This article first appeared in Logistics Viewpoints.
As we kick off the summer of 2024, three years past the emergence of COVID-19, we are still seeing the effects of the pandemic on the world’s supply chains.
As supply chain professionals, COVID-19 made us recognize that disruption is a given. From production shutdowns and material shortages to blocked shipping lanes, we now accept supply chain uncertainty as an everyday fact. We also know that supply chain uncertainty extends beyond logistics surprises. It also encompasses increasing customer expectations and omni-channel demand shifts, exacerbated by the pandemic as consumers fundamentally changed their shopping behaviors. Supply chain uncertainty has also increased due to the crippling labor shortages that followed the pandemic, as workforce preferences and values also changed radically.
The biggest lesson from the pandemic is clear: We must build our supply chains from the ground up for resilience and prepare our end-to-end networks to sense any disruption and pivot, strategically and profitably, in response. Resilience is so important that US President Joe Biden recently formed a new national supply chain resilience council to strengthen the country’s supply chains.
Over the past three years, most companies have invested in advanced technology to help create that resilience. They have implemented warehouse and transportation management systems, control towers, automation and robotics, and other solutions to optimize performance. As a result, they are working more efficiently, making more fact-based decisions, and pivoting faster as conditions change.
The Importance of a Platform Approach
While these investments are driving positive results, companies can do even more. As the pandemic recedes, it is time for companies to avoid scrambling to implement point technology solutions on a one-by-one basis. It is time to take a more strategic, measured approach. To truly maximize their supply chain resilience and the return on their technology investments, organizations must build an advanced technology platform that spans their end-to-end operations, creating real-time visibility, data sharing, collaboration, and responsiveness.
As companies struggled to modernize their supply chains following the pandemic, they often boxed themselves in by purchasing a series of niche, or point, solutions that solved a specific problem, such as e-commerce order management or automated picking. They recognize now that these solutions are not connected, making it difficult to collaborate across functions, communicate in real-time, and scale beyond current business volumes. And, as mergers and acquisitions accelerate, it has become impossible to build a resilient supply chain when the supply chain network spans so many disconnected systems and tools.
While digital transformation has been a high priority over the past few years, an end-to-end transformation is not attainable unless solutions reside on the same platform and share data across supply chain functions. A platform approach is critical in delivering resilience, as it brings the entire supply chain together with the same real-time perspective, data, priorities, and a single path forward.
Consider the Warehouse — the Heart of the Supply Chain
The best way to illustrate the importance of a platform approach is to look at a specific area of the supply chain. Consider the warehouse, the heart of the supply chain. Not only do distribution centers represent an enormous cost center, but they play a crucial role in delivering on customer promises.
Warehouse operations changed dramatically during the pandemic, representing a critical technology investment for most businesses. Warehouse management system (WMS) sales will increase from $2.75 billion in 2022 to $7.30 billion by 2030, reflecting an annual growth rate of 13.2%.
Sales of warehouse automation solutions, defined as “the use of machines, robots, and software to automate the movement and storage of inventory and other goods,” will reach $57.6 billion by 2030, reflecting a 15.3% annual growth rate.
Because of their strategic and financial performance, it is not surprising that warehouses have become a top priority for many companies seeking a digital transformation. Today’s warehouses often feature a warehouse management system (WMS), robotics, and automation tools, including tasking solutions, transaction tools, labor management systems, yard management solutions, and, increasingly, warehouse execution systems (WES, which was the focus of my recent Logistics Viewpoints article).
These warehouse systems and tools must work together and tightly integrate with enterprise resource planning (ERP) solutions and other systems running in the warehouse to generate the highest value.
However, that is rarely the case, as companies have added warehouse optimization technologies in an ad hoc, on-the-fly manner following the pandemic. While this scattered approach is understandable — as companies struggled to overcome specific challenges like labor shortages or in-store fulfillment — the result is a disconnected warehouse environment that lacks real-time visibility and connectivity across functions and stakeholders.
