The Three Waves Of Supply Chain
Technological innovation accelerates year after year, transforming and revolutionizing everyday life as we know it. Supply chain technology has evolved too, and it has advanced in three different waves over the past century.
The 1st Wave of Supply Chain Tech
The 1st wave of supply chain innovation began in 1948 with the Berlin Airlift. As countries were delivering goods - such as coal, food, and medicine - to Berlin, they discovered they needed a more effective method to coordinate with other countries. Their solution was EDI, or Electronic Data Interchange, technology.
EDI utilizes the computer-to-computer exchange of business information, such as purchase orders and invoices, in a standard format. In other words, paper-based transactions were automated and replaced by a standard electronic format, which saved a lot of time from waiting for the documents to be delivered and eliminated a lot of costly errors caused by manual processing. (IBM)
EDI fulfilled the needs of the UN and was really useful in the 1940s. For the first time, people could easily communicate hundreds of product attributes and data, such as when a good has been sent and when it would be arriving. EDI also enabled basic data transformation, and so, units can be easily converted from pounds to kilograms, for example.
Example of EDI Coding
The 2nd Wave
The 2nd wave of supply chain tech began in 1974, when Wrigley’s Juicy Fruit chewing gum was the first product marked with a scannable barcode. This barcode was created with the help of GS1 (Global Standard 1), a non-profit organization that develops global standards for business communication, such as barcodes and GDSN (Global Data Synchronization Network) technology, which allows real-time data storage, synchronization, and transformation. Since then, companies have been able to display thousands, rather than hundreds, of product attributes. It became standard to have a different barcode on every individual item, which enabled easier identification and tracking of products. It also became standard to display images of a product so consumers could better understand their purchases. Last but not least, it became standard to use GDSN technology, which means that all businesses share data in the same format, and thus, speak the same language.
GDSN Data Flow | Source: GS1
The Problem With 1940s and 70s Technology in 2021
Although 1st and 2nd wave technologies were revolutionary and good for their times, they are insufficient solutions for the pace and scale of 21st century digital supply chain management.
The problem with EDI is that it’s too simple. It can only encode around 100 product attributes and cannot produce images. These limitations hold EDI technology back from fully meeting the demands of brands and retailers that sell thousands of products with hundreds of thousands of product attributes associated with each product.
In addition to only being able to encode product attributes in the thousands range, the problem with GDSN is that it is difficult to add attributes in the first place. In order to add a GS1 GDSN standard, it must be brought to GS1’s attention. GS1 would then have to agree to approve - or disapprove - of the addition of the specific standard. This could lead to a series of meetings and calls that takes years before a conclusion is reached. This delay is especially detrimental in the healthcare industry, where there are life-or-death situations, and expressing a specific attribute could save a person’s life.
EDI and GDSN having limited product attribute encoding abilities make it hard for businesses to curate content to specific audiences. The market now demands unlimited product attributes due to the infinite digital aisle. Unlimited product attributes are how you get a consumer to actually be interested in a product since they allow consumers to envision what it’s like to own the product and feel a connection to it.
The digital supply chain needs an innovative reformation. There is no reason for companies to still be using 1940s and 1970s supply chain technology when technology itself has advanced so much in the past 80 years.
Venzee is Leading the 3rd Wave of Digital Supply Chain Innovation
The 3rd wave of supply chain tech began in 2016 when people began experimenting with automation, artificial intelligence, and machine learning to address the problems of 1st and 2nd wave digital supply chain technologies. These cutting-edge technologies allow businesses to convey an unlimited number of product attributes. This means that not only does an intelligent supply chain software cover all the benefits of EDI and GDSN technology (data delivery, imaging, real-time data storage, real-time data synchronization, and real-time data transformation), but it also allows businesses to tailor their products to all retailer channels and audiences.
How is Venzee leading the 3rd wave of digital supply chain innovation? As crazy as it sounds, most supply chain management companies these days still use 1940s and 1970s technologies. But at Venzee, we are not settling for 80-year-old technology and comfort; we want to disrupt the supply chain. We believe that automation, AI, and machine learning are the future of supply chain management and our technology is paving the way for that future.
Learn more about the 3 waves of supply chain tech in episode 68 of our podcast Rethinking Supply Chain: https://rethinking-supply-chain.simplecast.com/episodes/the-3-waves-of-supply-chain-innovation-continued.
Learn more about Venzee’s disruptive supply chain innovation, Mesh Connector™, at venzee.com.
The 3 Waves of Supply Chain Tech