There is an emerging strategy in supply chain networks--ship anything from anywhere. This is not a new trend but has gained new credence in the COVID time. Companies ran short of products or supplies and looked deep into their supply chains for alternative sources and shipping options. Once these new sourcing linkages are built across supply chains, there's no going back. Supply chain partners across all echelons need to prepare for a future where just having products available to ship in the part of the supply chain you directly control will not be a winning strategy.
The concept of drop ship--the ability to source/ship a product or materials from various partners in a supply chain network--underlies the ship anything from anywhere strategy. Drop ship is not a new concept but became a necessity for many companies during COVID when they ran short of the ability to quickly satisfy consumer's (or manufacturing) demand from traditional sources. The usual suppliers ran short of materials or products and companies had to seek new sources, often companies with whom they had not done business in the past. And to meet demands, either the consumer of manufacturing, companies often asked whether these new sources could ship directly to a plant or consumer, not using traditional channels (for example supplier to distributor to company warehouse to consumer).
Omnichannel delivery strategies have also contributed to the ship anything from anywhere paradigm. Retailers, for example, started to realize that they could drop ship to the consumer directly from their stores, instead of from their warehouse operations. Of course, one has to evaluate the cost to serve from these alternatives, but it is often cheaper and faster to use a variety of options to meet demands, rather than to rely on traditional 'linear' supply chains (where companies move products from suppliers or plants to their own distribution centers the to stores and the consumer).
Difficulties in forecasting are just one of the issues that arise in implementing a ship anything from anywhere, or omnichannel, strategy. How do you plan demand when the consumer has so many alternative paths to your product--stores, company websites, marketplaces to name a few? The new paradigm will require upgraded supply chain decision software that has the ability to rapidly decide which product source is the best one to meet customer needs. Besides traditional cost & service, additional factors, such as the ability of a manufacturer or other supplier in the supply chain to manage a local delivery, especially one requiring special handling.
Will it all go back to 'normal' when we get to the other side of the COVID economy? The simple answer is no--omnichannel supply chain strategies powered by drop ship are here to stay. All supply chain participants need to begin to modify their operations to conform to the new future state. Companies wishing to have their manufacturers or suppliers ship directly to customers may have to provide a range of digital commerce support capabilities that are not typically used by up-channel partners, including:
- listing tools
- commerce analytics
- product information management
- digital asset management
- digital image capture
- returns management
- product marketing
It is going to be a very interesting world in supply chains over the next decade as we witness all these changes.
Comments