By Till Dengel, VP of Product Marketing for Logistics, SAP
The logistics landscape is undergoing a massive transformation, driven by fast-shifting market needs, global trade tensions, and new tech breakthroughs. These are not only changing customer expectations but also disrupting long-standing logistics paradigms. The real question today is not just about squeezing out efficiency anymore, but about building supply networks that are agile, transparent, and intelligent from the ground up.
SAP’s Global Head of Product Marketing for Logistics, Till Dengel, puts it well in The Future of Supply Chain podcast: “What we’re witnessing isn’t just fixing problems here and there, we see a fundamental, deep shift at the very core of logistics.” For companies ready to rethink how they operate, there’s a real chance to turn supply chains into engines of growth, not just cost centers.
Winning customer loyalty by moving inventory closer to their doorstep
Companies are shifting from traditional large scale distribution centers to distributed networks that bring inventory closer to customers. The rise of these networks reflects a broader shift toward hyper-localization, where speed and proximity are key competitive advantages.
“Instead of one big warehouse far away, many small, satellite warehouses spread out make supply chains faster and more flexible,” said Dengel. “Businesses that use regional hubs and local stores as mini-fulfillment centers are preparing for a future where being quick and close to customers is key to success.”
If you’d like to learn more about how businesses can reimagine logistics operations for a future-proof supply chain, here is everything you need to know.
Because in a world where my Amazon seems to know what we want to buy next week better than we do, having those future products nearby ensures we get them faster, either directly in the customers’ hands or available quickly at stores.
“But this is not solely about delivery speed,” Dengel adds. It symbolizes a mindset shift, the acknowledgment that quick and reliable delivery information is where the battle for customer loyalty is truly won or lost. By bringing inventory closer and leveraging cutting-edge automation, companies are resetting expectations for what fulfillment can look like in a world that demands “now” over “next week.”
Businesses use integrated logistics platforms and real-time visibility tools that connect distributed warehouses, trucks, and stores. This connectedness enables companies to respond quickly to issues such as traffic delays or low stock, while also reducing waste. Distributed networks cut long-haul shipping, lower fuel use, and minimize packaging, making supply chains not only faster but also more sustainable.
“Leaders who invest in strategic warehousing and logistics networks are investing in a future built on both responsiveness and relevance,” said Dengel. “Technology offers us visibility, but true supply chain mastery demands connectivity.”
Connectivity is a catalyst that turns visibility into results
Regionalization through connected inventory systems is no longer just a competitive advantage; it has become a strategic necessity.
Imagine that, with a busy holiday season right around the corner, order volumes surge, and customers expect lightning-fast fulfillment. If one of the fulfillment center’s shelves runs low, the nearby centers can spring into action and help fill the gap. This prevents businesses from relying solely on distant warehouses.
Local hubs can respond instantly to meet demand, resulting in significantly faster deliveries, reducing pressure on shipping networks, and ultimately satisfying holiday shoppers. This operational model is part of a larger trend towards blended fulfillment strategies, allowing companies to select from a range of approaches to improve their local and in-store capabilities.
“The challenge is to transform disparate data points into actionable insights that drive fulfillment decisions in real-time,” said Dengel. “The companies that succeed will be those who can see their inventory not as isolated stocks; they view inventory as a dynamic network of resources that must be orchestrated continuously to meet customer needs while optimizing costs.”
This connected mindset breaks down silos, replacing rigid hierarchies with agile ecosystems, supply chains that are as nimble as they are efficient. Because the true resilience comes from end-to-end integration, where inventory visibility merges smoothly with transportation coordination, turning black boxes for the customer into smooth, reliable delivery information that fuel ongoing customer loyalty.
Bridging the gaps with multi-tier distribution networks
“Imagine placing an international online order where the German 3PL that is doing the final mile – can’t access the French 3PL’s system that is doing the main leg,” said Dengel. “That results in a breakdown of the process and information flow. Without seamless digital connectivity, these complex networks risk becoming bottlenecks rather than competitive advantages.”
This is a common challenge because managing multi-tier distribution networks involves coordinating numerous warehouses, logistics providers, and transportation modes, each with its own system and processes.
This complexity is precisely where business AI can add significant value. However, AI’s effectiveness depends on a strong foundation of clean, integrated data across all tiers – from local-fulfillment centers to large distribution hubs.
“We’re seeing companies trying to establish an orchestration layer using AI to fetch data from one system, translate it, and feed it into another, stitching together the different parts of the supply chain,” said Dengel.
AI already supports practical tasks, such as automating order creation, workforce optimization, and routing efficiency.
The next big step is agentic AI, according to Dengel – intelligent agents collaborating autonomously. For example, a customer service agent who retrieves information could then trigger another agent to ship goods.
However, if warehouses aren’t digitized or there is a lack APIs to execute AI’s instructions, AI agents will be of little help. Digitization and integration at every tier are essential to unlock AI’s potential for orchestration.
When companies utilize AI in conjunction with robust and connected logistics execution systems, only then can they transform complex distribution networks into flexible, reliable, and efficient systems, which enables them to enhance service and mitigate the risk of problems.
A bold call to action for supply chain leaders
Leaders today face a critical imperative: to drive transformative change in supply chain operations, rather than settle for incremental improvements. This requires strategic investment in digitizing also small facilities in logistics networks to bring real-time connectivity across all inventory tiers.
“It’s more and more the trend to be agile, and in order to be agile, you need to digitize some of the business that’s not yet fully digital,” said Dengel.
Those who rise to this challenge will not only prepare their supply chains to deal with volatility but also unlock unprecedented commercial agility and customer intimacy. The opportunity is vast, but so is the imperative to reimagine what supply chain excellence truly means in 2025 and beyond.
If you’d like to learn more about how businesses can reimagine logistics operations for a future-proof supply chain, here is everything you need to know.