Logistically Speaking: Supply Chains Enter the Era of the New Abnormal

Aug. 14, 2013
Don't get caught up in terminology. The supply chain is as relevant now as it ever was.

Though there's not much empirical evidence to back this up, journalists really do have a heart. Having just finished writing this month's special report on the state of logistics in the United States, I'm acutely aware that my sources for the article didn't offer up much in the way of unabashed enthusiasm and rousing good news. A year ago, in her annual State of Logistics Report, transportation analyst Rosalyn Wilson characterized the industry's performance as "unremarkable," and this year, she basically concluded that maybe unremarkable is as good as it's going to get for the foreseeable future. Maybe what we're seeing now is the new normal of logistics.

Then again, it could be we're just looking in the wrong places for something remarkable. Maybe the future of logistics doesn't lie in the railroads and trucks, but somewhere else entirely, in a world that will revolve around things like 3-D printing, sustainability labeling and supply chain drones. Maybe we need to start focusing more on what I call the New Abnormal. Here are some recent examples.

• The Internet of Things. Although the idea of every item—and maybe every person—on the planet being tagged with a unique ID linked to the Internet has unmistakably creepy overtones, the supply chain implications are staggering. With many citizens wondering if the government is tapping their cellphones and monitoring every purchase they make, my guess is that the next big cottage industry to emerge will be home security devices designed to block transmission of personal IDs. And then there will be devices developed to override the blocks. And so on and so on.

• Omni-channel retail. The conventional wisdom used to be that the e-retailers, led by Amazon, would make the old-line brick-and-mortar retailers obsolete. In one sense, that's been proven out, as the tombstones of Borders, Circuit City, CompUSA, KB Toys, Montgomery Ward and numerous other national chains can attest. And when's the last time you paid a visit to a Blockbuster, a Kmart or a J.C. Penney store? But let's not ring the death bell for all retail stores quite yet. "Brick-and-mortar stores are becoming more than just a point of sale – they're an essential component of the supply chain as pick-up/drop-off locations for e-commerce orders," notes Kris Bjorson, leader of Jones Lang LaSalle's retail/e-commerce distribution group. Omni-channel distribution is making retail stores relevant again by making it possible for individual stores to, in effect, become mini-DCs, able to fulfill same-day and next-day orders no matter how the item was purchased (web, mobile, in-store or catalog).

• Supply chain MBAs. Way back in 2001, Fortune magazine published an article provocatively titled, "Supply Chains Get Sexy." The main premise was that supply chain management programs were becoming popular at business schools, and that supply chain grads could write their own ticket, with plum salaries waiting for them. Flash forward a dozen years, and now the Wall Street Journal has written the same basic article, "The Hot New MBA: Supply Chain Management." The new wrinkle to the WSJ story is how many career-oriented students are enrolling in graduate-level supply chain courses, again operating under the premise that the jobs—and the salaries—are there waiting for them. The anecdotal evidence seems at odds with what we've seen from our annual MH&L Salary Survey (one college, for instance, claims its supply chain MBAs are finding jobs with salaries starting at $97,000), but it's at least reassuring to know that supply chains are sexy again.

• Emerging markets. The biggest growth market for supply chains in the coming years, not surprisingly, are the so-called "emerging market" countries (e.g., Argentina, Hungary, Indonesia, Pakistan, United Arab Emirates) whose growing economies are often highly fragmented between rural and urban locations, and whose infrastructures are often unreliable, notes Mike Burkett, research vice president at analyst firm Gartner. These challenges offer opportunities for global companies to design new supply chain networks capable of meeting the needs of these emerging companies. And a key component of those networks will be real-time visibility, says Jeff Dobbs, a partner with consulting firm KPMG. "Moving toward a demand-driven supply chain is probably the single most important step a global manufacturer can take today," Dobbs says, but cautions that much of today's supply chain technology is outdated. He believes, though, that we're on the verge of a "hyper-innovation era" that will be based on new data technologies and enhanced visibility capabilities. Or, in other words, the New Abnormal.

Follow me on Twitter @supplychaindave.  

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