Question
read the article and then answer the question, the question is What are the important changes in market and technology? this is article : In
read the article and then answer the question, the question is What are the important changes in market and technology?
this is article :
In the late 1990s, as information technology capabilities improved, there was a greater adoption of supply chain man- agement (SCM) practices, such as sharing demand information along the supply chain to reduce inventory in many Fortune 500 companies. As SCM gained popularity, there were several academic articles as well as practitioner articles that extolled the benefits of SCM, and some even attempted to define the term SCM but they were inconsistent. It was during this time that the article titled "Defining Supply Chain Management" was written in an attempt to shed light on the nature of supply chain management by better describing, explaining, and predict- ing the phenomenon. As of November 1, 2018, "Defining Sup- ply Chain Management" published by the Journal of Business Logistics (JBL) in 2001 was cited over 4,925 times. We appre- ciate the JBL editorial team giving us the opportunity to reflect on our article and to discuss the continued relevance of "Defin- ing Supply Chain Management" in light of the many changes that have happened since 2001.
As business academics, many of us believe it is our duty to provide theoretical frameworks for emerging business phenom- ena so that managers can better understand, predict, and control issues arising out of new phenomena in the market. The phe- nomenon of SCM was at a crossroad in the late 1990s when companies realized that normative statements about supply chain written in 1950s (e.g., Forrester 1958) needed to be adapted in the era of increased global competition. The SCM phenomenon is once again at a crossroad in the age of Industry 4.0 (or the Fourth Industrial Revolution) with the rapid development of information-led technologies. In this context, Zinn and Goldsby (2017b) suggest that theory building should not be separate from the substance of the phenomenon of our interest when it is scant and/or dispersed in the field. Therefore, as was the case when we wrote "Defining Supply Chain Management" we discuss the changing as well as unchanging nature of SCM and based on the ever-changing market we attempt to project the future of SCM.
In presenting the relevance of "Defining Supply Chain Man- agement," we first introduce the historical review of our study. We then discuss the contributions our 2001 JBL article made to theory and practice of SCM. Next, we delve into the environ- mental changes surrounding SCM. And finally, we suggest that aspects of our article can still provide a relevant framework to support SCM research and practice.
WHAT HAS HAPPENED SINCE "DEFINING SUPPLY CHAIN MANAGEMENT"
As expected, in the intervening 17 years since we published "Defining Supply Chain Management," market environments (business, political, environmental, social, etc.) have continued to
change. Below we briefly discuss the market and technology evolutions that have brought about recent changes in supply chain practices.
Market trends
Channel power has shifted even more toward the end-customer in the increasingly global economy. More frequently, customers demand not only improvements in product and service benefits but also reductions in price. First, shifting end-customer prefer- ences toward ever more unique offerings coupled with techno- logical innovation have required companies to come up with new ways to accommodate such personalization needs.
Second, customers have come to seek satisfaction in their entire shopping experiences or "customer journey" that involve the steps they go through in engaging with the company in terms of product, service, purchasing, after sale service, or any combi- nation (Richardson 2010). According to Richardson (2010), the consumer journey starts with experiencing advertising or a store visit, then product purchase and use, followed by sharing about the experience with others, and finally upgrading, replacing, or choosing a competitor (i.e., starting a new journey with another company). In addition, customers demand the same level of con- venience and availability across different channel optionseither online or offline, via direct or indirect channels. When the expected product value is not realized, end-customers demand an instant, convenient means of return and refund.
Third, customers are starting to borrow and experience prod- ucts rather than own them as they perceive satisfaction not through buying products, but through experiencing them. Referred to as a sharing, access, or on-demand economy (cf. Pine and Gilmore 1998; Moatti 2015; Eckhardt and Bardhi 2017; Gesing 2017), customer preference for short-term access to products over actual ownership is becoming more prevalent. For example, customers rent dresses and everyday clothes from com- panies such as Rent-The-Runway, which has about 10 million customers who use the company service 120 days per year on average, and subscriptions of which have been growing over 150% annum (Ackerman 2018). In experience-oriented consump- tion, consumers are less concerned with brand names and more with the intermediaries' capability to manage inventory availabil- ity and provide timely service throughout their experience.
Lastly, customers are also concerned about the impacts of their entire consumption experiences on their economic well-being, personal well-being, and more recently on the well-being of the society and the environment. They are more aware of break- downs that occur upstream in a supply chain and the implica- tions of them on their well-being, for example, outbreaks of illness (e.g., Chipotle's E Coli contaminated food), and injury (e.g., Mattel's lead paint toys, suicides at a Chinese iPhone man- ufacturer). Customers' supply chain concerns therefore require companies to offer ecologically friendly, ethically desirable, and fashionably up-to-date products (i.e., sustainable products).
