Digital Supply Chain

Background:
IOT is a big thing, probably biggest ever.
Please refer to IIC (Industrial Internet Consortium) for details about IOT and its impact to businesses. Without no doubt and no argument, we have already stepped in to a new world of IoT (Internet of Things) Economy.
Let me draw two big pictures for you here:


(1) Information Technology Evolution
IBM came in on the first wave, General Purpose Computor, namely "mainframes" proliferation.
SAP R/2 and R/3 came in on the second wave as down sized or server and PC proliferation..
New generation of MS, APPLE, Oracle and Google, Salesforce.com, ….. all started surf on the third wave, "smart & connected" and cloud computing, a bigger and faster wave ever.


(2) Impacts to Economy and Businesses


We are in the second stage now transiting to the third stage;


Pre IOT era, traditional product companies built their reputations by;
◆Quality Products (products include “service products”)
◆Competitive Prices
◆Meet Customer needs efficiently & effectively
ex: Aircraft: less fuel, Tractors: plant faster,
Light bulbs: last long, less energy

IOT era(Stage-3 and onward), product companies build their reputations by;
◆Down Stream Values to Customers
◆Reasons-Why behind the buy
◆Use-of-Product to meet specific “outcomes”


Ex: Optimization of transportation of people
across long distances
Increase crop yield
Lighting only when needed


So economy transforms from “Product Economy” to “Product Outcome Economy”.
This transformation is unavoidable and is to happen globally and rapidly.
Businesses then compete on their ability to deliver quantifiable results that matter to their customers in a specific places and time.


Heavily rely on;
◆Business Partners,
◆Connected Ecosystems,
◆Advanced Analytics, Knowledge to interpret data,
◆New data steam from smart products for customer needs and behaviors
◆Global Scale and Reach

This will change the process of Marketing and Selling significantly. Software for automatic lead generation designed based on traditional product economy won’t be instrumental to businesses competing to improve their top line performance.

In Outcome economy, delivery of outcomes instead of products(inventory) is key. Think about perpetual license model of software product business vs SaaS, PaaS, or IaaS. Marketing including pricing and therefore remodel king of business model are crucial. These changes keep all pro's busy reengineering their knowledge and capability. Embedded predictive analytics  and cognitive computing tech may make them simpler for people.

The future will define the relationship between "producer" and "consumer".  Some large amount of product economy however remain as product business than product outcome business. It has just begun and will mature next 10 years.

Push economy or corresponding supply chain matured over 100 years after 2nd Industrialization. I think this time it matures in 10 years, 1/10th of the speed, as it is accelerated by software and data science and "smart & connected" architectual enhancements.

Like flat production yields the best plant productivity, push should be a dominant orientation in product business. But how to respond customer's demand, the point of competition is moving to outcomes already from product functionality and price.

Once connected to real time consumer oriented supply chain system, other than micro(tactical) algorithm such as allocation of inventory or adjusting product mix and capacity, etc would not make any competitive differences or discreminations. So once connected, supply chain in digital economy is a utility and is a mission critical but not a strategic. Product design, quality, timing and software and IOT techniques to increase outcomes are the strategic.