Did Supply Chains Make The Difference Between HMV and Amazon?
It has long been clear that the internet is transforming how we shop and buy. However, online tools and the behaviour they enable are also re-fashioning supply chains: the ways in which businesses interact, the ways they trade, co-operate, sub-contract and compete with each other, the ways they move and track raw materials, components and finished goods – all of the ‘back story’ that goes into creating a product or service for the consumer is undergoing radical change.
The development of large-scale business has always depended on technological advance. The Industrial Revolution can be said to have begun with the invention of the Spinning Jenny, a mechanical device that enabled cotton yarn to be spun more quickly, and the rest, as they say, is history. Steam and electric-powered machines soon followed, spawning huge factories and the urban centres that grew up around them. Eventually industrial processes reached their ultimate rationalization with the Fordist production lines of twentieth-century manufacturing. Finally, there came computerization, refining each and every part of the chain.
When barcodes are scanned, most of us probably have a vague sense of what it means but we are unable to grasp the whole infrastructure surrounding this act. Your purchase is not just one item of data. Everything that can be known about it – the who, what, where, when, why and how often – is fed into vast algorithmic models that are used to analyse systems and processes, to make them more efficient. Stock is replenished more quickly, there is less waste, new products are brought to market faster; the fractions that are shaved off the purchasing cycle help drive down the price of the goods, and for the company it can mean the difference between profit and loss.
Similarly, we are happy that the Internet is able to tell us that, while Argos do not have our item in our local store, they have it in a nearby one, but we do not see the sophisticated tracking software, the Radio Frequency Identification Devices (affectionately known as RFIDs) on trucks and pallets that enable the store to provide us with this level of detail during our search. We are blissfully unaware that, as we browse the Internet, the World Wide Web is also hosting the complex ‘tunneling’ architecture, the encrypted systems that allow businesses like Argos to share information with their suppliers, making sure customers have the goods that the company knows – through its data modelling system – they are soon going to want.
Argos is an example of a company that, when it comes to shopping habits, has ‘seen the writing on the wall’, announcing that a number of outlets will close, as it becomes a ‘digitally-led’ business. It seems impossible to imagine that one day Argos might disappear from our High Streets yet even mighty ‘click and mortar’ companies are looking nervously at the emerging ‘pure play’ businesses, rivals with a fraction of their staffing and overheads.
The people running these concerns may never see any of the products they sell, with warehousing and distribution contracted out to the logistics companies that have become the major beneficiaries of the shift in shopping habits. Lured by the bargains to be found online, shoppers have quickly become accustomed to buying from companies in a virtual universe, of whom they have never heard. This startling shopper volatility means that a business model that fails to keep pace can be blown out of the water in several short years, as the High Street failures, now seemingly happening on an almost weekly basis, have proven. High Streets blame economic downturn for their losses when it’s actually a basic change in customer shopping habits and expectations that’s to ‘blame’.
Not only has the Internet changed consumers, it has opened up new possibilities – and brought new dangers – for B2B relationships. Procurement can now happen online also, with business rivals far more visible than before. Client and contractor relationships have also arguably become more fickle, based less on loyalty and tradition and more on pragmatism and the bottom line. The result is likely to be more collaboration and data-sharing, supply chain partnerships in which both parties invest – and therefore have something to lose.
Optimising supply chains therefore, making them as fast, as lean and as responsive as possible, has now become a central plank of business strategy. Gone is the purchasing manager with his clipboard and requisition forms; supply chain management is now about Big Data, large-scale analytics, and the people who understand and can implement these systems are major players in the business landscape.
To get on in this fast-changing world, businesses need to have skilled management who are not afraid of change, who can see the potentials and opportunities. Brighton School of Business and Management’s modern, Internet-based courses allow training in modern supply chain management; don’t become obsolete like the stores on the High Street!
Managing your own training can make you a crucial player when it comes to your company’s development and sustainability. Choose from courses leading to an Award, Certificate or Diploma in Supply Chain Management to learn more about this fast-developing field.