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There Is No Such Thing As A Pure-Play Manufacturer Anymore

Despite new technology advances, forthcoming changes to supply chain execution will revolve not around the technology itself but rather the convergence of the multiple systems and the teams that enable it.

Supply Chain Management has gone through some fairly significant changes over the past quarter century. Not only has the global marketplace thrown many curve balls our way that have transformed the way manufacturers, wholesalers and distributors operate to remain viable, but recently we are seeing that changing consumer expectations are driving the latest disruption to supply chains and the roles within it, particularly within the retail sector.

This is largely due to today’s tech-savvy consumers, who want convenience — to shop whenever and however they please — and they want a great experience every time. Many consumers are beginning to buy directly from wholesalers and manufacturers with easy-to-use ecommerce sites. In response, the traditional model of manufacturing and distribution is rapidly changing as organizations are looking to cost-effectively increase market share and reach new customers. As a result of this shift, professional planners and buyers are beginning to expect the same level of service and flexibility from their business partners as they are experiencing in their personal life as consumers.

Companies today exist in an omnichannel world, where the movement of goods and supplies is a common thread that runs throughout the various stages of the supply chain. Breaking down the barriers that isolate the departmental silos within these ecosystems will give rise to a converged supply chain across procurement, manufacturing, warehousing, transportation, support and retail — setting the stage for truly integrated supply chain partnerships.

Despite new technology advances, forthcoming changes to supply chain execution will revolve not around the technology itself but rather the convergence of the multiple systems and the teams that enable it. This is because companies are looking at new ways of maximizing their investments and optimizing the resources already on hand. For instance:

  • Manufacturers and wholesale distributors are realizing that they can make better margins using the internet to go directly to consumers to sell their products, whether through their own ecommerce site or using the likes of Amazon and eBay. Taking this approach however, essentially competes directly with their own retail partners — but a balance has to be found for the future success of all channels.
  • The growth of ecommerce has forced established retailers to adopt omnichannel fulfillment practices. This creates an incentive to have smaller and more agile distribution centers located near city centers. Large retail locations will turn into small show rooms with attached fulfillment centers. Many retailers are also now doing their own manufacturing, assembly and distribution in an attempt to own the entire supply chain to guarantee quality, consistency and cost.
  • Manufacturers are also looking to adopt some strategies from retail — pop-up stores for example. Imagine a mobile manufacturing facility utilizing the latest additive manufacturing processes that can be moved on a regular basis to fulfill specific customer needs.

No matter which role you play, today’s supply chains rely on the internet. The ability for companies to effectively run a very efficient supply chain to manage all of these ecosystems really relies on their ability to interconnect immediately and have complete visibility of the entire business in real time, which you can only do with technology via the internet.

That means operating your entire supply chain from one system on the internet — giving you deep and up-to-the-minute visibility of every interaction, transaction, and relationship occurring in your business in every market, anywhere in the world.

To accomplish this degree of networked collaboration, partner companies will need a flexible, always-on, remotely accessible and easily adaptable cloud-based platform. Without one, they can't possibly achieve the visibility that all partners will need into product information, shipping status, order details and other critical information. Nor will they be able to guarantee that all partners are looking at the same version of the data to monitor performance and identify opportunities for improvement.   

It’s safe to say that cloud technology will continue to drive business transformation, as well as healthy competition; and there is little doubt that by investing in the latest cloud-based technologies, manufacturers, retailers, wholesalers and distributors will be in a far better position to weather this disruption — and survive.

Gavin Davidson is a manufacturing industry lead at Netsuite.

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