Changes in the supply chain

Core findings


  1. The most highly prioritized logistics goals refer to satisfying customer expectations, delivery reliability, and logistics costs.
  2. Changes in distribution channels in the direction of platforms and portals lead to small scale logistics services that are individualized for customers.
  3. The ability to connect to uninterrupted IT systems is set to become a matter of survival for suppliers/contractors.
  4. Currently, in the supply chain, the need for data is often not satisfied (e.g. 61% material flow disruptions); however, one can already recognize a growing willingness to share the data.
  5. The companies largely expect a reduction in inventory, warehousing, and administrative costs as a result of digitalization. Trade, however, expects this to bring increased costs in packaging and returning goods.



Logistic goals in the supply chain

The logistic goal with the highest priority for retail and the manufacturing industry is the adherence to delivery dates. Logistic service provider rather focus on fulfilling the requirements of their costumers.

The logistics service sector shows a particularly clear prioritization of fulfilling customer needs. Changes in the value chain – especially for logistical services – are, therefore, increasingly customer-driven. Then, reliable and individually designed services at competitive prices become even more visible. The resulting complexity is best controlled with (digital) technologies which can establish transparency in the supply chain, and which benefit all participants.

Individual customer requirements specifically bring about change regarding the size and nature of product flow, the inter-organizational data exchange, and the supply chain composition.

The individualization of the product flow

Omni channel concepts have arrived in retail while online sales channels are extended further. This matrix becomes increasingly important to maintain market presence and, thus, catalyzes change in distribution logistics that aims for availability and cost minimization.

Logistic service provider trust in close relationship to their costumers. The sales business is heavily influenced by stationary and direct contact. Decentralized storage concepts and the associated adjustments to infrastructure follow customers’ wishes for short delivery times and individual delivery modes both in the B2C and B2B environment.

The requested services basically become small-scale and customized. This trends requires the manufacturing industry to offer mass customization solutions and an adoption of existing manufacturing processes which allows a production in batch size 1. In this future smart factory, flexible, modular cyber-physical systems will communicate with each other and will allow, without large setup costs, the continuous adaptation of production and operation to serve individual customer wishes. This, however, implies a complete overhaul of IT and internal logistics systems, and also of those across the entire supply chain.

...requires a broader focus on customer centricity

Interactive overview: customer centricity

Data-driven control of the supply chain

In the course of digitalization, more information is recorded and processed than before, so that information management, particularly across company borders, plays an even more important role. 79% of the respondents regard a transparent supply chain as relevant or highly relevant but difficulties in the implementation still exist.

Transport data, as well as data on delivered and received goods, is already comprehensively shared. However, companies recognize a growing need for exchanging a larger variety of data, such as inventory data, demand forecasts, or data on material flow problems. Such data sharing facilitates market analysis, computes requirements along the entire supply chain, and it also assists in calculating adequate measures in real time. This can lead, in all supply chain stages, to improved service levels and reduced risk of being out-of-stock that would be caused by a lack of transparency.

Despite a lively discussion about the question of data protection and data security, companies increasingly distance themselves from rigid security-minded thinking and can identify both the need for and the potential of information sharing along the supply chain. Beyond a willingness to share, the actual data exchange carries challenges of a completely different dimension. Companies often fail, because the required data is not available, interfaces are not defined, or the quality and integrity of the data are inadequate. The ability to connect to uninterrupted IT systems is set to become a matter of survival for many parties.

...requires a broader focus on realtime visibility

Interactive overview: realtime visibility

Reorganisation of supply chains...

This study shows that too few companies seriously grapple with the issue of how the cooperation and composition of actors in the supply chain will change through digitalization. Therefore, each individual company needs to reevaluate and find its new role within the supply chain.

In the digital age, rapidity is more important than ever. As a result, it becomes necessary for companies to build an agile supply chain network that allows continuous monitoring of developments and enables fast adaptation in this volatile environment.

Product flow is becoming more regional again, and factories are closer to the market. Predictive analytics open new ways to lower transport, inventory, and storage costs. Retail expects digitalization to bring increased costs in packaging and returning goods

(Digital) increased output will grow in size – The parties disagree how they shall be split. Platform provider are increasingly entering the market, shippers are becoming more flexible and due to cheaper alternatives on the spot market companies risk losing orders – a risk that applies to both logistics service providers and suppliers. Increasing digitalization now helps to reduce complexity and allows for better control of the processes. This has brought a turnaround in that these knowledge-intensive tasks are once again fully performed in-house.

...requires a broader focus on agile supply networks

Interactive overview: agile supply networks