As disruptions occur, the end-to-end warehouse operation cannot recognize the change, agree on a resolution, shift priorities collaboratively, and course-correct rapidly. Functional stakeholders in one area might enact a change — like prioritizing a specific customer order — that has negative implications for the business (e.g., shortchanging customers with strategic importance).
When systems are disconnected, businesses may not allocate scarce inventory, labor, and other resources in a way that makes the most sense from a holistic business perspective. That narrow, functional perspective is at cross purposes with building long-term supply chain resilience.
Exponentially Increasing Resilience
In contrast, consider what a platform approach can do for today’s modern distribution centers. Warehousing is the culmination of many discrete activities coming together in a carefully orchestrated way. A shared technology platform unites and synchronizes these discrete activities, turning today’s disconnected warehouse operations into a seamless, end-to-end, connected workflow.
As products, labor, equipment, and other resources ebb and flow, the warehouse has real-time visibility into changing conditions. Enabled by artificial intelligence (AI) and machine learning (ML), optimization engines in the WMS and WES determine a resolution. Then, the new execution plan cascades through tasking, automation, scheduling, and other solutions autonomously. A series of disparate point solutions transforms into an intelligent ecosystem, sharing the same awareness, data, and strategic priorities.
The WMS works with the yard, labor, tasking, transportation, order, and other management solutions on the platform. This orchestration with synchronizing supply chain execution can extend to specific robotics and automation tools, the ERP, customer systems, and other parts of the business, provided the platform is capable of that level of integration and connectivity. The end-to-end platform becomes a living, breathing organism that shifts as conditions shift automatically — which is the definition of resilience.
Beyond responding to shifting conditions on a real-time, minute-by-minute basis, a platform approach enables the warehouse to be ready for longer-term trends. For example, if the distribution network needs to add new capabilities — such as in-store fulfillment — businesses can add an adaptive fulfillment and warehousing solution simply and cost-effectively on top of the platform.
Today, software companies offer increased capabilities as composable microservices that organizations can add seamlessly to the existing technology ecosystem. When choosing a platform provider, companies should search for established warehouse expertise and leadership in core areas such as WMS and a flexible, modern software architecture. Cloud-native solutions and composable microservices help companies manage their current challenges and position them to accommodate future challenges with new features and functionality. It is best to identify a software vendor that constantly innovates and adds new capabilities as the warehouse environment evolves.
The pandemic taught us to prepare for any contingency. We watched as consumer-packaged goods (CPG) leaders rushed frantically to adopt direct-to-consumer sales and distribution models. In many cases, their WMS could not support a reimagined business model.
The right warehouse platform will not be constrained but will have robust functionality and adapt to support the diverse distribution needs of manufacturers, retailers, and logistics service providers (LSPs). Organizations should look for a platform with wide market adoption and hundreds of customers in various industries.
Beyond the Warehouse: Building an End-to-End Supply Chain Platform
This article has focused on leveraging a shared technology platform in the warehouse. But imagine if that platform also extended to transportation management, order management, demand planning and forecasting, supply planning, allocation and replenishment, and retail commerce. Bringing the entire supply chain, with its dozens of activities and technology solutions, together on a shared platform is the way to create true resilience.
The post-pandemic era has seen most companies invest in a promised digital transformation that would prepare them for new disruptions. Unfortunately, too many organizations have achieved mixed results because they created an environment of disconnected point solutions. While these solutions might be excellent at achieving narrow functional results, their impact is naturally limited. They lack the real-time connectivity and tight integration to optimize warehousing operations — let alone an end-to-end supply chain.
Operating successfully during the pandemic, as well as in the post-pandemic era, represents an enormous achievement. Global supply chains had the chance to demonstrate their capabilities, make a meaningful difference, and earn new respect. Now, it is time to pause and take a strategic look ahead. We have focused on building resilience in parts of our supply chains, and the rewards have been obvious. We must take our performance to a new level and exponentially increase our future resilience by embracing a platform and more holistic approach.
