The Ongoing Impact of E-Commerce on the Supply Chain

BillDuBois

e-commerce transaction on mobile phoneA recent post on Logistics Management cites some figures supporting the idea that e-commerce is a runaway train continuing to gather momentum. Based on data for the latest major shopping days, Cyber Monday has eclipsed Black Friday when it comes to sales numbers and what consumers did to meet their holiday shopping needs.

This finding continues a clear statistical trend. In Q2 2015, the U.S. Commerce Department reported e-commerce sales grew at 4.2 percent (compared to 1.6 percent for overall retail sales). This growth, combined with the impact digital commerce has on consumer behavior, has what the Wall Street Journal called “an outsize impact” on the supply chain.

Increased e-commerce volumes and omnichannel strategies are putting unprecedented demands on the supply chain. The rapidly changing demands of consumers (e.g., click and collect or click and next-day delivery) present a whole new set of challenges to retailers and e-tailers. They’re desperately searching for new supply chain and fulfillment solutions at every stage of operations, which includes demand forecasting, inventory management, warehousing strategies, technology integration, and distribution practices. Increasingly, manufacturers are turning from a traditional supply-driven orientation to demand-driven solutions to effectively meet e-commerce and omnichannel challenges to the supply chain. In fact, an article on the Journal of Commerce website notes visibility into the supply chain and agility in responding to change are key to mitigate risk and maximize opportunity in meeting the challenges e-commerce growth and the digital consumer present to the enterprise.

The top 10 supply chain predictions for the coming year released by industry analyst IDC illustrate the heightened need to innovate to respond to change. Simon Ellis, vice president of global supply chain strategy for IDC, said in a recent interview, “the common thread across these predictions is change. Manufacturing businesses are undergoing enormous change, including changing consumer expectations and technological advancements. I’ve been in and around the supply chain for 30 years, and it seems like the pace and impact of change is greater than we’ve seen.” He adds that e-commerce networks are simply a better way of doing most things in the supply chain, that organizations are recognizing this, and that they are using or plan to use solutions that accommodate e-commerce.

IDC’s top 10 predictions include:

  • By the end of 2016, one-third of all manufacturers will be actively integrating their “traditional” supply chain processes with product and network design, manufacturing, and service.
  • By the end of 2017, the need for visibility, scalability, and flexibility across the value chain will drive 60 percent of manufacturers to invest in cloud-based warehouse management systems and transportation management solutions aligned to their trade partner networks.
  • By 2018, proliferation of advanced, purpose-built, analytic applications aligned to the Internet of Things (IoT) will result in 15 percent productivity improvements for manufacturing supply chains.
  • By the end of 2019, enterprise-wide improvements in resiliency and visibility will have rendered short-term forecasting moot for 50 percent of all consumer products manufacturers and 25 percent of all others.
  • By 2020, 50 percent of the operational jobs in the supply chain will have evolved into “knowledge” roles required to support new technologies such as cognitive computing and modern robotics.

You can find the rest of their predictions here.

BillDuBois

Bill DuBois has enjoyed over 20 years with Kinaxis in a number of roles including his current position as Director of Product and Marketing Content. Prior to his move to Marketing, Bill was a Senior Business Consultant providing pre-sales support to the Kinaxis Sales Team. This included developing and delivering “stand-out” product demonstrations, delivering ROI analysis and conducting pilot projects for prospective customers. Prior to joining Kinaxis, Bill gained 12 years of manufacturing, supply chain and lean experience while with Boeing of Canada. Bill is APICS CPIM certified. And as a qualified APICS instructor, Bill has developed and delivered APICS courses in material planning, master scheduling, capacity management and just-in-time. Bill has also developed and delivered Lean education and training packages for all levels of personnel. Bill studied Electronics Technology at Algonquin College in Ottawa, Ontario, Canada. Bill is also the host of our home-grown Stevie Award Winning Late Late Supply Chain Show. The Late Late Supply Chain Show videos can be found on the Just for Laughs section of the Supply Chain Expert Community. With top-ten list in hand, Bill keys up his late show antics appealing to a broad base of supply chain professionals — those who can laugh at the chaos of their daily lives. Bill has won the plaudits of critics — all one of them – and has proven himself in the ratings — first in Late Late Supply Chain shows! And Bill won’t stop until “this order has been filled.” Check him out for yourself!

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Discussions

  1. Nice blog. Thanks for sharing the above information with us. Rapid growth in emerging markets and the proliferation of digital channels through which to search for and engage with businesses, consumers all around the globe are becoming online shoppers. Beyond the products and brands consumers know locally, the Internet is introducing them to new merchants and unique products not readily available in their own markets. Here, the major challenge to brand owners and their supply chain participants is to make the flow of commerce faster and more responsive to the pull of customer demand.

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