Insights

Building the Ecommerce supply chain of the future

Jonathan Colehower, Global Supply Chain Strategy Practice Lead

Supply chains have faced unprecedented challenges in recent months - a global pandemic that shut down the economy, limitations on brick-and-mortar operations, policy inconsistencies across borders - the list goes on. But there has been a positive note to all the hardships they have faced. Supply chain management (SCM) for Commerce and other sectors have waded through the unpredictable and challenging months with a keen focus on supply chain innovation.

More enterprises and executives are thinking about innovating to create more agile, technology-driven supply chains that are better prepared to navigate industry changes and face unexpected volatility.

It got us thinking: What will e-Commerce supply chains of the future look like? Here are 4 key ways we think they will evolve.

Quick Takeaways

• Artificial Intelligence (AI) technologies have the capability to create sophisticated, centralized, control-tower insights for supply chains by managing and analyzing vast amounts of data.
• Supply chain executives have indicated that AI will be their top area of investment in the next three years.
• Strategic partnerships will become a key component of globalized supply chains in the future as enterprises seek to leverage each other’s strengths, reduce costs, and minimize risk.
• The future of last-mile fulfillment is humanless. It’s likely that we will soon see drones, self-driving cars, and even self-flying planes handling delivery for eCommerce retailers.

AI power control tower insights

Artificial intelligence is the number one driver for supply chain digital transformation. It provides the foundation of the many components that make up the future supply chain.

Even before the global pandemic hit, supply chain managers have faced challenges due to increasing complexity, faster change, and increasingly demanding customer expectations. An acceptable turnaround time in the eCommerce world has quickly shortened from 7-10 days to 24 hours or less over the past several years.

Moreover, customers expect real-time tracking and continual updates as their products make their way to delivery status. AI and the next-level supply chain visibility it creates are the solutions enterprises must invest in to meet these challenges and remain competitive over time.

Let’s step back for a moment and define what we mean by supply chain visibility or SCV. In short, it is the ability to track a product’s every touchpoint on the supply chain, from the original manufacturer to the final consumer. Research by Ernst & Young found that increased SCV is the top priority for supply chain executives over the next 12-36 months.

Ideally, everyone along the supply chain has a unified view (i.e., they’re using the same system and seeing the same real-time tracking information at any given moment).

Cloud technology and the Internet of Things (IoT) have significantly transformed supply chain visibility in recent years to make this possible. Devices like QR codes, barcode scanners, motion sensors, and more send continuous real-time data to the cloud for easy accessibility. This, in turn, leads to a new problem, albeit not a bad one, too much data. The solution? Artificial Intelligence.

Artificial Intelligence takes the big data collected at all points on the supply chain. It uses machine algorithms to turn it into predictive insights, performance analyses, and any number of other data sets that supply chain teams can use to create an end-to-end, holistic view of the supply chain.

The high level of visibility is called control tower insight, a centralized data dashboard that shows key metrics, data, and events along the supply chain. Reaching a control tower level of supply chain visibility is currently a sign of a sophisticated supply chain. But for supply chains of the future? It will be imperative.

Partnerships become critical

Supply chain managers have learned over the past 18 months is that creating strategic partnerships and pooling resources is a sign of a robust enterprise supply chain. Creating partnerships requires a level of collaboration, forethought, and planning that requires an innovative and forward-thinking approach.

As supply chains struggled to operate under their normal business models, companies quickly realized that leveraging each other's strengths to reduce costs, increase agility, and meet customer demands was not a stopgap solution but a long-term strategy.

Globalization is another factor driving increased partnerships within supply chains. In the future, supply chains will continue to become larger, more complex, and more interconnected across geographic boundaries. At the same time, the eCommerce and retail industries are likely to evolve at a faster pace.

Partnerships will be key for companies to get creative about continually solving problems and operating at optimal levels.

Omnichannel becomes the supply chain norm

One of the most noticeable trends to emerge during the pandemic is the demand for a true omnichannel customer experience. This requires an enterprise-level shift for companies for whom multichannel options are no longer enough.

Customer touchpoints on eCommerce sites, mobile apps, and brick-and-mortar stores must be integrated so that they can feel their experience is always personalized and consistent. It is possible by creating cross-channel access to customer history and preferences so that their experience can be customized no matter how they decide to shop at a given time.

As customers continue to operate more frequently via digital channels, the demand for varied order fulfillment options (home delivery, shop in-store, curbside pickup, and more) increases. In such a scenario, omnichannel strategies and the ability for supply chains to communicate behind the scenes to execute order fulfillment will become even more critical.

Technology transforms last-mile fulfillment

When we think about supply chains of the future, we think of drones, self-driving vehicles, even self-flying planes. These are no science fiction, but real and possible ways companies will handle last-mile delivery in future supply chains. And in some cases, supply chains of the present. Amazon received FAA approval in 2020 to operate its drone delivery system and is building out its execution plan.

How Amazon Drone Delivery will Work (video)

The point? Humanless delivery technology is already here, and it will undoubtedly be a vital part of the future supply chains.

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