“Smart connected ecosystems combined with artificial intelligence integrated in products is game changing and disruptive,” says Frank Vorrath, VP of Global Supply Chain at Johnson Controls, on the topics of traditional business and the smart building sector.

Vorrath highlights the supply chain ecosystem, comprising of the entire supply and value chains, as central to success for the modern business. By incorporating smart technology and artificial intelligence companies can better connect the front-end of their business with the back-end, to create efficiency and a better service for their customers.

The digitization of the supply chain ecosystem is cutting costs, creating value from new opportunities and becoming the difference between success and failure. This is true for traditional business and also for smart cities and buildings.

“The overall question will be how ecosystems can be enabled by smart technology to deliver value exponentially faster, and how smart connected products transform competition,” Vorrath asks. “Value chains will transform into ecosystems of ecosystems, highly connected and dependant on each other.”

In a retail business, for example, the traditional supply chain sees a variety of suppliers shipping a variety of goods to a variety of warehouses. At the warehouses, products are organized then mobilized when demanded by retail outlets. In this supply-demand organizational system, deliveries may be delayed, misplaced or stolen; in transit, at the warehouse or in the store. This creates inefficiencies, losses, and unnecessary out-of-stock situations, which directly impact the bottom line and company reputation.

A smart, connected, supply chain ecosystem can positively impact all of this. Many retail companies have embraced radio frequency identification (RFID) technology, for example. RFID tags on every item or carton are read by RFID readers to create real-time visibility throughout the supply chain. The system can alert supply chain managers when and where products are delayed or stolen. It can also accurately highlight when stores need to reorder stock, and it can instantly locate this stock in a chaotic warehouse. A digitalized supply chain means a smooth running company.

Furthermore, businesses who adopt a digitalized supply chain are gaining massively from new opportunities such as omni-channel retail. Omni-channel allows retailers to combine the online, mobile and brick-and-mortar shopping experiences for the benefit of the modern consumer.

Shop online and pick up in store, buy in store and request delivery, browse in store – use your mobile device to recognize and compare items – then request delivery. These are the demands of the modern consumer and they will choose retailers who offer those services. In fact, omni-channel is winning back customer from online shopping and even forcing online retailers into creating brick-and-mortar stores. Reversing a trend against all expectation.

In the smart technology sector, including smart buildings, cities, homes and so on, smart connected ecosystems are equally as important. Smart cities, for example, incorporate numerous information, communication and security technologies to control their assets. This in turn promotes further development of smart buildings, which combines with smart public services to create the city.

Information from a building feeds into the city, in the case of energy management for example. Simultaneously, information from the city feeds into the building, when dealing with crises for instance.

Connected environments, such as the smart city or smart building, require a dependable, agile, reactive and cost-effective supply chain in order to serve their occupants while remaining competitive. Just like in the retail business, a smart city’s supply chain should be created through deep knowledge and analysis of the customer and market.

Smart cities should strive to be leaders in cost saving. They should seek out or develop the ideal products for their specific needs. They should be constantly assessing and adapting to provide the best service. Like retail or other industries, the smart city or building must make strategic choices to achieve one or all of these objectives. These factors are a result of the supply chain ecosystem, and it is these factors that will determine success.

Smart cities and buildings, like other businesses, must strive for supply chain excellence. Their supply chain must tie in end-to-end capabilities that align with a certain value chain or the overall ecosystem strategy. Only then can they hope to create efficiency through technology, better processes, systems, data or human productivity.

“In the future, organizations need to be able to make more deliberate choices and to make smarter decisions on how to serve customers. This means digitalization and supply chain excellence are no longer a choice. They are a must,” states Vorrath.

Only through the supply chain can businesses, cities and buildings, meet their real objectives. Industries such as retail have begun to realize this, and it is those retail companies that have embraced smart supply chain ecosystems, which are leading the sector. Those that haven’t are quickly being left behind. The same will soon be true of smart cities, buildings and homes.

“We live in a new world of an engagement, an ecosystem-driven economy where everything around us is changing exponentially. In the future a company will not only compete against another company. Every company is and will be part of an ecosystem and success will depend on how a company can create a strong and sustainable ecosystem that is able to compete and win in the marketplace,” says Vorrath.

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