Technological advances
A range of new and existing technologies are dramatically changing the business environment since we published "Defining Supply Chain Management." Examples of new technologies that
may affect the supply chain practices include the Internet of Things (IoT), data science (better known as big data and artificial intelligence or AI), blockchain, additive manufacturing (better known as 3D printing), and robotics among others. Waller and Fawcett (2013, 2014) claimed that the above-mentioned tech- nologies are not simply buzzwords, but are actual phenomena that have become relevant to SCM. While these technologies seem separate, they are frequently interconnected.
The core of IoT is interconnectivity via Internet technologies across devices and users throughout the supply chain (customers, suppliers, etc.; Kranz 2017). The implementation of IoT requires open technology architecture, apart from proprietary systems and open organizational structure, away from organizational silos through which captured data are shared across expanded supply chains whenever possible.
Although big data and AI technologies are still in the early stage of adoption, they have begun impacting many functional activities in supply chain. By incorporating customer and opera- tions data, these technologies can create capabilities that give companies new competitive edges. However, data need to be standardized in a format to be shared across functional and orga- nizational boundaries in a data-driven culture to realize the data- driven capabilities (Sanders 2016; Davenport and Bean 2018).
Blockchain is another technology that has the potential to have a significant impact on supply chain practices. Blockchain will provide a means for companies to digitally encode and store transaction records in transparent, shared databases protected from deletion, tampering, and revision (Iansiti and Lakhani 2017). To this day, a typical supply chain spends significant time and efforts in verifying all the transactions that occur as value is added along the supply chain from raw material supplier to end- customer. Blockchain technology has the potential to signifi- cantly reduce the need for verification, thereby increasing the efficiency of SCM. Blockchain-based supply chain enables trans- parency in business culture where companies are more frequently recording transactions that are subsequently shared within and across companies along a supply chain for the purposes of improving functional coordination, interfirm cooperation, and eventually service quality.
3D printing is a method of building three-dimensional solid objects by layering materials in successive patterns as found in conventional manufacturing (Kuckelhaus and Yee 2016). 3D printing consists of developing a digital model of the object through design software before feeding material through the prin- ter which builds the final object layer by layer. 3D printing has been mainly used to build product prototypes with plastics as its primary feeder material. As new technologies such as laser sin- tering that enabled the use of special metals in 3D printing, 3D printing is now considered a potential option in low volume and customized production with speed. 3D printing also suggests a new supply chain design option whereby customers customize or personalize orders online, and manufacturers can produce the product in nearby factories and deliver the product to the cus- tomer in a very short cycle time (Sodhi and Tang 2017).
While the vision of robotics has a historical relevance from centuries past, the invention of computer integrated circuits and programming led to the rapid development and adoption of robotics technologies in the mid-twentieth century (Siciliano and Khatib 2016). The repetitive nature of tasks found in
manufacturing operations such as automotive assembly has per- haps been the most visible area of robotics application as part of supply chain operations. The 2012 acquisition of Kiva Systems by Amazon brought even more attention to the potential contri- bution of robotics technologies in warehouse picking and pack- ing. Recently, the combination of more powerful computer processors, the capture of detailed data via IoT and the employ- ment of AI has spurred faster development and adoption of robotics in areas where process steps are not so clearly defined, leading to potential improvements in supply chain planning, execution, and control.
The influence of market and technological changes
Past editors (Waller and Fawcett 2014) and present editors of JBL (Goldsby and Zinn 2016) uniformly suggested that market and industry structure may lead companies to adopt disruptive technologies such as additive technology and IoT, which in turn together cause major changes in supply chains including the need for organization and infrastructure designs and skills to manage them. Therefore, it is necessary to start our discus- sion with the influences the market changes have on SCM. Zinn and Goldsby (2017a) argued that supply chains are becoming ever more customer centric to provide customers with an increasing number of product and service assortments. Con- sequently, it becomes essential for managers to develop the capabilities to sense shifting patterns in customer preferences and subsequent demand changes and to respond to the cus- tomers evermore demanding and sophisticated requirements at a nearly individual level.
Concerning the influences that technological changes may have on SCM, Mooney et al. (1996) proposed order of changes in creating business value that are driven by the adoption of technological changes (e.g., information technology). First-order changes are incremental in nature and result mainly from: (1) the automation of particular operational processes (i.e., automational effect) and/or (2) the availability of information for better deci- sion making, control, and coordination (i.e., informational effect) in operational processes in a company. Second-order changes are innovative in nature in that they facilitate automating not only operational but also managerial processes and generate rich infor- mation about operational processes. In the second-order change, the automational and informational effects reinforce with each other to create synergistic effects. Finally, third-order changes are transformational in nature because it helps a company develop new capabilities and new ways of doing business. With the advancement of the Industry 4.0 or the Fourth Industrial Revolution, once fragmented but related technologies converge into systems or business modelsfor example, smart factory and anticipatory shippinggiving transformational effects to supply chain practices.
First, the potential for true mass customization or personaliza- tion is growing thanks to technological innovations. IoT is cap- turing larger volumes of product- and market- related data from source to consumption and, again, back to source. Advances in AI processing are helping to present information that reflects market demand and specific customer requirements. Once cus- tomer preference and demand changes are captured and analyzed, new manufacturing and distribution technologies, notably 3D
printing and robotics, become more actionable and applicable in customization and even personalization of product/service.
