Bits, Bots and Bolts

THREE MEGA-TRENDS AFFECTING COMMERCE IN THE NEW CENTURY

By Michael Zakkour

My son Julian is 21 months old. When he was born our immediate need for diapers and formula and our solution for buying it all led to me thinking about how technology and the modern supply chain are no longer just supports for business but in many cases they are the business.
In particular we discovered a company called Diapers.com, one of the fastest growing e-commerce companies in the world.
They dont make anything, dont design anything, and do not employ many people; but what they do do they do better than anyone else. That is, they offer thousands of baby items for sale on a slick web interface, delivered to your door in 24-48 hours, at discounted prices.

In other words they are a technology driven interface with a supply chain powered business model dependent on cheaply manufactured goods from China.

They are a perfect example of the three major trends shaping the world of commerce today.
E-commerce, Supply Chain as Business Cornerstone and The Rise of China.
They have all contributed to creating new types of companies and require business owners across industries to thinkabout their operations in new ways.

E-commerce

Over the last twenty five years advances in the technologies that gave rise to the e-commerce revolution have shaped the way every one of us perceives and engages in the shopping experience. Luxury items, bathroom items, movies, music, medical advice, daily deals and almost every other form of commerce has moved online.
And if people are buying, that means someone else is making, storing, moving and delivering. True, some purchases remain in the digital realm, but tangible items are the backbone of the Amazon Empire and the growing trend to buy it all online remains a constant challenge to traditional retailers and brands.

Supply Chain as Cornerstone

Helping fuel this burst of consumerism around t! he world is the modern supply chain. Everything from supersize container shipping, to Supply Chain IT, and material handling integration to complex distribution centers that pick and sort thousands of SKUs, the movement of goods by land, air, sea and rail and the vehicles and facilities that make it all possible are what define our 21st century commercial lives.
As with Diapers.com, Amazon.com, Ebay, Wal-Mart and so many more, the supply chain is no longer a support system but an integral driver of savings, revenue and growth. In some cases your supply chain will help define who you are with both

your customers and your suppliers.
Technology in the supply chain and technology as an interface have changed the way we sell and buy goods. But those goods have to come from somewhere.

Rounding out the three trends is the rise of China

With China having served as factory to the world since the early 90s, North Americans, Europeans and many others around the world suddenly had access to a number and quantity of goods like never before.
Put simply, China made it possible for more people to buy more stuff, in more places. Things that people only twenty years earlier saved up to buy (like a good vacuum cleaner) became disposable and replaceable based on price.

While its true that China is transitioning a good portion of its manufacturing to higher value, higher margin goods and focusing more on services, it will remain for the near future the go to nation for a huge number of categories in the low to mid range and will bring more higher tech capabilities to bear every year.

We recommend that every business think about how the rise of e-commerce, the new importance of supply chain as a growth driver and a rising and changing China affect their business and how they could benefit by stronger strategies for each.