Over half of all manufacturers surveyed in 2016 by Industry Week expect to move away from “make-to-stock” supply chain solutions in favor of “build to order” and “configure or assemble to order” by 2020. That shift won’t surprise anyone who’s been watching the impact that technology has had on buyer behavior. In a nutshell: one-size-fits-all no longer fits all.
In a TED Talk, UPS Vice President of Corporate Strategy Alan Amling calls this trend “The My Way Highway.” According to Amling, the “my way” mindset is borne of the intersection of millennial consumers and rapidly advancing digital technology. With the UPS 2017 IBD Study stating that, “the millennial generation might have the most profound impact on the future of industrial products buying than any other,” it’s becoming increasingly clear that millennial consumers are reshaping the industrial supply chain for good.
One of Amling’s points is that fulfilling non-standard build-to-order purchases will require fundamental changes to global supply chain solutions. From raw materials and order fulfillment to returns and maintenance, supply chain visibility is going to become even more important. Here are some of the ways that supply chain visibility can help businesses cater to the new build-to-order mindset of millennial consumers.
Manufacturers haven’t had their heads in the sand. The growing use of sensors to make digital connections between machines, facilities and people has spawned an array of overlapping movements like Industry 4.0, the Internet of Things and Smart Operations, among others. Each is built upon the same premise: the data captured by those connections, along with sophisticated analysis and real-time response, will improve supply chain visibility, ultimately lead to more agile supply chain solutions that are better able to cope with the demands of build-to-order.
“That level of operations maturity will be years in the making, but there’s no reason to stop forward motion,” says Charlie Covert, Vice President of UPS Customer Solutions. As one of the logistics giant’s supply chain optimization consultants, Covert supports customers in several industries, including industrial manufacturing and industrial distribution.
“It’s important to look at the path forward as a series of incremental steps, some of which can be done faster or better in collaboration with outside or third parties,” Covert says. He points to cutting edge logistics technology that can increase visibility into industrial supply chains. “Many manufacturers make use of UPS Quantum View® supply chain visibility tools, while Flex® Global View also offers the kind of visibility that industrial organizations are looking for.”
Covert adds that some providers also have established relationships with tech companies that offer solutions to increasingly common challenges. One such pain point is how to integrate e-commerce, warehouse management and inventory management platforms in order to improve throughput or order fill rates, but without increasing inventory levels.
“Talk with your supply chain partners and see what’s out there,” Covert says. “You might be one meeting away from solving what’s keeping you up at night, or more importantly, what should be keeping you up at night.”
In the midst of a digital revolution, manufacturing leaders are leery of investing in infrastructure needed for the “My Way Highway” demands of millennial consumers and end users. The obvious risk of standing on the sidelines is to fall out of consideration altogether.
Dan Gagnon, Vice President of UPS Global Logistics & Distribution, says contract services can help manufacturers respond faster to changes. “Some third-party logistics providers have invested in a global network of warehouses and distribution sites, as well as light manufacturing facilities,” he says. “Third-party services can be a faster way to get hold of the nimble technology and processes you’ll need to deliver custom orders or make-to-order products.”
Gagnon also cites the benefits of being one of the first “feet in the door” with customers. “Technology and processes are changing so fast that rarely does a company have the right capabilities ready to go,” he says. “An experienced third-party provider can be a very powerful ally.”
UPS’s Amling suggests that on-demand additive manufacturing (AM), also known ask 3D printing, is an underutilized tool for fulfilling demand for the sort of custom products or orders demanded by millennial consumers. Although manufacturers currently rely on AM most for prototyping and product development, it’s increasingly used for on-demand production of critical repair parts and custom orders.
“Traditional manufacturing will probably remain the most cost-efficient way to produce large quantities of identical items for some time to come, but there are exceptions,” Amling says. “For example, although per-unit costs of certain AM-produced pieces may seem high compared to traditional mass production, once you factor in the upfront mold or tooling costs required to traditionally manufacture fewer than 500 units, that’ll probably wipe out any profits and take up to eight weeks longer.” He adds, “And if faster response time means the difference between keeping and losing a customer, it’s hard to put a price on that.”
Amling points to the UPS-Fast Radius micro-factory near Louisville, Ky., which provides on-demand additive manufacturing in a number of different materials, variations and quantities. He notes that parts or products ordered one day can be delivered as soon as the next business day in the United States, or on the second business day in Europe or Asia.
“The ‘My Way Highway’ customer is here, and their ranks are growing,” Amling says. “What better way to outdo your competition than by being first to meet their needs?”
Learn more about the ways UPS can help you respond to the changing needs of millennial consumers.
Sign up for email offers, insights, and industry news that can help improve your shipping. You can manage your preferences at any time.
News and Insights to help you ship smarter
Service Updates to alert you to severe weather and events impacting operations
Promotions and Offers to help you get the most for your money
Product News to keep you up-to-date on new services, tools, and features