Quick Take: Creating a resilient, responsive, and regenerative supply chain
Distributors can help lead the way to this bright, bold future. Are you ready to join the cause?
Inspired to move forward
Just a few days ago, I shared distribution’s bold and bright vision for the future of the supply chain at CSCMP EDGE 2022, the Council of Supply Chain Management’s annual industry conference. I led two sessions. The first was styled as a TedTalk with prepared comments peppered with a few ad hoc additions. The second was more of a work session, exploring three radical business models emerging from distributor innovations. In both, I made the case that distributors—yes, distributors!—have the right stuff for leading the supply chain out of its current mess and toward a resilient, responsive, and regenerative future. More on that below, but first, a view of the hot topics.
EDGE is a massive event attended by a few thousand supply chain professionals from manufacturing companies, retail organizations, third-party logistics services (3PL) providers, vendors, and more than a few distributors. Before the main event, a full day is devoted to sharing state-of-the-art academic research. Then, three days of keynotes and workshops. Members are global, and a forum was dedicated to attendees from international markets. Many of the people I met were happy to be together as the pandemic wanes. I noticed a high level of excitement, curiosity, and purpose.
Resiliency was the hot topic, of course. Supply chain professionals are scrambling to respond to the ongoing crisis of getting products from here to there, to meet demand. Artificial intelligence (AI) is on the table, but not for growing sales and directing sales efforts, as it is for distributors. Among supply chain professionals, AI is for managing costs, optimizing operations, and predicting the best movement of containers and inventory in a global, multimodal system. The supply chain is out of sync, and costs are out of control. Everyone is working to fix the situation and make the supply chain what it must become for the long run—a competent, committed, and predictable system. I heard these themes many times, and they are explored in depth in the Council of Supply Chain Management’s 33rd Annual State of Logistics report, available here. A must-read, to be sure.
I offered something different: big ideas and bold stories from the front lines of distributor innovations. My comments reflected my weekly reporting in this newsletter and, more importantly, my experiences working with distributors and their line-of-trade industry associations, especially NAED and NAW. At NAW, we are working to help distributors understand how innovation fits their aspirations and culture, and building an innovation discipline that is “by and for” distributors. At NAED, we are working on evolving the value chain for the digital age, a system comprised of distributors and manufacturers operating as connected businesses.
I will share recordings and transcripts of my sessions soon, but for now, I would like to report on three discussions conducted across both sessions, the ideas that most resonated with my audience:
History is the future. Inspired by American economist Thomas Sowell, I called on supply chain members to remember that throughout history, innovation happened where cities, ports, and railheads emerged, where people crossed mountains, deserts, and oceans. These are the places where humans came to trade. This is where the supply chain came alive. In its quest for efficiency, the supply chain lost its imagination—its ability to inspire. But that can be the supply chain’s future once more. A modern supply chain runs on data but is hyper-focused on helping humans achieve their aspirations by doing global and local commerce.
Distributors are different. Today’s distributors are not what many supply chain professionals remember. Distributors are innovating because they must. They are at risk of wholesale disruption more than any supply chain member. (Pun intended.) It’s wrong to think distributors add value to manufacturers’ products. No. Distributors are leaning in to help customers transform for the digital age—because it’s the right thing to do. As they do so, distributors create value through their labor, knowledge, financing, and leadership. Distributors are local and global. They help skilled workers flourish. And as the supply chain is run on algorithms, distributors will create network effects, just as platforms do, but for the betterment of communities, society, and the economy.
Radical models for radical times. I shared stories about actual progress made toward three radical business models: innovation intermediary, regenerative value creation, and decentralized distribution. These are evolving models in which distributors, acting organically and competing in a free market with new ideas, are reacting to what is in front of them. Our society, its workers, and its leaders are striving for something new: a business model with purpose that fulfills human needs as it meets the requirements for financial viability and success. And as the tip of the spear for a new supply chain, distributors can become its sensors and enablers, showing the way forward. Our collective goal must be to help customers achieve unimagined and previously impossible customer outcomes.
Your Take?
The supply chain needs a moonshot. All its participants, customers, vendors, and communities must unite to achieve the impossible, raise funds for investments, and overcome uncertainty and risk. Just as we did for the one true moonshot that put humankind on, well, the moon. The supply chain should only prosper if customers prosper. And the supply chain’s future should not just be about overcoming disruption to maintain the flow of goods. That’s resiliency. The supply chain can also be responsive to the needs and aspirations of its customers. And, it can help to regenerate jobs, especially skilled workers and communities—the places on both ends of the supply chain where we all live and work. The supply chain must be resilient, responsive, and regenerative. And by achieving this, a robust supply chain will be profitable, sustainable, essential, and respected.
Do you agree? What are your ideas and experiences? What are you doing? Can you do more? How can I help? Please share your comments below or reach