Google and the Future of Supply Chain


Kevin OMarah, Contributor

February 18, 2016

This week Google, now re-named Alphabet, became the most valuable company on earth besting Apple for at a least one day.  No matter what happens the rest of this week, Google is sending notice that its place in world of business strategy is at the head of the table.  What it means for the future of supply chain is a speed up in all the disruptive and important technologies we are tracking.


Alphabet’s big jump this week was in part explained by success that the core Google search and advertising business demonstrated, especially in mobile.  The other part of Alphabet’s huge win was separately reporting operational and financial details of its empire.

The $3.5B spent on expeditionary projects like artificial intelligence, self-driving cars and high speed fibre to the poor can now be looked upon as high risk bets beside an amazing cash machine in search driven advertising.  Removing uncertainty allows investors to lower risk premiums.  Good for the stock price.

Part one of this story ties back to what the other mega-techs are doing right, which is ever more precise targeting of content to the customer moment.  Facebook, Amazon and Apple are all able to deliver a better use of your attention span than anyone else.  We pay for this with spending on advertisers’ products, and everyone wins.  It’s a content economy and Google might know more about what that means than anyone.


Part two is more interesting for supply chain people.  Google’s much talked about investments in autonomous vehicles for instance could have a significant impact on last mile logistics for e-commerce.  Route density, driver costs, and inventory placement all add complexity to a parcel system that consumers increasingly expect for free.  Fleets of drone delivery vehicles could enable new levels of efficiency and reliability, especially if deployed at scale.

Google has also bet heavily on robotics with a binge of acquisitions a few years back including Boston Dynamics and Schaft.  Little of the potential that this effort holds is making it to market now, but consumerized robots most certainly would change the equation of final assembly and delivery so vexing to supply chain planners.  Low cost, safe “collaborative” robots could impact supply chain strategies in retail, field service, healthcare and who knows what else.

Artificial intelligence also offers promise in supply chain as machine learning applications like predictive ordering, supply capacity commitments and risk event monitoring automate or enhance traditional human jobs.  Google’s recent AI victory in a game of Go shows that science fiction could soon be science fact with big implications for what we can expect from point-of-sale systems or warehouse automation.

The Power of Platform

Under all of this of course is an internal supply chain that plans, sources and builds Google’s data centres.  Like its counterparts in mega-cloud enablement Microsoft, Amazon and Facebook, Google drives innovation back up the high tech value chain.  It is not satisfied with even the most powerful off-the-shelf servers, network equipment, or even silicon.  Instead it designs and assembles componentry to its own specifications as part of an ongoing effort to stay ahead of consumer expectations for response time.

The parallel development of data analytics against 3+ billion searches per day means that Google knows more about what people are thinking than any entity in history.  Its recent success with advertising revenue proves also that the Android platform is thriving and an 85% smartphone market share says plenty about staying power.

Google’s supply chain strategy has been to physically enable a platform for curious humans to ask easily and expect a quick answer.  In terms of supply chain technology, this may be the most powerful demand sensing system ever built.

Trillion Dollar Market Cap?

Everyone knows Google owns our first loyalty when people have a question.  Still however, someone else owns the supply response.  Could we find ourselves ten years from now Googling needs that are then met by robots, drones or of internet-of-things enabled home appliances?  Why not.

In such a world Google could end up taking a penny every time we turn on the heat, have a bite to eat or get a haircut.

Don’t be evil!

This article was written by Kevin O’Marah from Forbes and was legally licensed through the NewsCred publisher network.

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