The supply chain, as the name suggests, was the creation of a world of linear thinking. Even today, its logic—from the upstream sourcing of components to the distribution of final products—remains very linear. However, a combination of forces is now beginning to emerge that is fundamentally shifting the supply chain from a linear logic to a more networked and systemic logic.
First, physical flows and digital flows are rapidly converging as real-world objects are embedded with sensors. In the world of monolithic ERP systems, these flows were decoupled, but increasingly products (and the components that lead to their creation) can be tracked in real-time. When aggregated and analyzed, real-time data can inform and restructure the logic that determines stock movement. For example, the retailer Macy’s was able to better assess the inventory performance by digitizing all its stock. It then restructured processes to better liquidate slow-moving inventory.
Second, machines and processes are merging through digitization. Data captured from the performance of machines can restructure their processes. In turn, the output of processes can be used to inform the future behavior of the machines involved. Machines showing signs of wear and tear can be prioritized for repair while work is shifted to other machines. Companies like Bosch are investing heavily to enable their clients to digitize their factory operations in such a way.
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