This whitepaper examines what the future Supply Chain might look like. In exploring how things are currently done in the supply chain and how they possibly could and should be done tomorrow, it may well stretch your thinking. Specifically the whitepaper looks at disruptions that will shape our future supply chains including; 3D Printing Mobile Technology New channels for last-mile delivery Connectivity – Big Data and the Internet of Things Predictive Analytics It concludes that the Future of Supply Chain Strategy must embrace disruption. www.gra.net.au

1. What will supply chains of the future look like?
© GRA 2015

2. Shanaka Jayasinghe
Manager
GRA Sydney
sjayasinghe@gra.net.au
Shanaka is on a mission to build in technological and environmental sustainability into
Australian supply chains. Marking a positive contribution by reducing waste and
increasing national productivity.
Shanaka is always in pursuit of the next innovation in supply chain with a view to
practically apply such innovations to allow his clients to achieve online supply chain
competitive advantage. He is drawn to connect the dots of how influential companies
such as Uber, Amazon, and Google are shaping the supply chain landscape of tomorrow.
GRA is Australia’s premier, expert consulting firm specialising in supply chain & logistics strategy, planning and execution. We offer
consulting, professional services, supply chain systems, training & education and benchmarking across a broad range of industries.
© GRA 2015
We turn supply chains into a competitive advantage

3. © GRA 2015
Disruptions change the status quo – how we do certain things a certain way.
This shapes our expectation of how things should be done and in doing so prompts change in how things can be done.
Once we know things should and can be done differently, this is ultimately how things are done.
Of course only until the next disruption…
This whitepaper looks to stretch your thinking. It will explore how things are currently done in the supply chain and
how they possibly could and should be done tomorrow…
Increased
consumer
expectations
Pressure on supply
chains
Step change in
capability
Disruptions
shaping future
supply chains
The Disruption Cycle

4. Disruptions that will shape our future supply chains…
© GRA 2015
Mobile Technology New channels for Last-mile Delivery Connectivity - Big Data and the Internet of Things Predictive Analytics3D Printing Automation* Green Supply Chains*
*not covered in this whitepaper

5. Visionary
Game-changerNiche Player
Challenger
Mobile Technology
New Channels for Last-mile Delivery
Connectivity - Big Data and the Internet of Things
Predictive Analytics
3D Printing
Complete supply chain disruptor
Change is
happening
now
Niche supply chain disruptor
Change is
happening
tomorrow
The Magic Quadrant of Supply Chain Disruptors
© GRA 2015
*Green Supply Chains
*Automation
*not covered in this whitepaper

6. 3D Printing
© GRA 2015
3D printing, or additive manufacturing, is the process of making three dimensional solid objects from a digital file.
The supply chain implication of 3D printing is a significant disruption to manufacturing supply
chains and how they are designed today.
Though manufacturing in certain locations can be low-cost, managing a global logistics network is
not, especially when considering Australia, with low population densities and a vast geographic
expanse leading to high transportation costs. 3D printing is able to reduce these costs by enabling
businesses to station local manufacturing centres closer to strategic markets, reducing the length
of the supply chain, inventory levels and helping reduce carbon footprint.
We will first see changes in highly complex spare parts operations with challenging logistics. The
challenge in such supply chains is often expensive parts, stored in many locations where demand
is sporadic and difficult to statistically forecast. What 3D printing will enable is lower inventory
levels by holding a ‘vanilla set’ of raw materials capable of producing ‘x’ number of parts. This is
as opposed to holding ‘x’ number of parts.
Aviation and the Defence Forces have been early adopters and rightly so. Consider an aircraft
engine which has in excess of 25,000 componentry parts. If we were to service this engine in an
airbase in Western Australia we potentially require all 25,000 parts to be available in some
quantity, on-site (in WA) at any given time. This is a significant inventory holding challenge, and it
also puts a strain on our working capital. Using 3D printing we can hold a mix of raw materials and
components to maintain the capability requirement whilst lowering our overall inventory
footprint in our network. This will improve our working capital and overall serviceability.
Case Examples include:
 Defence Forces (particularly the US Military)
 GE Aviation (First engine parts becoming operational)
 Automotive (e.g. Mercedes, BMW and General Motors)
 Health-care (from bionic limbs to organs)
 Clothing & Wearables e.g. Nike (custom shoes)
 Amazon (patent for a mobile 3D Printing Delivery Trucks)
Now
 Production Prototypes
 Small MFG runs of High Value/Complexity
 Dental/Aural healthcare forms/aids
Soon
 Almost all service parts
 Complex high volume/high value forms
 Products related to fashion/trends - high volume/short lifespan
Later
 Mass produced fast
moving consumer goods
 Automotive/Aviation

