The industrial economy is coming to an end and a very different economy is emerging – with new technologies, new business models, new roles, and a new mindset. The next economy will be focused on solutions, that are constantly changing and reconfigured in response to end users’ changing needs. A shift that is also driven by a mixture of the necessity to become sustainable and rapid technological development. What will this mean to the Supply Chain?
A new underlying logic for running the business
In the 19th and 20th centuries, the machine was a metaphor for society. Industrialization was based on automated, mechanical mass production, and capitalism with its focus on money and growth was the underlying logic of the economy. Then came computers, and with digitization came an economy that was based on bits and information – increasingly virtual and detached from the limitations of the physical world. The next transformation is moving toward a technological paradigm characterized by living systems and biology, which can support our well-being in the future in a stable and sustainable way. We will mobilize biology to deliver what we currently produce with fossil energy, chemistry, and mechanics.
Three connected transitions
According to Peter Hesseldahl, journalist, and author of the book “When technology comes alive, and life becomes technology” we will see three connected transitions when transitioning to the future.
- Our relationship with technology: New powerful technologies like artificial intelligence and biotechnology will change humans’ relationships with technology.
- Our relationship with nature: Our relationship with nature and the ecosystem must change from domination to partnership.
- Our relationship with each other: At the same time, we are leaving the industrial society and logic and moving towards a new economy based on other values than just money, and in which the distribution of power and wealth must be renegotiated.
The whole idea or basis for the above three transitions is, that they must turn out well for the entire transition to succeed in creating a thriving world.
Supply Chain to be seen as a living system
Digitization is reshaping the fundamentals of the Supply Chain. It changes the culture to one which is more adaptive, resilient, innovative, and customer-centric. The organization must be seen and function as a living system – not just a mechanical one.
Living systems are ecosystems. There must be a balanced interaction between the many different parts of the system, otherwise, it will collapse. If one wants to thrive in the long run, one must ensure that all other elements of the system thrive as well. Therefore, concepts such as circularity, resilience, and regeneration become essential. There is a wide range of characteristics and principles that recur in all living systems. Often, they are almost the opposite of the rules of the game we have created in the mechanical and digital economy. Also in the Supply Chain, as well as in the business in general, we must start acting in accordance with the principles of ecosystems.
Principles for re-imagining
How can we learn from how living systems work and use them as principles that are relevant to guiding and shaping the future approach? Here are a couple of examples that can help you re-imagine the Supply Chain in the living economy:
Example 1: Resources kept within the limitations of the ecosystem
An organization cannot function in isolation. It is supposed to be in constant interaction with the environment. The world consists of interconnected and interacting systems. Just disassembling and examining individual components will not provide an understanding of the relations and interactions. That could potentially mean that the Supply Chain must be configured within the limitations of the ecosystem. As opposed to today where resources are seen as abundant and inexhaustible.
Example 2: Ecosystems are circular
The waste from one process becomes raw material in other processes. An ecosystem consists of a multitude of creatures and organisms, each evolved to play a specific part in the vast streams that transform materials and energy into everchanging forms. It is a balanced interaction where everyone plays a part so as not to break the chain.
It would most likely mean an end to mass production and standardized solutions. Instead, it is time to invent instances- solutions for specific contexts. It will also mean an end to scaling and providing similar solutions to the whole world. We will see more diverse, decentralized, and local solutions. Manufacturing, and running of the operations in general, will be done on flexible platforms as opposed to fixed platforms, as we see it today.
Example 3: Reconnecting with each other is key
On the more social side, we will see an urge to reconnect with each other – and nature. An economic model where one simply gobbles up nature and spits out the waste is not sustainable- and likewise, an economy that consumes people to create money is not a durable strategy. The system needs to be balanced to create long-term well-being for everyone. We will hence see an urge to regain individual freedom to compete and create but in a new format expressed as responsibility and accountability. Humanity, empathy, and creativity are crucial competencies.
Welcome to the living economy
So, as mentioned in the beginning: The industrial economy is coming to an end and a very different economy is emerging – with new technologies, new business models, new roles, and a new mindset. The next economy will be focused on solutions, that are constantly changing and reconfigured in response to end users’ changing needs. It is also an economy shaped by very strong demands to reduce CO2 emissions and impact on the environment. It is a highly complex economy, which connects large numbers of players by using extreme amounts of data.
Interestingly, all of this leads to solutions that can best be described using mechanisms and concepts found in biology and living systems: Ecosystems, circularity, balance, feedback and tipping points, and adaptability. This has implications for Supply Chains, production, retail, and recycling: Atoms – physical products and materials will increasingly become local. Bits and data will be global.
Source: With inspiration from Peter Hesseldahl’s “When technology comes alive, and life becomes technology” published in Mandag Morgen and as a book.