Boxes Like Bits: The New Supply Chain
Insight The changing face of supply chain logistics in the digital era.
For two decades now, the Information Superhighway has been impacting the way goods flow along our actual superhighways, and through our skies, and over our seas. The changes were insignificant at first, but have been since growing larger and advancing more quickly as the world becomes more and more connected. And since the logistics industry itself has evolved, so has the role of logistics in companies across all sectors.
“Five or ten years ago, supply chain logistics was a cost, no different from packaging, just a requirement of doing business,” says Ryan Persad, Director Purolator Logistics at Purolator Inc. “In the last five years, that has changed. It’s no longer a line item cost on a ledger, it’s a means of driving revenue and margin.”
Take e-commerce, for example. As consumers increasingly shop online and become accustomed to instant access to product information, rapid shipping directly to their home, and friendly return policies, consumer-facing companies that focus on logistics mechanisms that make those things possible are rewarded.
"You can’t survive in the logistics space anymore as a pure transportation company."
And so organizations that want to remain competitive find themselves placing even more importance on supply chain logistics. “Supply chain logistics has moved up a level within organizations,” says Persad. “Previously, the warehouse manager or purchasing manager led decision-making around a company’s transportation and supply chain. Increasingly, companies have elevated the role to the level of vice-president, a person dedicated to leading supply chain logistics.”
Flexible, agile, scalable, affordable
For a logistics provider, thriving in this new world requires far more than just putting more trucks on the road. Rapid delivery in both customer-facing and business-to-business transactions is built on distributed warehousing, intelligent inventory management, and, increasingly, predictive models of upcoming demand. And all of this needs to be scalable and affordable. It’s a challenge that has required a paradigm shift in what it means to be a logistics company. “You can’t survive in the logistics space anymore as a pure transportation company,” explains Persad. Customers are no longer just interested in buying transportation, they are seeking capabilities that add value to their business.”
At every level of the process, the key is flexibility and agility, both of which are primarily information-driven. Through Internet and cloud technologies, logistics companies have become able to track inventory and movement in a way that would have been unthinkable a decade ago. That means that supply chain decisions can be made on the fly, adapting to moment-by-moment needs and avoiding inefficiencies like unnecessary distribution centre stopovers.
The invisible internet of logistics
In a way, as supply chain logistics becomes more infused with Internet technology, it becomes more like the Internet itself. Just as a website or file finds its own route across the innumerably interconnected nodes of fibre, so too has the supply chain become smarter, more distributed, increasingly complex and more resistant to disruption.
This new supply chain model is the foundation enabling our web-to-door culture and just-in-time economy. And, most impressively, it’s doing all this while remaining largely invisible to the untrained eye.