CeMAT Insider

3 futuristic ways globalisation will change supply chain management

Posted by CeMAT Team on 27-Jun-2016 12:25:41

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Globalisation has had deep affects on the way consumers purchase and think about their user experience. Not only do consumers order goods from all over the world, but there is also an expectation that they will have those goods delivered to them within a few days.

New buyer trends are emerging to preference local businesses. Do you remember when the Kindle was thought to eradicate the need for physical books and bookstores? Once the eBook craze dust settled, it’s now known that people enjoy reading on their eBooks for the convenience, but they also enjoy browsing physical books in independent bookstores

So what does this tell us about the contemporary consumer? On the one hand they want the convenience of online shopping and fast shipping, but they aren’t yet ready to throw away the new experience they get from going to the local store to support the business in their area.

CeMAT-Insider-quote-4.pngPolitical and geographic boundaries are being redrawn as global markets and economies are becoming increasingly interconnected, and all companies regardless of their size, must adjust to new patterns of procurement, production, and sale. This is leading to far-reaching changes in the entire supply chain and requires enormous flexibility.

Without efficient and sustainable operations moving into the future, many businesses will experience globalisation as on obstacle rather than an opportunity to grow.

Here we are going to look at three futuristic ways globalisation is impacting the supply chain.

 

1. Changing consumer behaviour from the rise of automated payment systems

Shoppers are attracted to the most convenient and efficient way of going about things. So when presented with automated options such as a self-service checkout, it’s easy to see why. Take a look at the below image, there are a multitude of reasons why customers prefer to go to the self-service checkout in the super market ranging from speed, to simply not wanting to converse with the check-out chick.

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Image source

Consumers were surveyed in Australia, France, Germany, Italy, Japan, Russia, Spain, UK, and the US, and 90% identify themselves as users of self-checkouts, and of these, 7% of global consumers always use self-checkouts regardless of how many items they are buying or how long they need to wait to use it.

And why is this? They like the convenience of it, it’s easy to use, often faster, and consumers know there is an attendant waiting by the side if they come across any issues. But the benefits of automated payment systems do not stop there.

Due to the increase in demand for more convenient and efficient payment systems, it’s been found that self-service technologies also increase order size and volume.

In 2004, McDonald’s experimented with self-service kiosks and found that the average check size was 30% higher and that 20% of consumers who didn’t initially order a drink would add one on when prompted by the automated system.

CeMAT-Insider-quote-3.pngThey concluded that add-on systems integrated into the kiosk sales process were able to encourage consumers to increase the size of their order. Further, self-service kiosks caused consumers to behave differently when using an automated order system because there is no potential for social judgment by a human server or cashier. 

So how has this changed consumer behaviour? It’s been touched on lightly, but it’s important to state again. Consumers have an expectation of instant gratification through convenience and efficiency. 

Order fulfilment no longer ends outside the four-walls of the warehouse. Poor distribution will be first noted by the customer, it is non-negotiable and a bad experience won’t be forgotten. 

By identifying and understanding the factors that influence your customers, brands have the opportunity to develop strategies to ensure you can provide what you’re customers are after. Providing them with a great buying experience, one that is fast and efficient, will ensure they will return to your business for another great purchase.

So what does all this mean for your business? If consumers prefer easy and automated payment systems, if might be worth looking at the best solution for your business.

The Commonwealth Bank of Australia really got what the consumer wanted right with it’s new EFTPOS tablet Albert. This tablet can take payments anywhere in store, it allows consumers to split bills (the bane of large groups), and it has a simple pricing plan. Not only is it a great innovative product that’s great for consumers, the CBA makes it as easy and no-fuss as possible to order.

If you’re an eCommerce site, do you offer a variety of payment systems that cater to a range of different customer personas? Even something as simply as offering both direct transfer or PayPal is a great way to start. You can read more about the most popular payment systems here.

2. Creating a network perspective of smart cities and supply chain management

A smart city has ICT features that encompass environmental issues, human and social capital. It’s been predicted that we can anticipate smart cities that are run by AI that can adjust traffic lights, alert citizens to free parking spaces, collect rubbish, and the potential for this is really endless.

The idea behind a smart city is that once everything is tapped into the internet, the data that is created can be used to create a better city for its citizens. This is exactly what Barcelona did with it’s T-Mobilitat Project by providing a new intelligent payment platform that allows payments with smartphones or chip-based smart cards that can customise fares and offer discounts according to users’ consumption. 

CeMAT-Insider-smart-city-supply-chain-management.jpegSmart cities provide an ideal background that shed light on the supply chain. Each interaction in the supply chain can generate digital exhaust from networked sensors from transportation vehicles and containers, industrial machines and even mobile phones.

This may not be new to you, but smart cities will be adding new sets of data to this landscape by including video data from surveillance cameras, social media data; all the result of citizen collaboration.

Currently all this data that can be used to harness improvements in the supply chain or in a smart city is being underutilised, but combing the two could lower operational complexity by reducing system uncertainty or the deviation from schedule.

Technologies in this area could soon support the development of a “heat map” with geographically displayed information such as density of commercial transactions, average expenses, and consumption location. 

CeMAT-Insider-quote-2.pngOnce technology gets to the point where it can network big data from your supply chain and smart cities, the benefits could be limitless. Just a few benefits are:

  • Fitting the mobility patterns of consumers during the day
  • Synchronising deliveries with the consumers location data obtained through their mobile device
  • Receiving updates on transportation vehicles real-time location
  • Combining smart traffic systems with smart parking to improve routing and deliveries 

 

3. Industrie 4.0 will create more connections than ever before

So far we’ve touched on the top end of consumer behaviour, how consumer behaviour feeds data into a networked supply chain and smart cities, and now we can look at the nitty-gritty of where all-encompassed networks will be headed through Industrie 4.0.

But what is Industrie 4.0? If you look at all the individual elements of supply chains and how they are being equipped with more and more intelligence, it’s clear to see that advancements in technology are making it increasingly possible for that intelligence to assume control of itself.

CeMAT-Insider-quote-1.pngIntelligent automation is on the rise and it’s permitting a highly effective interlinking and networking of processes, otherwise referred to as Industrie 4.0.

To utilise this interconnectedness effectively, it is necessary to have a secure and reliable technology that encompasses more and more processes, functional elements, software, and control systems. They all must be integrated into a harmonious, powerful, and workable system for efficient control of this huge flow of data.

The challenge here will be in the way in which this complexity is managed, and being able to yield appropriate benefits from it, because otherwise what would be the point? 

Only the future will tell if these predictions come to full fruition. You may have already seeing some of these coming into place in your supply chain, and some might not occur. If you want to find out more about the future of supply chain management and intralogistics, register your free pass to CeMAT AUSTRALIA 2016 here.

 

Topics: Supply Chain Management