Second, being consumer-centric means focusing on your cus- tomers and serving them in holistic ways, providing universal customer experiences in any stage and shopping channels for customer consumption. The core idea of burgeoning omnichannel strategy is to provide customer service seamlessly across differ- ent shopping channelsretail customers are able to experience the same level of customer service via direct vs. retail channel, online vs. offline, or mobile vs. internet-based channels. For example, retail customers may want to browse products at a bricks and mortar store, order a product at an online store, pay for it at another store, and return it to a third store with a refund coming from another store if necessary.
A basic premise with omnichannel is that no matter what channel customers visit, they should be allowed full access to information about product, price, place, and promotion, enabling the customer to make purchasing, use, and disposal decisions at their own convenience. To make certain that end-customers will obtain reliable and timely product information throughout the customer journey, companies are working on the rapid integra- tion of the larger volume of supply chain data and are beginning to apply big data and AI methodologies to better align inventory and other resources with their supply chain partners.
The customer journey has also become bidirectional: from cra- dle to grave and vice versa, meaning companies must better accommodate retail customers' expectation of easy product return and refund when they are dissatisfied with the purchase. To min- imize cost and maximize asset recovery under easy return and refund policies, companies are strengthening reverse logistics operations in collaboration with reverse logistics specialists, cus- tomers, and suppliers. To further address these demands from end-customers, companies are seeking to use technologies that enhance market-sensing capability and minimize inventory deployment in the first place; that is, IoT, big data, and AI are mechanisms by which companies adapt quicker to what is hot and what is not for a specific customer segment, location, and point in time, so that companies can stop deploying unnecessary products into the supply chain to minimize reverse logistics costs.
A critical success factor in implementing omnichannel strate- gies is the ability to gain customer trust. For example, Amazon now fulfills a majority of customer orders from its own fulfill- ment centers that link and take control of flows of product, ser- vice, information, and finance in every stage of its supply chain operations. The same is true for Walmart that operates distribu- tion centers dedicated to Walmart.com operation. For the same reason, Amazon now operates almost 600 physical retail loca- tions across the United States with their purchase of Whole Foods Market while Walmart operates Walmart.com. Therefore, the competition is not only between brick-and-mortar vs. online stores, but across both channels that is between click-and-mortar stores.
Third, recent trends in customer interests extend beyond qual- ity and the price of products but also include the social and environmental impact of their consumption. Accordingly, cus- tomers, nongovernment organizations, and regulatory bodies alike are demanding more detailed information about the prod- ucts they consume (Marshall etal. 2016). Traditionally, companies have attempted to manage supply chain quality in
the means of tightened auditing, an area that has become depen-
dent on third-party auditors or first-tier suppliers who may out-
source subassembly work to lower-tier suppliers listed on an
approved vendor list. This hierarchical model of quality control
was devised to deal with supply chain structures that have
increased in complexity. Supply bases have gradually migrated
from high-cost countries to low-cost countries where transporta-
tion and communication infrastructures are underdeveloped. In
contrast, external stakeholders demand more scrutiny as the
quality and sustainability of the product are determined by sup-
pliers beyond the first tier in many cases. For example, Mattel's
recall crisis due to the use of lead paint in 2007 was not caused
by a 1st-tier assemblers but a second-tier subcontractor hired by the first tier to deal with increasing demand. In response to growing demand, leading industrials companies including Nike, Nestle, and Apple Computer started to disclose supply chain information both in breadth across a single tier and in depth across multiple tiers.
The demand for more sustainable supply chains and the result- ing transparency raise costs, and companies are being asked to devise a balanced approach in making their supply chains sus- tainable. Factors important to building sustainable supply chains include sharing collaborative philosophies across the supply chain as well as monitoring first mile (e.g., farms and fishery), as well as last mile (e.g., end-customers). This means that compa- nies should engage with lower-tier (i.e., second and/or third tier) suppliers directly, passing first-tier suppliers and/or third-party auditors whenever necessary. For example, Starbucks cooperates with coffee bean farmers in the means of Coffee and Farmer Equity (C.A.F.E.) certification, training, and even financial assis- tance. Another example is Honda's implementation of directed buying (i.e., designating lower-tier buyers as sources of raw materials or subassembly based on close examinations by the OEM) to control not only cost, but more importantly quality and transparency within their supply chain (Choi and Linton 2011).
The sustainable supply chain capability may be based on IT technologies, including IoT, data analytics, blockchain, along with similar technology to form the infrastructure to capture data and share information about material transformations and changes in ownership. Recently, Walmart announced that it is mandating its fresh food suppliers to start collecting information (e.g., field locations and harvest times) and uploading it to the IBM Food Trust Network, which is based on blockchain technol- ogy (Clancy 2018).
In summary, supply chain management evolves around the market changes, and technological changes have "strategic and systemic" impacts to transform the way companies manage their supply chains.
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