7. Mobile Technology
© GRA 2015
Mobile technology – your Apple or Android device which enables companies to access highly personalised data.
The supply chain implications here are many, lets look at two that come to mind for retailers.
 Today, a demand-driven retailer for instance might forecast at a SKU or group level and a more sophisticated
retailer at a SKU by store (location) level. In doing so, the retailer pre-positions inventory in the network to
optimise service level availability/responsiveness at the lowest cost.
 Tomorrow, imagine a retailer forecasting at a SKU by customer level where the customer is not the store,
but you. That is, the demand signal comes from your phone and cascades upstream all the way to the raw
materials supplier to trigger the manufacturing process and time-phased distribution in the network. The
retailer here would be pre-positioning inventory in the network for YOU based on your shopping habits, your
movements and other data in your mobile device.
Mobile technology enables real-time, personalisation and location data. This is incredibly valuable in terms of
last-mile fulfilment for online purchasing. Last mile fulfilment, particularly in Australia is one of the most
significant challenges in online fulfilment.
DHL, Amazon and Audi have partnered to propose a solution to this challenge. How does it work? You order
from Amazon and goods move though the network to the DHL courier who confirm your vehicle location using
the data in your mobile device, DHL on arrival at your vehicle have a one-time electronic access code to the
boot of your vehicle where they can deliver the ordered goods.
Raw
Materials
Manufacturer
Distribution
Centre
Cross-Dock Store
YOU
(Customer)

8. New channels for last mile delivery
© GRA 2015
Peer-to-Peer Transportation – Uber is the obvious case study, however I would encourage you to focus on the
concept of peer-to-peer supply chains where Uber is the technology enabler.
 Uber started as Uber Black, a network of privately licenced drivers and has since introduced (albeit with
some resistance) UberX, a network of random drivers. These drivers are in essence a distribution network.
Uber tomorrow is likely to leverage its distribution network to transport packaged goods (not just people) –
enabling anyone to effectively become a courier on their daily commute.
‐ In the build up to Christmas, major retailers in the United States have partnered with Uber to pilot
last mile fulfilment of online orders. Beyond these pilot efforts, imagine a world where it is as
simple as typing into Google Maps you are traveling from A  B and then receiving a proposition
to deliver a package from somewhere near ‘A’ to somewhere near ‘B’. Note, trust is a significant
hurdle here and relies heavily on the highly personalised data profile in your mobile device.
Click & Collect – huge in Europe, we are at the tip of the ice berg in Australia.
 Think grocery, you have the option now to order online and pick up from store. Woolies have taken this a
step further, partnering with EBay, so you can now make a purchase on EBay and pick up in store at your
local Woolies. These partnerships in click & collect will become more prevalent as both parties ‘win’. The
win for Woolies is they get greater online presence and more traffic in store and the win for EBay is a
distribution footprint via the Woolies store network.
‐ My question to you is to look beyond this. Imagine what the next partnership will look like? Could
an online retailer take the next step and partner with a public transport provider? Perhaps Sydney
Trains? That way, as a phase one, we could order online and pick up goods at our local train station
on our daily commute, or better yet, a phase two, we could tap into peer-to-peer transportation in
rail (much like the Uber concept for road).
Drone Technology – no this is not science fiction, it’s already here.
 Imagine a world where apartments are being designed with drone landing pads to enable them to deliver
small goods to densely populated areas.
Noting the above, perhaps there is hope for online retail to become quite profitable even in a country like
Australia with a massive geographic expanse and low population density.
For retailers, last mile delivery in the past was as simple as transporting goods from a distribution centre to store where you as the customer would pick up the goods, whilst shopping…
Today there exists a multitude of ways for your product to find its way to you. Let’s explore three potential game-changers…

