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Extended Supply Chain: What Are We Really Thinking About?

January 18, 2016 by Tom Redd 11

Omnichannel is a marvelous thing, and all cogs in the retail mechanism play a part. But when it comes to actual fulfillment, it’s up to logistics to meet consumer demand. And brother, have things gotten demanding.

Traditional retail used to operate like the stern father: “Hungry, Trevor? Tough luck. Dinner isn’t until six. It’s served at the kitchen table. You’ll eat what Mom made, and you’ll like it.”

Today’s consumers, however, are like willful, overly entitled children. They call the shots: “Hey, ‘rents, Trevor here. I’ll be hungry at, like, sort of, random times today. No telling when it’ll happen, but I’ll want whatever I want in my room — or maybe soccer practice or maybe Jason’s house. And, dude, if I don’t like what you’re cooking, you better find it somewhere else. And, oh, I may, like, hate it and send it back and need something else right away. OK? Peace, out.”

Kids — we still love ’em, right?

And thus, the retail logistics system that used to be about getting goods from point A to point B — from the supplier to the DC and on to the store. —is now more like drawing from points A-through-Z and delivering to A-through-Z. In terms of complexity, supply chains have gone from linear to spherical in, historically speaking, the blink of an eye. We’re required to deliver from anywhere, to anywhere — perhaps within hours — in virtually any quantity and in diverse combinations of SKUs.  Remember when “customer centricity” was just an empty promise? Many thought the visionaries who floated the notion were full of it. Guess what? It’s here, all thanks to the supply chain that must do it all — the “extended supply chain.”

IDC 2015 Net SC.pngWhat do we mean by that? A great new SAP-sponsored white paper from IDC Manufacturing Insights defines it this way:

“The future of the supply chain is one of an outwardly networked and collaborative organization that fully integrates supply chain with design, manufacturing, and asset management into an ‘extended’ supply chain that is able to respond quickly and accurately to a broad set of customers and consumers as well as their evolving requirements and expectations.”

That’s a mouthful. For me, the keys are “integration” of supply chain processes throughout the enterprise, and system-wide intelligence so that we can manage the complexity that comes with omnichannel demand.

By intelligence, of course, we mean data — lots and lots of data, generated at all points in the omni-verse, from warehouses to mobile apps and social platforms, online product pages and physical store shelves.

The author of the IDC white paper, Simon Ellis, points out how critical the cloud has become in gathering all this diverse information and employing analytics to turn the data into timely insights. “If we think of the broader networks, they simply won’t work efficiently and effectively without this ‘information loop’,” he writes.

So what do we think about when we think about the extended supply chain? Not so much the movement of forklifts, trucks, handcarts and dollies, but the movement, management and analysis of information. If you can visualize the Internet of Everything, you’re pretty much there. It’s all happening — quickly — and it’s all great news for retail.

And, yes, Trevor will be down for dinner too!

To see how the extended supply chain works for real, come see us at NRF. In the mean time, read the IDC white paper. It’s terrific stuff.

Interested in learning more about how SAP for Retail is powering the digital in-store experience revolution? Request a meeting and visit us during NRF 2016.

This story originally appeared on SAP Business Trends.

Top image via Shutterstock

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