How to Build a Trillion Dollar Supply Chain

Amazon became a trillion-dollar business in February 2020 – a month before COVID-19 shut down the United States. That’s not an opinion, it’s a fact. They became the fourth trillion-dollar company in history, and the reason they were able to reach that milestone is because early on they bet on technology and highly qualified resources that disrupted the supply chain market, and subsequently solved how to meet demand and make life more convenient.

And nothing has stopped them from doing it.

As of mid-June 2020 – 90 days after the global shutdown, with roughly 30 million people unemployed – rather than having slowed down at all, the company’s market cap reached $1.3 trillion.

While other businesses were being shuttered, many organizations with cloud-enabled supply chains have found themselves thriving. Analysts and media have been awestruck at how quickly Amazon and other companies have responded to changes in the marketplace. But the truth is, these companies made smart investments in building resilient supply chain networks using technology that is readily available to everyone in today’s market.

Software resilience gives organizations the ability to pivot in the face of market pressures and evolve to meet changes in customer trends, and disruptions to individual markets or the global economy.

There is no reason why other companies can’t do the same. The one thing Amazon has made clear is that investing in advanced technology is the antivirus for today’s global supply chain issues. The tech giant isn’t doing magic tricks! All they are doing is betting on a clear, long-term strategy driven by cloud and advanced technologies.

While other companies continue investing in cheap labor, taking shortcuts, and worrying about process improvement, visionary organizations have proved that none of that will help build resilience. Those are Band-Aids, half measures, and possibly only busy work. What is truly effective and should be the foundation of a modern business is the reimagining and rebuilding of supply chain infrastructure. Anything else is playing catch up.

However, the rest of the market will catch up. Competition will intensify as more organizations move supply chain processes to the cloud and remove business silos to create a better view of the customer and deliver on the promise of online customer experiences.

So, what else needs to happen in the world before other businesses decide to do the same and invest in infrastructure that gives them elasticity and visibility across their supply chains? Exactly what disruption does the market still need to see to believe that cloud and advanced technologies are the foundation of modern business?

For the past 10 years, it has been established that businesses need to digitise their supply chain infrastructures and make themselves resilient to a marketplace that was fundamentally different – and changing fast – from what it was in 1983 or 1996.

So, the future we been talking about has finally arrived, and if your supply chain network is straining under the weight, sorry to say , but there is no more wiggle room. There is no more cushion. Band-Aids won’t help you. It is time to change.

Consumer behaviors are fundamentally different from what they were five months ago. Consider this: since the pandemic began, retailers have experienced a spike in online orders that has taken online sales to sustained levels that we previously only experienced during Black Fridays or Cyber Mondays. Supply chains have been fulfilling the same level of activity as those “events” every day since mid-March.

In a recent article in Supermarket News, it was reported that online grocery sales are expected to grow 40% in 2020. What do numbers such as this this tell us as supply chain professionals? What it tells me is that there’s no way back to “normal,” and customers seem to have shifted what “normal” even means. As professionals, we need to make our supply chain more resilient and migrate them toward the future.

What most businesses without a cloud strategy have been doing for the last five months is stretching their infrastructure to the limit. Today, organizations should have clear roadmaps of how they will migrate to newer infrastructures and advanced technologies that can support their supply chains.

Kudos to all the companies who saw the trends, invested in technology, and met the supply chain challenges of the last few months. They have proven that a vibrant marketplace can exist and needs can be met.

But nothing they have done in terms of technology is radical. The technologies they have used have been in the market for a while, waiting to replace or integrate with whatever systems already existed. Businesses just have to make the decision to get themselves in the game.

In the retail industry, there is a 1,000 pound gorilla currently dominating the field, but we have witnessed company digital transformations that have enabled other retail organisations to start playing on the same field at the same level, and switch from a defensive strategy to finally playing offence again.

The time is now. A recent Fortune study of F500 CFOs showed that the COVID-19 pandemic has added further urgency and accelerated digital transformation plans. There may never be a driver as powerful as the current crisis. Organizations that are still being held back by legacy supply chain and logistics technology need to begin moving towards a cloud-enabled supply chain – or risk being left behind.

 

© Supply Chain Management Review

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