With a nod to Harold Leavitt, technology is the common thread that enables people to complete work in a process and ultimately transform business by highlighting fast, cheaper or better ways to meet the same or other unmet need.
During these dark days of ever-increasing infections among our population, the light at the end of the tunnel seems miles away. Without a doubt, gut-wrenching scenes of medical personnel struggling with limited resources and literally dying to save lives will bring about a better appreciation for those in this field along with scientists. Dare I say, this generation of middle and budding high schoolers may be attracted to these fields!
Clearly, we have broken processes – whether it is testing kits, masks, ventilators, hospital beds or shopping for food and staples – that can be improved. However, even as the first glimmer appears, industries and segments will likely have been or in the process of being transformed dramatically. Remember that most of the gig economy came to be or took off during the 2008/9 recession – Airbnb, Uber et al. While some of my limited (for brevity and quick read) highlights noted below are already happening in the selected sectors, I expect this to be turbocharged at the other end of the tunnel. Of course, domain experts are probably miles ahead of solving the problems that they best understand and will probably transform.
1. Transportation/Logistics/Supply Chain
Acceleration of direct to consumer in all industry segments will raise the cost-to-serve and consequently the dependency on last-mile delivery providers. This will likely result in a major re-think – more than we see today – of operational including distribution processes including the proliferation of micro-fulfilment centres, alternative delivery/pick-up locations.
Autonomous delivery – including driverless vehicles, delivery drones will become more mainstream with regulatory approvals more readily granted.
Farm-to-table has taken off the past few years providing a model for sustainable consumption, expect the same for several industries; not just for sustainability but closer to consumption. Central America, Eastern Europe and South & East Asia which were already at the forefront of such moves, will offer more incentives to attract industries and see more infrastructure spending with labour reforms.
Logistics companies will start to re-think grocery delivery and perhaps partner/acquire the existing hyperlocal players.
End to end supply chain visibility – including lower-tier suppliers to automotive and other multi-layered supply chains
2. Healthcare
The widespread proliferation of AI-enhanced tools for hospital systems, pharmaceutical firms will result in more streamlined and targeted health care delivery.
Telemedicine will become more widespread and user-friendly – wearable devices will begin to add more value – and we can expect the tech giants to make several healthcare acquisitions.
3D printing and other robotic innovations will become mainstream in this sector
A small number of medical personnel on the front lines of this pandemic will become entrepreneurs bringing to market systems, processes and products that will mitigate the challenges faced during this crisis. The challenge will be dealing with regulators and the entrenched hospital/pharmaceutical industrial complex who will lobby to hold back any regulatory changes.
There will be a rethink of private health insurance that has been clogging the system and adding to the misery. Perhaps there will even be a new appreciation for a market solution for healthcare that includes ALL in the US!
3. Retail
Supermarkets – Food & Grocery, the last to gain traction in online order and delivery, will be markedly different. Shopping services will have plenty of competition from new entrants, existing logistics players or the delivery arm of the supermarkets (expect acquisitions or greenfield projects which include multiple grocers).
Holiday shopping season was a walk in the park compared to managing the demand (at least for retailers that are open) and supply during these times; While the non-food retailers have not felt the supply disruptions, yet, the global disruptions will result in a comprehensive restructuring of the supply chain.
Industry consolidation will be a fait accompli. Amazon will most certainly be acquiring some home-goods/apparel retailers expanding their brick & mortar footprint.
Once the situation evolves, a majority of the apparel and home goods stores – close to urban centres – will become fitting rooms and micro-fulfilment centres not just for their brands but also for third-party sellers on marketplaces.
Just as Target bought Shipt we see the recent announcement of Costco buying Innovel Solutions, expect Amazon to double down on expanding its last-mile network through acquisition and even Walmart join the bidding wars.
4. Automotive
Will telecommuting minimize the need to have multi-car families? Will the dealership model finally face a precipitous decline? Or will wariness with crowded public transport – in urban areas – lead to newer transportation models? Will slowing customer traffic compel auto manufacturers to use online technology, including virtual reality to sell their wares?
Nearshoring of production, already in progress, will expand more rapidly. Dependence on China for brakes & steering components will diminish as more suppliers get closer to end product. Expect consolidation of Tier 2/3 suppliers
3D printing and newer technologies will significantly change the after-parts logistics market. Industry leaders will ensure that each new part/component have multiple sources in different geographies.
While industry experts will re-visit challenges of the past decades to glean lessons for this period, it is fair to say that this global disruption has no precedent, at least in our lifetime. In most economies, the lifeblood for both job and economic growth has been, whether you call them, mom & pop, small business, specialist shops or independent retailers. Unless they come back to life with their innovative ways to meet the customer’s unmet need none of these economies will survive. However, what keeps them humming is the growth and sustenance of anchor firms in all these industries whose survival will depend on a fundamental transformation to meet the new normal.
This is a guest post from Raghu Ramachandran of 13 Colony Global LLC. you can contact Raghu at [email protected]
