Manufacturing supply chains are experiencing a post-pandemic paradigm shift. As business models evolve to solve market disruptions, such as changing or adding direct-to-consumer (D2C) to a business-to-business (B2B) model, supply chains require agility and innovation to build resiliency and stay ahead of trends. United States D2C e-commerce sales have more than tripled in the past six years. 1 The market gained almost $100 billion in about half a decade from 2016 to 2021. It is expected to grow by nearly another $100 billion in the next three years, reaching $212.90 billion by 2024.1 With added supply chain complexities, including D2C, B2B, and advanced last-mile delivery bots, drones, and self-driving vehicles, manufacturers need strategies that go beyond cost reduction and can easily scale across the network. Supply chain networks able to scale their ecosystems will gain a competitive advantage, and the intelligent solutions to achieve this are composable and modular business applications.
Composable business applications are cloud-based technologies that provide unlimited scalability. They seamlessly integrate with other applications and are easy to use through a low-code or no-code interface. This composability allows organizations to combine different modular applications in an incremental and agile way through rapid sprints instead of embarking on time-consuming and costly rip-and-replace projects. Therefore, reach faster impact regardless of where manufacturers might be in their digital supply chain transformation journey.
The effectiveness of organizations’ digital supply chain in orchestrating supplier and fulfillment partnerships to meet anticipated customer demand determines the quality of the customer experience, as outlined in our on-demand webinar: A Smart Approach to Supply Chain Resilience Using Intelligent Order Management, featuring George Lawrie, Forrester Vice President and Principal Analyst.
To summarize, composability makes supply chain network innovation possible, as highlighted in the three advantages below.
1. Modern open platforms pave the way for innovation
Recent years show that siloed data has no place in today’s supply chain network. Traditional networks support predictable environments, which are no longer the case with current market dynamics. From raw material shortages to non-traditional emerging channels, supply chain networks require agility that extends to all stakeholders and foster fluid collaboration.
According to a Forrester report, platforms make it easier to assemble complex technology portfolios across a range of packaging alternatives, leveraging modular components while allowing for customization and custom development.2
Composable and modular business applications seamlessly integrate with existing enterprise systems with modern open platforms and low-code/no-code interfaces. In addition, they support innovative features such as predictive analytics or agile manufacturing for real-time and cross-channel inventory visibility. They also enable manufacturers to enhance network strategies and allow rapid deployment of digital supply chain control towers —another advantage of composability.
2. End-to-end visibility to scale supply chain networks
Improving the customer experience is a top priority for many organizations. However, during the COVID-19 pandemic, we saw customer loyalty easily swayed. This trend gave new brand entrants a foothold into e-commerce and catalyzed many established brands to engage D2C to maintain market share. Similarly, the rise of the omnichannel’s ease of purchasing, delivery, and return options has set high customer expectations and introduced new buying behaviors. These dynamics present significant risks as ongoing supply chain disruptions continue. But extensible composable tools arm the supply chain network with another advantage: the digital control tower with end-to-end visibility to anticipate and mitigate order management turmoil.
According to a Forrester survey, the most common planned improvement (49 percent) retailers and CPG companies are making, is better visibility across the supply chain (from factories to raw materials suppliers).3 Consumer packaged goods (CPG) manufacturers with newly launched D2C business models recognize that complete visibility is essential for favorable customer experiences.
Digital supply chain control towers take real-time data from multiple supply chain network workloads and provide a holistic, multi-dimensional view. The partnership with FedEx and Microsoft Dynamics 365 for the cross-platform, logistics-as-a-service solution for brands exemplifies these capabilities, offering features like a seamless return experience and transportation optimization to proactively avoid delivery delays. Dynamics 365 Intelligent Order Management also allows organizations to set up the first step to incrementally build a composable digital supply chain platform with different module solutions for end-to-end visibility and deliver highly valued unified customer experiences.
3. Composability with AI drives actionable insights
Finally, composable business applications enable optimization at each node level letting manufacturers know where opportunities exist. Composable business applications give manufacturers advantages that are counterintuitive to previous assumptions. Advanced analytics powered by built-in AI and machine learning capabilities allow manufacturers to test hypotheses with predictive data-driven outcomes.
A Forrester survey shows that 56 percent of respondents report that one of the most important aspects of supply chain agility is increasing the use of machine learning and AI to drive process automation.3
An innovative supply chain network leverages composable digital tools with embedded AI and machine learning to improve decision-making, unify disparate data, foresee disruptions, and utilize deeper insights.
To start building composability in your supply chain network watch the video:
Achieve more with agile and resilient supply chains
Dynamics 365 innovates supply chain networks, making them resilient and sustainable through composability. These intelligent solutions work seamlessly with enterprise resource planning (ERP) and customer relationship management (CRM) systems to respond to market dynamics quickly and integrate with many market-leading API-enabled applications. Pre-built connectors extend business capabilities through an ecosystem of specialized partners for order delivery, tax compliance, price calculations, transportation, and other logistics services. Plus, users can easily create rules and quickly configure order flows to adapt to changing market conditions or scale to support peak volume demands with an easy-to-use low-code/no-code interface.
By enabling these capabilities, manufacturers can accelerate the digital transformation of their order management process and turn order fulfillment into a competitive advantage. Users can also automate and optimize fulfillment using AI to create real-time inventory visibility and extend into a digital control tower for end-to-end network visibility.
At Microsoft, we are committed to empowering every person and organization on the planet to achieve more. With our next-generation digital supply chain applications, manufacturers can leverage composability to drive innovation across their supply chain networks. See how they can innovate yours in the on-demand webinar: A Smart Approach to Supply Chain Resilience Using Intelligent Order Management.
Sources
1- eMarketer, 2022. Established brands will drive the vast majority of D2C ecommerce sales.
2- Forrester, 2021. Accelerate Sustainable Innovation With Platforms.
3- Forrester, 2021. The Digital Commerce Imperative. A commissioned study conducted by Forrester Consulting on behalf of Microsoft.