9. 2015 Data
Connectivity - Big Data and the Internet of Things
© GRA 2015
Data is on the rise. As a species, in 2015, we are creating in 2 days the amount of data that was created in the entire year of 2003.
2003 Data Data is changing the way we think, how decisions are made and the landscape of global markets.
Traditionally supply chains were designed to use structured, clean data. But it turns out that in today’s environment, the most
important data for the supply chain is often unstructured data in the form of for example customer service call data, social
media data, warranty and return information, customer rating and review data. Over the next decade, supply chain processes
will need to listen, test and learn based on the sensing and pattern recognition from big data technologies.
For the supply chain, data is only useful when it is connected. The Internet of Things is seeking to make such connections.
Imagine as a supply chain director, a world where you know exactly where your cargo is and also whether it is at the correct
temperature, whether it has been dropped or damaged, whether the truck driver braked hard or is currently stuck in traffic –
or better yet, who the driver is with a reliability rating included. This is the world of the Internet of Things.
Imagine a supply chain so connected that management have in their hand the lever to influence in real-time, the entire flow
of a banana from farm to store.
How would this work? Take the farm to store example CISCO advertised in 2014.
 The banana anticipated the early harvest based on its pigmentation which told the servers to alert the logistics provider
who arranged the new delivery time with the supermarket chain.
 The supermarket chain placed the current stock of bananas on sale, and the shopping cart with its tablet driven
advertising, just to be extra helpful, suggested a delicious banana dessert recipe to drive down the current stock. (CISCO, 2014)

10. Think about how these companies are using data today…
Predictive Analytics
© GRA 2015
Companies today, leveraging data, are getting to know and understand their customers more than ever imagined in the past.
The last decade has focused on the use of linear optimisation and statistics based on historical
data to drive forecasting and improve supply chain decisions. Business rules have been simple ‘if
then’ statements. As supply chains become more complex and the needs are greater, these ‘if
then’ statements are moving towards ‘what if modelling and pattern recognition technologies.
Online and Mobile shopping has resulted in a completely new channel to customer and although
this has stretched the warehousing and distribution capabilities of the supply chain, this new
form of data has also given greater insight and new meaning into previously less explored areas
such as forecasting. For instance, retailers can finally measure lost sales accurately through
quantitative webpage data, rather than anecdotal evidence from stores.
Additionally, using login information companies are not only better understanding real demand
and lost sale data, but additionally, better understanding your purchasing habits, patterns and
trends – leveraging this information to then prompt highly focused marketing campaigns as well
as improved management of clearance stock items.
 Take Amazon for example who recently obtained a patent for a concept known as
‘anticipatory shipping’ or ‘yesterday shipping’. The idea here is Amazon analyse you user-
profile data and based on your cursor movements, check-out strike rate, etc. will crunch
algorithms to predict the probability of you purchasing certain items – before you actually do.
‐ Based on this data and probability, Amazon will then send you this item and give you
the ‘option’ to buy it at your door, or, preposition the inventory in the network letting
you know its able to be delivered within ‘x’ hours. The icing on the cake is when
Amazon then incentivise you to purchase it by offering ‘x %’ off to seal the deal.
Generally, companies see the value in using predictive analytics and big data in their supply
chains, however the foundation capability is often missing and the cost of deployment is still
deemed too high.

11. © GRA 2015
Increased
consumer
expectations
Pressure on supply
chains
Step change in
capability
Disruptions
shaping future
supply chains
Supply Chain Strategy of the future must embrace disruption.
www.gra.net.au
Subscribe to GRA news at www.gra.net.au/subscribe
The Future of Supply Chain Strategy
Supply Chain Strategy
Business Strategy
Traditional:
Business
Strategy
Supply Chain
Strategy
Emerging:
Traditionally, Business strategy drives supply
chain strategy.
For example, a business strategy of operational
excellence would drive supply chain strategy via
leaner operations to reduce cost e.g. a
centralised distribution network – the trade-off
here is often responsiveness to customer.
Supply chain investments often involve long term
payback cycles and as such we want to ensure there is
a strict long term alignment with business strategy.
As the rate of change increases in the world, business
strategy must evolve accordingly, so when making
investment decisions in the supply chain we must also
drive the business strategy decision.