Look out supply chain—Here comes the Metaverse

If you’re like many, if not most, people, you had one question when Facebook changed its name to Meta last October: What the heck is the Metaverse and why is Mark Zuckerberg investing in it? And, if you’re a supply chain manager, you might also have asked: If it’s a thing, how will it impact my supply chain?

To a certain extent, talking about the Metaverse can feel a bit like discussing the Internet in the 1970s. The building blocks of a new form of communication were in the process of being built and while it was clear the Internet was coming; it wasn’t certain then how deep or far reaching its implications were going to be.

The Metaverse, or the immersive virtual environment that supports various online interactions, has become an increasingly popular technology trend that is being pursued by various tech giants, not just Facebook. But what actually is the Metaverse? And, why are tech giants so interested?

The Metaverse

Broadly speaking, the technologies that make up the metaverse can include virtual reality— that is persistent virtual worlds that continue to exist even when you’re not playing—as well as augmented reality that combines aspects of the digital and physical worlds. This virtual world is now accessed through PCs, game consoles and even phones and not just through virtual reality (VR) or augmented reality (AR) devices. This makes the Metaverse device agnostic.

It also translates to a digital economy, where users can create, buy and sell goods. The unique blending of gaming, social, entertainment and e-commerce in the Metaverse has the potential to revolutionize consumer behavior.

Just looking at e-commerce, the Metaverse has the possibility of combining the best of both a store experience and customer service with the convenience of shopping at home. The immersive multi-dimensional ability to interact with the products, understand their features and attributes, get answers to any questions in real time before making a purchase, and still being physically at the location of choice could transform consumer behavior like nothing else.

For example, consider a customer looking to buy a new television online. Rather than visit various websites to look at brands and models online through pictures/text or even a video, the Metaverse elevates the same experience in a 3D immersive world. It’s a world where the customer can visit digital stores, get served by the store employees and actually operate and interact with the television selected before making the purchase. It’s today’s e-commerce shopping experience on steroids.

We already know that the human mind triggers the same emotional experience and responses in VR/AR as in real life. This perhaps explains Ralph Lauren’s decision last December to open a digital store to sell digital clothes and collections on Roblox, a platform with 47 million daily active users.

Even in its simplest form, the technologies that make up the Metaverse have the potential to revolutionize digital interactions with wide ranging impacts, not just on e-consumer but also on organizational behaviors and structures.

For this article, let’s touch on some of the impacts of this emerging technologies on supply chains.

Digital supply chains

Digital transformation is not a new supply chain concept; the leaders on Gartner’s list of the Top 25 Supply Chains are all engaged in a digital transformation of some aspect of their organizations.

Early digital transformation initiatives focused on low-hanging fruit, and were largely characterized by the digital connectedness of systems, tools and machines with a focus on better solutions, such as gaining visibility through the Internet of Things (IoT). This has mostly been physical-first in nature. Machines and systems connect to each other, and we use the connections to better understand the physical. But so far, the digital in digital transformation has been secondary to the physical.

The Metaverse, by contrast, is a digital-first world from the ground up. Where the goal of digital operations is to digitally enhance the physical supply chain, the goal of the Metaverse is to create a digital space that is then translated onto the physical world. It is lasting, stands on its own and interfaces with reality.

The question that naturally comes to mind is: If supply chains are traditionally built to buy, make, store and move physical products, would the shift to a digital first world made up of digital products and digital experiences diminish the importance of supply chains as we know them? Or, would the Metaverse elevate and completely redefine them?

I am believer in the latter. Let’s walk through some aspects of supply chain that would transform with these technologies.

Manufacturing

The Metaverse will make 3D and virtual tools accessible to general consumers. That could ignite a creativity and design explosion that will accelerate the trend towards the mass customization we have been talking about for some time now.

The Metaverse will also provide the ability to digitally simulate products, production processes and factories to optimize the allocation of assets across the supply chain, run production scenarios and even operator training in a more immersive environment. This avoids the start and stop of physical manufacturing facilities as well as long down times and learning curves in factories when there is a changeover in the product type being manufactured. This will have far reaching implications to fulfill consumer desires for customized products which have been challenging to produce cost effectively in traditional factories that were engineered for mass manufacturing.

Shortened product lifecycles

The Metaverse is a communal space for sharing ideas and ideal for collaboration. It would be incredibly easy for stakeholders within or external to a business to collaborate on the design of a new product, share it with manufacturers within the same environment and iterate based on feedback. That will shorten the product life cycle for new products and increase the speed of development of a workable design.

Efficient and transparent purchasing

The Metaverse will improve collaboration across all tiers of a supply chain, again internally and externally. That means collaborating not just with direct vendor’s vendors for innovating and cost engineering, but also enabling limitless and concurrent collaboration up the value chain. That connectivity will make the end-to-end chain more transparent and efficient, including having transparent and effective cost negotiations between buyers and vendors.

With wide-scale collaboration and more detailed, production-optimized designs, the margin of error for production would lead to improved product quality and service, as well as reduce customer churn and return rates. Further efficiencies can be realized with reduced costs for quality control and need for travel to vendor locations.

Supply chain transparency

Global supply chains are complex and difficult to understand, even by the most seasoned global SCM professionals. Recently, customers, investors, employees and stakeholders have been asking for more visibility into where raw materials are procured as well where and who is producing components and final products. Both corporate and consumer customers want transparency about the environmental and collateral impacts of the supply chains with whom they’re doing business.

The Metaverse will enhance supply chain transparency with 3D representations of how products are made, distributed and sold. This would also mean interested stakeholders will gain visibility into lead times, transit times, shipping delays and even real time shipping costs. This transparency and visibility will enhance the trust and effectiveness of supply chains.

Warehouse operations

The Metaverse is a 3D world. This environment will lead to better and more efficient warehouse designs and optimal locations. The unlimited collaboration offered by the Metaverse will also mean that every stakeholder, from worker unions to ESG and sustainability teams, will be able to have a dynamic voice in warehouse design. This can be simulated, experienced and improved in the Metaverse before the physical build, saving money and time from concept to reality.

If city governments and local bodies adopt Meta technologies, they could review and approve new designs and proposals in the Metaverse and copy the final approved design version to their own records for archives.

The Metaverse will provide a realistic environment where key operator training can take place without any disruption to the day-to-day operations and test any adjustments to warehouse flow and layout. Further benefits to warehousing will come in better space utilization, through dynamic space modelling, slotting and racking optimization as the volume of SKUs grows or product characteristics change. While optimization and slotting are always important, they are even more critical due to the trend towards smaller and even micro-fulfillment centers, where storage space is at a very high premium.

Let’s not get ahead of ourselves. We’re at the earliest of early stages in the development of the Metaverse. In the coming years, many new technologies will emerge and evolve, expanding the case for adoption. In my view, the true worth of any technology lies in how it improves the experiences of its users and customers. The immersive capabilities of the Metaverse offers the potential for huge benefits and applications.

One of my immediate tasks right now is the organization of a global vendor conference. As I work out the innumerous challenges of physical space and COVID travel restrictions, I can’t help but wonder, wouldn’t it actually be better if we meet in the Metaverse instead?

About the author: Roit Kathiala has led global supply chain teams at leading retail companies in Europe, Asia and North America and is an architect and advisor to leading companies on their product, supply chain, sustainability and digital strategies.

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