Industry Talk

Regular Industry Development Updates, Opinions and Talking Points relating to Manufacturing, the Supply Chain and Logistics.

Leveraging Supply Chain Service Providers for Competitive Advantage

As Business 4.0 and Digital become more competitive realities (think the Amazon Effect or Nike using 3D Printing technology to personalize its shoe offering), companies are faced with the challenges of taking advantage of and leading with the new digital technologies versus falling behind and seeing little return on the investments required to compete in digital markets. During the Gartner Supply Chain Executive Conference last May, Gartner released their “Market Guide for Supply Chain Strategy and Operations Consulting”.

One of the key findings was that “There is a shift from projects to ongoing business process services as consulting firms leverage technologies such as SaaS, cloud computing, analytics and open-source technologies. As a result, CSCOs will have new ways to source and engage with consulting firms and other service providers for assistance with supply chain strategy and operations initiatives.”

Business 4.0 places a challenge on companies as digital markets enable companies to rapidly, if not immediately, expand their geographic footprint globally. Think of all of the small local companies that are leveraging Amazon’s marketing and fulfillment services to immediately offer their products to a global market. It’s important to note that while the geographic market expands, the product market (as Nike is demonstrating) is shrinking into personalized, hyperlocal market micro-segments as consumers can get anything, anytime, anywhere with a click personalized to their individual desires.

Exacerbating these challenges are mobility, the Internet of Things (IoT), and data collection devices from smartphones to wearables to sensors and monitors that create an abundance of new data and data sources. We’re seeing cognitive analytics becoming a competitive disruptor. The abundance of personalized data coupled with advanced analytics is enabling companies to market based on your individual behavior data. Think of those electronic banners and ads that “seem” to know exactly what you’ve been searching for. As wearable technology enables physiological and biometric data to be collected, companies may know your craving before you do! Will that Fitbit you wear come back to byte you?

Meeting these challenges requires agility and new talent and skills, especially with the pressures of short lead times and last mile delivery. Many companies simply can’t staff and scale the necessary resources and skills globally fast enough and will seek support from global service providers from a supply chain perspective for consulting, IT, third party logistics, contract manufacturers, etc.

Service providers offer unique capabilities to companies that want to advance faster and further to leverage disruption in the market from these new technologies. Service providers are, by design, on top of new and emerging technologies. For the service provider, it’s a strategic differentiator. Service providers maintain and recruit talent that is highly educated, and trained, and mobile. And, specialized talent such as cyber security, regulatory compliance, and international trade are distributed among many different specialty business units shared across clients. Companies can engage talent with many different specialists for variable length and requirements without full time equivalent investment requirements. The capability for companies to leverage service providers to rapidly respond to scale up or down, to adopt new technologies, to integrate new acquisitions or mergers, to transform operations, or develop new strategies or business models is a source of competitive advantage in rapidly changing, disruptive emerging markets.

Selecting a service provider can be daunting and the risk of the wrong selection catastrophic. As I mentioned earlier, there are many different types of service providers from local to global, niche specialized to broad arrays of multiple services. The Gartner “Market Guide for Supply Chain Strategy and Operations Consulting” is an excellent source for guidance on the different types and requirements for identifying and selecting a strategic partner for supply chain services. If you’re contemplating engaging a service provider, assessing your need for a service provider, or in the process of selecting a service provider, I would recommend starting with this comprehensive report.

Transforming to Business 4.0, Digital, advanced analytics and other emerging disruptive strategies and technologies is a journey. Selecting the right guide will be critical to gaining competitive advantage.