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Making It Look Simple: The Supply Chain Network Complexity Behind Next- and Same-Day Shipping

You see it. You like it. You get it. Sounds simple, right?

From your perspective as the customer in a 24×7 connected world of online shopping, it certainly is simple. That’s the whole idea, after all.

And not only to do you get what you order – you get it quickly. Two days from now. Or the next day. Or the same day. Even within the hour.

But as with all things of value – including experiences – the complexity is often hidden. For you to get what you want when you want it, the activities of multiple supply chain networks need to be orchestrated behind the scenes.

Delivering it

To get a sense of how all of this comes together, let’s take a look at a recent party I threw. On the morning of the party, I decided I needed a new Bluetooth speaker to stream my music. For me to get the speaker on time, an efficient logistics network needed to kick into gear.

The speaker needed to be picked and packed from either a distribution center or a retail outlet nearby. Delivery trucks needed to be on hand and routed to my front door. Because time is of the essence, all required product and distribution data needed to be on hand as well. The result was that I got what I wanted when I wanted it. Music to my ears!

But for the speaker to be available for shipping in the first place, companies need to have the inventory on hand. This inventory needs to be balanced across globally dispersed distribution centers. Traditional challenges of buffering inventory to prevent stock-outs, while minimizing inventory levels to keep costs down, apply more than ever.

Of course, some manufacturers are cutting out retailers by selling directly. To meet the demand of these direct customers, manufacturers need logistics processes that support smaller and more frequent shipments to a higher number of customers. For companies that want to successfully serve demanding customers like me, a logistics and distribution network with total visibility for tracking inventory, movements, and orders in real time is now table stakes.

Making it

Delivery to my front door is the endpoint of a long supply chain process. First, the speaker needs to be made.

When it comes to manufacturing, a whole host of decisions enters into the equation. Does the company make the product or outsource the manufacturing process? Does the production take place locally or overseas? Are different parts made in different places by different entities – only to be assembled later to make the final product? Or maybe 3D printing is an option. If so, do you contract that out or do it in-house?

Whatever the case, access to manufacturing networks gives companies the flexibility to contract with manufacturing resources quickly as demand dictates. Here again, collaboration and visibility are critical for success. As soon as possible, manufacturing partners in the network need demand data in order to plan capacity and actually make the product that you and I are going to order.

Designing it

All of which brings us to the design phase.

In the desire economy – where you see it, like it, and get it with a click – everything starts with some company somewhere understanding exactly what it is that you want. This means detecting desires, needs, and wishes, and then designing a product that satisfies these demands.

When it comes to accurately detecting demand, silos kill. What’s needed is data from everywhere about everything: what has sold in the past, customer satisfaction survey results, customer service feedback, external data on market trends, general economic health, sentiment analysis from social media – the list goes on.

This data will contain insights that are pertinent to design teams. For my party, maybe I want Bluetooth speaker that is compatible with my mobile phone, old stereo system, computer or any other device. Other customers may want compact options for listening to music on the go.

Whatever the case, to understand what the customer wants, design teams need to collaborate and share information with other teams. Often these teams exist outside of the organization – such as contract manufacturers or suppliers of raw materials.  Working with these teams requires collaborating across company boundaries to make design choices that enhance the product experience.

Planning it

Once demand signals are detected and products are in the market, planners need to understand the ability of the supply chain to meet the demand. Again, more collaboration and visibility are needed both across departmental and company boundaries during the sales and operations planning (S&OP) process – to ensure that the company has the capacity and supply to meet the demand across all levels of the supply chain.

Of course, planning cycles are more compressed than ever – which means that all of the data needs to be available in a timely manner if not in actual real time. Networks that break down silos and empower all participants in the supply chain to share information are critical.

Maintaining it

The smarter the products and assets companies make, the more they can share information across the network to improve the business.

My new Bluetooth speaker probably has 20 or more smart sensors that can share information to and from my phone or tablet, as well as back to the manufacturer. How is the speaker performing? Does it have a problem that requires maintenance? It can probably even share just how bad my taste in music is!

And there are thousands of other speakers of the same make or model doing the same. This result is an asset network of smart devices that can provide important design improvement data to the R&D department, deliver maintenance requests to the service organization, or even receive fixes automatically.

Bringing it all together – through a network of networks

Just to add to the complexity of all this, the lines are being blurred when it comes to traditional supply chain activities. We have logistics networks, manufacturing networks, supplier networks, and now even asset networks. And one organization could be part of numerous networks. In fact, in a globally connected digital economy, we have a network of networks.

What’s needed is a single platform that helps coordinate all activities in these networks. These activities range from planning and demand management to design, manufacturing, logistics, and operations – and back again with data from customers on how products are actually used.

Such a platform powering a network of networks can help companies achieve the elusive goal of total supply chain visibility. Companies can connect with suppliers, design resources, contract manufacturers , logistics service providers, even customers. Data is shared seamlessly and coordination can happen in real time. In the desire economy, this is exactly what companies need to successfully serve customers who expect to get what they want in an instant.

Connect all your planning processes – and use real-time and intelligent technologies to improve lead times and service levels – with intelligent supply and demand planning.

Paige Cox

About Paige Cox

Paige Wei Cox is the Senior Vice President and Head of Digital Supply Chain Networks Development at SAP SE. She is responsible for the overall supply chain business networks strategy across design, manufacturing, operations, and logistics. In addition, Paige leads the development of SAP Logistics Business Network and Asset Intelligent Network solutions, driving end-to-end supply chain visibility and asset central of digital twins. With proven track record of executive leadership in digital supply chain spanning diverse industries, she works with customers, thought leaders, and partners to deliver business values and innovations. Paige holds a Bachelor of Science degree from Purdue University and executive MBA from Mannheim University. Born in Shanghai, she grew up in New York City, resides in Heidelberg Germany with her family, and speaks fluent Mandarin Chinese.

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