How supply chain has changed in the past years

July 15, 2018
Jon Ruby
“Life moves pretty fast. If you don't stop and look around once in a while, you could miss it.”
− Ferris Bueller

Things are just not the same as they were when I was a kid. If I wanted a comic book, I got on my bike, rode to the store, searched through the stacks and paid for it with the change that I had been saving. Then I rode home with my new acquisition proudly stored in my backpack.

It’s a fond memory, with the feelings of independence and anticipation, but the reality is that, looked at as a question of supply chain, me and my bike were relative failures. Today I could search a nearly limitless database for whatever comic fit my exact desire from the comfort of my home. I could immediately access peer reviews of every option. I could participate in auctions to get the best price for whatever I wanted. After making my decision, I could pay with a variety of debit, credit or even crypto options. The result of this consumers’ paradise would then be delivered to my front door usually within 24 or 48 hours, and in many cases with no price for shipping. I could even sometimes return my purchase for a full refund without ever having to leave my home.

The way we acquire things today is very different than what it was just a decade ago. I want to take a few minutes and look at how this has changed the later stages of the supply chain.

My personal opinion is that we are in a period of flux as some massive shifts occur in our consumer marketplace. The Internet and sites like Amazon are like omniscient personal shoppers on amphetamines. If you add AI into the mix, we are purchasing the products that are perfect matches for us even if we didn’t know we wanted them. 

Maybe Dr. Who could do it, but short of science fiction, there is no single storage and transportation mechanism in existence that could get all of our virtual choices into our physical hands. The concepts of “wholesale” and “retail” are starting to blur. Buyers are getting things from makers directly.

How does delivery work when there are so many origins and destinations? 

Well, apart from the impact on our collective fitness levels, it means more trucks on the road, more planes in the air, more boats on the seas and a massive boom in the logistics. The level of complexity is orders of magnitude greater than it was just a couple of decades ago. As a result, systems that manage all of this information must continue to evolve.

In fact, at this point it could be argued that Amazon is more like Uber or AirBnB than it is like WalMart. Amazon has been moving to a place where they are mostly an organization that efficiently connects buyers with sellers with what they are looking for, and then assisting with the distribution of goods to fulfill those transactions. They are focusing more on drop shipping and the Amazon marketplace which means they are not like a traditional retailer. A traditional retailer’s focus is distribution centers where they stock all of their available inventory for ready access to be delivered to bricks and mortar storefronts.

From a technology perspective, modern retailing through ecommerce is just a peer-to-peer network where different information is constantly available for any client on the network to update. The job of logistics is to carry out the results of all that fast and efficient ecommerce transacting.

Last mile delivery

In practice, the greatest challenge in the physical world is what is known as “the last mile” delivery. All of the theory of efficient logistics works great until you start parsing it down to ship a single replica vintage Led Zeppelin lunch box to suburban Peoria, Illinois. Every pundit and their dog has theorized about what is going to happen to the logistics industry. What we do know for sure is that there is a huge amount of money involved and the group that figures out the best method, or combination of the best methods, is going to be very successful. Some are focused on bicycles, others on drones and still others on tighter integrations with national mail services that could reorient to carrying packages instead.

From bricks and mortar to delivery depots

My personal favorite is the re-tasking of bricks and mortar stores to become delivery depots. You would browse online, comparatively shop online, pay online and then pick things up from your local depot. This would allow you to avoid all the indecision that you run into while in the store, the need to go back multiple times after talking to friends and so on. It would allow you to try things on before taking them out of the shop, and decide when to go get them rather than being unsure when they would arrive at your door. The other ancillary benefits are the restored social interaction of people interacting face to face, as well as the impressive environmental benefits of eliminating the carbon footprint of “last mile” delivery. It would even account for the emergence of personalized products in the manufacturing world.

Hey, given this option, my memories of getting on my bike to go pick up the comic book might not end up being so out of date. We all need things to keep us of from feeling too old.

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