Author: James Cook
The consumer societies of today have become used to the ability of technology to help them find, review, price and buy all manner of products and services. They are able to do this from anywhere there is a reasonable Internet connection, order from vendors located almost anywhere and express ship to almost any point on the globe.
This has resulted in the transformation of the logistics industry and benefited those organisations with global reach and scope, who can utilise their asset intensive and wholly owned integrated networks. The other winners have been those companies that have enabled this explosion in online commerce, organisations such as Amazon.
The speed at which they have been able to build a logistics capability capable of competing with the very large global integrators has been largely due to their use of advanced technology. Since the company is itself a child of the Internet (Amazon would not have been able to exist prior to the WorldWideWeb), there is an inherent understanding of technology. While many of the large logistics operators have also developed impressive technology platforms, their mindsets have traditionally been the utilisation and control of physical assets. Amazon is, in its very DNA, a technology business that views, operates and directs its worldview through and by technology.
As the world continues to adopt technology devices in order to participate in modern society, this is very likely to entrench their dominance. This is a challenge to manufacturers who may find they have limited choices in accessing some markets, as well as logistics service providers that struggle to support the expected service levels of their customers if they focus on price rather than capability. Both of these categories include companies with a range of information systems supporting their operations.
These systems will include old, inflexible, but very reliable, ERP systems, through to loosely connected functional applications, with fragile and unreliable EDI mechanisms for client and partner data exchanges. e.g. Inventory Management, Order Management, Transportation Management, Supply Chain Planning, etc.
They are increasingly unsuited for the operational requirements shippers and their logistics service providers will need to compete with Amazon and their competitors going forward. It should also be understood that Amazon’s Chinese competitors are at least as advanced in terms of technology supported operations and customer engagement. Their physical logistics operations are in some cases, even more capable than those of Amazon.
This is why a new approach is necessary for companies seeking to compete in such a market. At the moment the online giants have a small fraction of the retail market in developed countries. But because retail is so fragmented, the success of the online players stands out. This means that there are opportunities for those companies prepared to embrace innovative technology platforms and reshape their entire fulfilment operations around them. This will not be a trivial task as it requires a shift in mindset and culture, characteristics that are perhaps the hardest to transform.
Tucson Technology addresses the SRM challenges.