both a product and its network, and that was true in the age of the American Telephone & Telegraph Company, and true today. For Uber, the “product” is the app that people run on their phones, and the “network” refers to all the active users at any given time who are connecting with Uber to drive or ride.” (p. 20)

A reimagined supply chain will operate as a network with a product. The product is sourcing and delivery of physical products with an expanding array of value-creating services. The network will emerge as businesses digitally connect, sharing information, operating on algorithms, and making better decisions around speed, costs, profits, sustainability, and more.

Network effects will power the future supply chain, but there’s a problem. Apple, Amazon, and Uber are free to develop market-dominating network effects because they operate on wholly owned platforms. The supply chain is a patchwork of incumbent organizations participating as customers, suppliers, service providers, regulators, customs officials, and more. Supply chain incumbents must invent new partnering principles to enable data sharing and transparency while protecting proprietary interests. 

Financial profits and human flourishing

It has become common to blame the current supply chain crisis on a lack of resiliency fostered by just-in-time practices and the pursuit of maximal efficiencies and profits. In Supply Chains: To build resilience and manage proactively, McKinsey & Company offers three essential priorities “… a nerve center for the supply chain, simulating and planning for extreme disruptions, and reevaluating just-in-time strategies.” Said differently, the supply chain needs a brain, survival instincts, and purpose.

As I research my remarks for EDGE 2022, I find inspiration in the evolution of sustainability as regeneration, a shift away from doing less harm toward an inclusive movement for doing more good. Through innovation, businesses are invited to help regenerate jobs, communities, societies, and economies. The global supply chain, acting globally and locally, creating network effects by serving every global citizen, can become a force for creating wealth worldwide.

By wealth, I mean financial gain and return-on-investment, but also goods realized through the dignity of work, building things, value-creating services, connections with far-away peoples, and more. The global supply chain connects every human everywhere, and it helps billions of people grow and thrive by respecting its potential to advance the human condition. In a word, the purpose of a resilient, responsive, and regenerative supply chain is to help humankind flourish.

Your take

This edition is the fifth and last in a series focused on big, transformative ideas for the future of distribution, all inspired by my participation at TWIN IMPACT 2022. I invite you to join my quest. Are you actively involved in shaping the future of the supply chain? Should you be? What more can we explore? Please share your comments below or reach me at mark.dancer@n4bi.com.