Blog postsJune 20, 2017
What Is a Bimodal Supply Chain and Why Does It Matter?
The elephant in the room is "innovation." Is the bimodal supply chain the tightrope that gets your business to the other side?
It seems like every week in tech there’s a new buzzword—or macro trend that has the potential to change… everything.
The cloud. Big data. XaaS. CapEx vs. OpEx. Digital transformation. Innovation. Anything “real-time”… You name it.
Well after years of businesses evolving to accommodate new technology and buzzwords, these macro trends have found themselves intermingling with the supply chain.
Recently, a new one has found its way into our space: the concept of the “Bimodal Supply Chain.” First introduced by Gartner as a way to innovate IT Project Management, the concept of “bimodal” operations has segued to supply chain operations and logistics.
But what does it mean and is it worth pursuing? In this article, we discuss macro trends that have affected the supply chain before, what bimodal means and how it applies to this industry, and a real-world example of a bimodal supply chain.
First, what is “bimodal”?
Gartner defines “bimodal” as “the practice of managing two separate but coherent styles of work: one focused on predictability (Mode 1); the other on exploration (Mode 2).”
In project management, it means running two (or more) modes of execution to get projects done. It’s a departure from fitting every initiative into the same Gantt chart or methodology, and instead encourages businesses to evolve execution methods to fit today’s projects, which are inherently iterative and collaborative—especially in IT.
For the supply chain, the definition of “bimodal” is parallel to project management. Mode 1 in the supply chain pertains to operations that manage the known disruptions—seasonality or updating WMS systems. Mode 1 is for managing well-understood and predictable occurrences and strategizing around them.
Mode 2 in the supply chain is focused on exploring and experimenting new solutions that address and solve areas of uncertainty, such as solving for unexpected inventory swings and mistakes in product forecasts, weather and climate conditions, testing new markets, or the boss wanting to test drone delivery. For today’s market, strategies for solving the unexpected or adapting to new technologies are paramount.
Mode 2 operations are inherently experimental and have outcomes that are harder to predict. They require smaller, more collaborative teams, outside influencers or solutions, and a fail-fast attitude to see if they work.
To run a bimodal supply chain, the room to innovate or test new solutions is a direct result of optimizing Mode 1 operations. It also relies on having clear strategic objectives in mind for the business—testing new solutions for transportation; growing into X new markets; being more competitive in logistics by offering one- or two-day shipping.
But for many businesses, success and strategic vision ties back to customer satisfaction and retention. There is no supply without demand. In supply chains, a bimodal strategy is a powerful tool for addressing the widening divide between what supply chains provide and what businesses need to meet customer demands.
Where have we seen this before?
Since its inception in the early 20th century, the supply chain model has remained relatively linear. It wasn’t until the 1990s that it was disrupted by “lean manufacturing” methodologies designed to improve internal operations and eliminate waste throughout the production cycle.
For many, lean manufacturing principles rocked the foundation of many supply chains—disrupting and initiating redesigns for everyday operations that are still in practice today. Lean manufacturing has remained a perpetual improvement process. But it’s different than today’s disruption.
Lean manufacturing was built for internal improvements to the supply chain. It has been about cutting costs and updating processes to be more efficient. Over the years, lean manufacturing best practices have evolved to include the adoption of new, disruptive technologies; for example, migrating core business applications to the cloud. In fact, lean manufacturing—as it applies to bimodal—makes up Mode 1 operations in the supply chain.
Today’s buzzwords, especially bimodal, are about modernizing technologies and processes, but it’s less about improving the company from the inside out. It’s about meeting market demands through solutions that are both efficient and, sometimes, experimental.
Where does bimodal fit in?
eCommerce has changed everything. Bold statement, but it’s true. It’s revolutionized consumers’ buying behaviors and expectations, how retailers manage inventory and logistics, and how the supply chain manages production and distribution of goods.
The supply chain and retail as a whole have transformed from a linear buying process to a multidimensional one. Consumers—at any time of the day—can get on an Internet-connected device and order something. Fulfilling orders on a market that now runs 24-hours a day, 365-days a year can be complex, especially if retailers and brands want to maintain a competitive edge.
Today’s competitive differentiation comes down to the quality of product and speed of logistics—both of which directly impact customer satisfaction.
According to Gartner, in order to manage the oscillating supply and demand, supply chains must operate using both Mode 1 and Mode 2, or a bimodal approach.
Again, Mode 1 centers around traditional methodologies like lean manufacturing. It’s about taking a look at operations and continually improving efficiency and cost reduction, managing predictable swings and inventory fluctuations, and focusing on risk mitigation and prevention.
Mode 2 focuses on pockets of the business that can be tailored for more experimental initiatives. Mode 2 is about speed; it’s dynamic and iterative, and is used to test big-step changes before going full-speed ahead.
In today’s market, the bimodal supply chain puts companies in the position to keep the lights running and operations moving, with the leeway to test new logistics or solutions that will ultimately enable businesses to transform, adapt, and stay relevant.
Bimodal: Not for the faint-hearted
Implementing a bimodal supply chain will force many supply chain professionals to think outside the box and take some risks.
But for retailers and brands in today’s market, the truth is that these innovations to the supply chain are vital. In a world dominated by a handful of industry giants, winning business often comes down to innovative ways to keep your supply chain and logistics speedy… and cost-effective.
Customer expectations on product availability and fast fulfillment have been whittled down from 5-7 business days to same- and one-day delivery. Most business can’t afford to absorb those financials without an innovative way to meet demand. Using a bimodal approach, organizations can continue to run Mode 1 operations to managed fixed assets and resources, while employing Mode 2 techniques to test new fulfillment solutions, product promotions, and markets.
Mode 2 initiatives rely on a “fail-fast” attitude. If you’re going to try something, give it your all and if it doesn’t show promising returns, move onto the next.
A real-world example of bimodal
Gartner recently released the report, “For Supply Chain Executives: The Bimodal Challenge.” In the report, Gartner mentions FLEXE as a real-world solution for the bimodal supply chain.
With the FLEXE network, retailers, brands, and manufacturers can find on-demand warehousing and fulfillment services using our marketplace. With access to more than 500 warehouse partners, our customers can run Mode 2 operations, like popping up new fulfillment centers or testing new markets, with virtually no risk. Customers can leverage the FLEXE platform to test new distribution and fulfillment strategies without investing in fixed assets.
The way it works is simple, it’s a pay-as-you-go model, and there are no long-term lease commitments or broker fees involved. It’s the first marketplace of its kind and offers businesses a way to get products closer to customers without investing in fixed assets. The result is a dynamic distribution center that lowers shipping costs and times, speeds up delivery, and maintains your brand promise to customers.
Should you care?
Whether you call it “bimodal” or not doesn’t matter. But the supply chain is in the midst of a transformation that can’t be ignored. As eCommerce and mCommerce increase in market share, your supply chain and distribution strategy will have to become as dynamic and flexible as today’s buying options are.
For many companies, success will always come down to keeping customers happy. Today, much of that comes down to how the supply chain and logistics operate. Finding new solutions to expand your distribution and fulfillment network, improve supply chain planning, and increase the speed of logistics could be the difference between you and the other guy that chose to ignore all the signs.