What Is a Connected Supply Chain and How Is It Created?

by Vector | Dec 14, 2021 5:08:55 PM

The term "connected supply chain" has been a part of industry circles for some time now. But what is it? Where do I find it? How is a connected supply chain created? Will it hurt? What if the connection breaks down? Today, we're investigating the questions surrounding supply chain connectivity. In general, I feel like this is one of those business terms many people take for granted.

Indeed, anyone might look on the bottom of their coffee mug, see where it was made, and agree we still live in a global economy. The bottlenecks at the West Coast shipping ports would further support that notion. Because of mounting bottlenecks, the supply chain is searching for answers. Simply put, the world economy is connected by a global supply chain. And now more than ever, it hangs in a tentative balance.

So let's get clear on what it means to have a connected supply chain. Specifically, can a better connection improve the inefficiencies that are plaguing our supply chains?

The Digital Revolution: A Moon Shot Worth Taking

Astronaut Neil Armstrong landed on the moon in 1969. He then had this to say about Earth after looking homeward from deep space: “It suddenly struck me that that tiny pea, pretty and blue, was the Earth. I put up my thumb and shut one eye. And my thumb blotted out the planet Earth."

It's been more than 50 years since Armstrong took his giant leap for mankind up on the moon. Since then, a lot has changed about our world. For starters, it's easy these days to take space flight for granted. Elon Musk's SpaceX rockets take off nearly every week. There's also the common notion that each of us walks around with more computation power in our pockets than NASA had in the rockets that went to the moon. We have so much software at our fingertips now, it's uncanny.

These are the star features of the digital revolution: Artificial intelligence (AI). The internet of things (IoT). Digitization software. Big data. Algorithms. Machine learning. And coming soon, Web3 blockchain and smart contracts.

Supply chain leaders have been working with software developers for a long time now to put these tools to use. But the overall culture has finally caught up as well. Millennials and digital natives are becoming decision makers at companies worldwide. These folks bring with them an inherent understanding of user experience (UX). In turn, control towers that can monitor every shipment in real time are the modern equivalent of NASA's mission control.

Beyond that, these technological advances coincided with culture change brought about by the pandemic.

The Cultural Shift of COVID: Connected Differently

Don't forget the heady, early days of the pandemic. Our connection to one another saved us. Specifically, our internet connection truly became everything. During those lockdown months, many people replaced the real world with the digital world.

The pandemic changed the culture. Online orders, for everything, skyrocketed. Online entertainment skyrocketed. Cryptocurrency skyrocketed. Instead of the office, we Zoomed online. Many professionals around the globe went home one day in mid-March 2020 and have never gone back to the office. Many companies and employees realized they got just as much work done (or more) with a work-from-home policy. So they kept working from home.

On the other hand, an estimated four million employees retired from the workforce in the Great Resignation. Thus, a labor shortage began. One thing there's no shortage of? Uncertainty.

Compare that to the iconic images of NASA's mission control. NASA counterbalanced their lack of computational power in 1969 with pure teamwork. Perhaps the computational power was inside the heads of the NASA engineers? Put another way, they were like a hivemind! And since it was John F. Kennedy's goal to put a man on the moon before the end of the decade, that makes JFK the queen bee.

Sure, it seems idyllic from a teamwork perspective. NASA in 1969 was a group of individuals who were hyper-focused on one goal. That team put their heads together. They got every drop out of whatever technology and cutting-edge software they could get their hands on. And they got the job done (including helping to win the Cold War).

But no one took a single selfie on Snapchat the entire mission!

Houston, We Have a Problem

The unfolding crisis has uncovered many weak links in the supply chain. Many of these center around uncertainty. Maybe we just need to approach our modern supply chain problems with a bit of NASA's teamwork and tenacity. But NASA's staffed missions to the moon were defunded once the United States won the space race. So instead, let's simply take NASA's space race ethos. Then we'll add all our modern technology to connect the supply chain in smarter ways.

Things go bad sometimes. Just ask the people involved with the Apollo 13 mission. Somewhere along the way, errors will occur. But a connected supply chain featuring end-to-end visibility can adapt quickly to issues such as:

  • Demand spikes of products
  • Raw material shortages
  • Long lead times lower in the supply chain
  • Container delays at a port
  • Driver delays en route

Meanwhile, a connected supply chain can help solve those problems with features that improve visibility in many areas, including:

  • Inventory management
  • Product development
  • Pricing fluctuations
  • Overall customer experience
  • Real-time shipment visibility
  • Accurate demand forecasting
  • Quality tracking
  • Issue resolution

When trading partners adopt the tools of technology, connect their supply chain, and share visibility, we'll all gain a measure of efficiency.

A Connected Supply Chain Has Resilience and Agility

I understand that business is competitive by nature. We're all in our own little space race with the competitor down the street. But businesses are also competitive with their supply chain trading partners. Unless you have a vertically integrated monopoly, each link of your supply chain is trying to maximize profit and minimize cost.

Without a long-term strategy, we might nickel and dime each other to death. We might eliminate waste from the system until there's nothing left. Yes, efficiency is the primary goal of lean manufacturing or just-in-time manufacturing. Unfortunately, the lean supply chain proved brittle. Lean got totally exposed during the pandemic. There were labor shortages, long lead times, increased costs, and raw materials shortages. There were unforeseen demand dips and spikes.

How do you manage all this upheaval? By shifting (in some ways) from competition to collaboration. By connecting the supply chain. A connected supply chain with a dual sourcing strategy that shares visibility is more robust.

Are the goals resilience, short-term agility, and long-term profitability?  If so, the just-in-time methodology might be replaced by a just-in-case methodology. In other words, enterprise-level companies should carry more suppliers, not fewer. Some should be very local. Invest in your region and your state.

Let's shift focus from short-term cost and quarterly marks. Instead, let's emphasize smart, connected supply chains on quality and delivery. A just-in-case model may not help inflationary pressure. But what choice do we have if we want to avoid a future supply chain crisis?

The New Space Race

Let's never forget some lessons of the space race. Kennedy captivated the nation with his challenge to put a man on the moon before the end of the 1960s. He wouldn't live to see it happen. But he was right for dreaming big. NASA was well behind the Soviet space program when he made his speech. But over the course of the next eight years, the United States got NASA going in the right direction, surpassed the USSR's space program, landed on the moon, won the space race, and eventually won the Cold War. In short, small decisions can change the arc of history.

If you're not satisfied with your connection to the broader supply chain, start with digitization. Digitized documents form the backbone of the other software developments we've mentioned and those that are yet to come. For example, smart contracts won't be written on paper. Beyond that, digitization through automation can also eliminate a lot of the tedium that comes along with old school paper-pushing. Learn more about digitization with Vector.

And finally, it would serve us to remember that from space, you can blot out the Earth with your thumb. We're all on the same ride. Let's stay humble, but dream big!

This post was written by Brian Deines. Brian believes that every day is a referendum on a brand’s relevance, and he’s excited to bring that kind of thinking to the world of modern manufacturing and logistics. He deploys a full-stack of business development, sales, and marketing tools built through years of work in the logistics, packaging, and tier-1 part supply industries serving a customer base comprised of Fortune 1000 OEMs.

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