Editorial
Driving operational efficiency at the core of business has long been accepted best practice to improve performance. Yet the edge is now offering more interesting opportunities to innovate and improve.
Here are three ways leaders are turning their attention to the edge, to the far reaches of their supply chain, to create value.
Come to the Edge to Create Value
For companies that compete on the basis of their supply chain performance, nirvana is achieving the “perfect order” — the right product delivered to the right place, at the right time, every time. While order perfection may well lie in the eyes of the customer, perfect order pursuit has often focused on improvements at the core that increase operational efficiency. But this approach, while necessary, has proven insufficient.
The Accenture Strategy supply chain report released in Nov. 2017 found that only 33 percent of operations executives see their cost intervention initiatives as having durable tangible impact. The conclusion? The time for chasing incremental savings is past. Focus needs to move to “creating new value to drive growth.” This is driving a push to the “edge” of the supply chain, to the customer.
“Come to the edge, he said.
We are afraid, they said.
Come to the edge, he said.
They came to the edge,
He pushed them, and they flew.”--Guillaume Apollinaire
The customer moments of truth for supply chain performance — the edge touchpoints that define the customer relationship — seem to offer the best opportunity to innovate. And, new technologies, that are helping to extend the reach to and through the customer, are presenting supply chains with the opportunity to lead the business in value creation.
Related Article: Transform the Global Supply Chain With Multi-Party Innovation
IoT Is Expanding our Universe
At the edges of the supply chain, the internet of things (IoT) is being used to transmit performance information to the systems that companies use to monitor their supply chains. IoT sensors can provide more accurate asset tracking, generating new and valuable data that can be catalogued.
For example, the medical device supply chain used to stop at the delivery of the device. No longer. Connected by the Internet of Medical Things (IoMT), the patient data points gathered from devices are helping to transform the healthcare value chain.
Data that comes from the extended endpoints of the medical device supply chain can be used for better track and trace capability to help manufacturers locate devices and facilitate recalls ordered by the FDA in the case of health risks. And, through a virtuous loop this extended supply chain should ultimately improve the functionality and quality of devices.
Surveys show IoT is leading other much-discussed technologies, including robotics and artificial intelligence, in business impact. In healthcare, capturing and applying IoT data is already creating new value — from improved inventory management to the possibility for better treatment plans.
Related Article: How to Deal With IoT Security Threats
Blockchain Is Enabling New Paths
With the potential to change how participants communicate and accomplish work, blockchain is perhaps at its most powerful in situations that remove intermediaries from complex transactions. That is why blockchain is a perfect fit for supply chain innovation at the edge.
Global supply chains are incredibly complex and extremely difficult to get right. The ability to enact secure, transparent and direct peer-to-peer — in effect, edge-to-edge — transactions speaks to the challenge of "balancing demand and supply."
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The Supply Chain Dive article, “Why Blockchain in the Supply Chain Is an Absolute Game Changer,” highlights blockchain’s ability to address the increased risk of purchasing counterfeit products. The so-called “gray market” that has grown due to the upswell of online ecommerce purchasing. As the article puts it, "Through blockchain technology, consumers can verify the product they purchased, and vendors and suppliers can take the same action. This increases efficiency and reliability within the supply chain."
Blockchain also holds value for the safety of our food chain. Just last month, Walmart unveiled a blockchain-backed traceability system for leafy greens that will be mandatory for all suppliers in 2019.
And because blockchain captures the quantity and transfer of assets regardless of the intervening mode of transit, it will grow in importance as new modes emerge like autonomous trucks, drones, and even Amazon’s proposed floating fulfillment center.
Those future Amazon floating fulfillment centers would literally move the supply chain into the clouds, with warehouses that are carried and held aloft by blimps. But there is another kind of innovation happening in the cloud that is also creating value at the edge of the supply chain.
Related Article: What's Next for Blockchain?
Cloud Is Creating “Exception-al” Value
We all agree that the supply chain ends at the customer point of consumption, right? Not really. The often-neglected reverse logistics function represents an ever-rising set of “exceptions” at the edge that have become business as usual.
In fact, the importance of reverse logistics — the flow of goods from the point of consumption back to the point of origin — has skyrocketed. It is not uncommon to see 30 percent and higher product return rates for online purchases, and the numbers are increasing as Amazon, Walmart and every ecommerce site on the planet offer omnichannel choices for ordering and faster delivery to the customer.
The cloud is being used to better manage these exceptions with less friction and to retain the potential value of the product upon return. Adaptive case management in the cloud has proven it can help to handle things “when good orders go bad” at any stage of the supply chain.
Interesting cloud-based technologies are helping large brands and retailers manage their reverse logistics processes to increase the value of excess and returned inventory.
Cloud technologies are also helping returned merchandise contribute to a green and sustainable supply chain. According to Optoro, a cloud-based returns optimization software company, "Most stores don't have the capacity to manage product returns in an environmentally friendly way. Optoro's systems help find new homes for returns.”
Related Article: How Supply Chains Deliver the Ultimate Customer Experience
Delivering on the Promise
Gartner's Top 25 Supply Chain companies are turning their attention to automation that drives from the edge — outside in — to address improvements in processes that can reshape flows and deliver better outcomes for the business.
It reminds me of the iconic movie scene from Butch Cassidy, where the ability to deliver — to shoot accurately — is questioned, and we find out from the Sundance Kid, “I’m better when I move.”
Supply chains, like the Sundance Kid, are better when they move. That is when they are fulfilling their promise and creating value. And increasingly we will see that value discovered at the edge of the supply chain and fulfilled with new technology — from IoT to blockchain to the cloud.
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