How has the ‘Amazon effect’ changed tech-adoption in supply chains?

Global supply chain

By Purva Aggarwal, Private Equity Wire – The pandemic has accelerated underlying technological changes which were anticipated in supply chains with respect to software and technology adoption, according to Dave Dolan, managing director at corporate finance adviser DC Advisory.

“The Amazon effect has changed consumer needs of wanting products delivered in a day or two versus what five years ago would be a week,” commented Dolan.

Other catalysts include supply chain and delivery mechanisms across industries requiring real time speed and visibility, location tracking, digitisation and minimum human to human interaction requirements during the current Covid-19 crisis.

During these unprecedented times, software and technology have enabled supply chains to reroute services from concentrated verticals such as hospitality and hotels to hospitals and pharmaceuticals.

Dolan also emphasises the fact that supply chains of the transportation industry will witness a changing capex environment accompanied by tighter margins in the future. There will also be an increased focus on optimising efficiency and maintenance of existing capex inventory using software and technology, rather than purchasing a replacement.

This is significant due to the “ripple effect” which leverages the high interconnectedness of mobility in supply chains, as, in Dolan's view,  a delay or breakdown in one segment of the supply chain would have a multi-field impact across the business.

He also believes that investors in the transportation industry seem to benefit from a 'flight to quality’ trend as they are currently witnessing good underlying trends.

However, they are likely to operate from a level of familiarity when it comes to deal prospecting and transaction management, as it is difficult to forge new relationships during the current home-working environment.

Overall, Dolan is cautiously optimistic about the future, saying: “The pandemic will have a positive effect on the industry as it will improve and increase technology to solve many complexities.”

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