In the future, every consumer will have their own supply chain. Today, that may not sound feasible or even necessary, but ultimately it will become the only way for companies to stay competitive.
More and more, products are becoming customised and tailored to specific needs. Consumers can buy computers, shoes or cars that are made especially for them. Successful companies need to adapt to these changing expectations, and not just in the production phase. Logistics and supply chain processes must be planned more flexibly and according to customers’ needs. The customer not only expects a great shopping experience but also a seamless customer journey, and this includes delivery at any place at any time.
Car manufacturers that have a fully transparent and automated supply chain will be strong contenders in the future, but synergies among companies, even competitors, will be necessary to achieve customer satisfaction. This new consumer-centric approach will lead to higher complexity across all processes. However, automation will bring the needed technological change to supply chains to make them more flexible.
To understand how we’re moving from the linear supply chain to this new model, it’s important to go way back.
Henry Ford said: “Any customer can have a car painted any colour that he wants so long as it is black”. In the early days of Ford’s production of the Model T on assembly lines, supply chains and logistics were not very complex. Ford produced a vehicle type with one colour and identical interior. People didn’t expect customised cars; they were happy to gain access to mobility in the first place.
Then other companies began to use assembly lines to produce cars, so cars became accessible to almost everyone around the world. The number of car manufacturers increased, initial set-up costs dropped, markets opened up, and technology enabled the global sales and transport of goods.
But, people were no longer happy to just have a car. They wanted a car that suited them. To stay competitive, automakers had to find their market niche — from expensive, high-end cars to massive sport utility vehicles (SUVs) to affordable mass-market products. The customers could choose the colour of the car and its interior, although the individualisation element was still limited.
Then the quality element gained popularity, and German car manufacturers had a big lead because they focused on high-quality production machines. At some point, however, the quality of the production sites of all manufacturers reached nearly the same standard.
And this is when the customisation of cars became a factor. Making each car as unique as its driver is a trend that has grown exponentially in recent years. Consumers can select all the features and services their hearts desire. And as electric and autonomous cars join the game, even more competitors are emerging in the automotive market.
So, that is why the complexity of supply chain processes is increasing. To stay competitive, manufacturers must shorten the production cycles and increase customisation. Ford didn’t worry about customisation, but manufacturers today have to manufacture cars for a specific customer with special requirements.
To be able to respond to the market in time, car manufacturers are increasing production flexibility and also aligning the supply chain to receive parts in the right place at the right time. Just-in-time production is becoming state of the art. However, many supply chain processes are still manual and inefficient, so the next step for manufacturers is to increase automation.
Just look at two companies that were recently valued at $US1 trillion dollars: Amazon and Apple. Both are obsessed with supply chain management and logistics, and they use logistics as one of their key factors for increasing earnings.
Amazon, for example, is constantly improving its service and offerings by controlling most of the value chain. It does this to make consumers happy and ensure that it is providing the best shopping experience. And part of that experience package includes better coordination and control of supply chains and logistics.
Supply chain and logistics transformation is still at a very early stage. However, the hope is that in a few years all consumers will be able to coordinate their own supply chain through complete visibility and automation of tasks. The products will be manufactured and delivered at the time and place the customer expects them. Companies that master this complex path of digitisation and automation will be ahead of their competitors.