E-commerce supply chains and the advent of automation.
The rise of digitisation
Despite Kodak inventing the digital camera, it filed for bankruptcy protection in January 2012! It simply wasn’t agile enough to shift it’s business model to digital quickly enough.
Over the past few years the rise of digitisation has claimed many companies P&L’s, pushing some out of business, forcing others to rapidly rethink their models and fundamentally changed the discourse of business forever. Consider the challenge Uber has thrown down to the taxi industry, or the seismic shift occurring for traditional Australian retailers from the likes of The Iconic, Kogan and Appliances Online.
A digital supply chain
A classic challenge for businesses that are not 100% digital is traditional supply chains with many transaction points and layers of cost have been exploited by their own complexity. What we are undoubtedly seeing is a rapid movement towards the digital supply chain or what is also known as digital supply networks. A place where communication is streamlined and linkages are seamless, supported by a customer centric supply network. So what does this mean moving forward? If what I’ve just explained makes no sense, don’t leave your house or office, and go try buy something from The Iconic . If you are in Sydney, Melbourne or Brisbane, you might receive it that day ….worst case the next. Consumer behavior is slowly being impacted by digital businesses where seamless supply chain makes buying and life easier in many ways.
Die Hard – really?
Industry 4.0 isn’t a new term. For those of you who have seen Die Hard 4.0 you might recall John McClane fighting cyber terrorists who hack into government and commercial computers in the United States, aiming to start a “fire sale.” A type of attack designed to target the nation’s dependence on IT infrastructure. McClane came out on top in that instance but there’s no doubt that today, cyber crime is quite probably one of the biggest threats to economic and societal stability since Pokemon GO. The McClane’s of today’s world certainly have their work cut out for them!
Industry 4.0 is driving a strong global movement towards value chain automation (or information transparency), creating smart manufacturing plants, cloud computing and connecting “things” to the internet (IoT). The result is an environment supporting the large scale curation of products under the conditions of highly flexible production.
It’s the consumer stupid
What is driving this requirement? Well, it comes down to the ever changing needs of the most powerful person in the value chain, the end customer. Since the advent of the smart phone, the consumer has never had more power in the eyes of a retailer. The consumer demands what they want, when and where they want it and how they want it. Industry 4.0 is there, quite literally, to support this modern way of doing business and serving the consumer.
Digital supply networks are exciting because they are enabling the customer to become more connected with the end-end process then ever before. It seems as though a new trend is appearing in the distant horizon. That is, trying to bring the human interaction back into the process. As society adopts Industry 4.0 and it becomes as mainstream as sliced cheese, the next set of challenges will undoubtedly revolve around humanizing automation.
The question companies need to ask themselves is what processes can be fully automated, leveraging the power and possibilities of Industry 4.0, that won’t disturb the customer experience? Artificial intelligence (“AI”) and virtual reality (“VR”) will no doubt play a very interesting role in this debate moving forward.
Where do you draw the automation line in the sand? Will customers have a problem with AI or VR? Maybe, but probably not. If you followed my suggestion and bought a T-shirt from The Iconic midway through reading this (…..hey it is possible), you will know if it doesn’t fit, it’s not a problem. They have a free return policy in the first 100 days. Send it back for a different size – no extra cost. No doubt when The Iconic adopts VR properly into it’s supply chain, they will eliminate even that cost within their business model.
Learn more about logistics and supply chain management in Monarch’s Diploma of Logistics.
Author: Jesse Wilson, Logistics, Supply Chain and Digital Consultant