Supply Chain Transformation is Blowin’ in the Wind

Change is one of life’s constants. The supply chain is no exception to this rule. According to Jonathan Webb (@j_p_webb), Head of Strategy Research at Procurement Leaders, supply chain transformation efforts have the field aboil in change. He reports that a survey of procurement executives found “82% of procurement organizations were currently undergoing a transformation.”[1] What makes this finding so impactful, Webb asserts, is that “many within the business community regard procurement and supply chain management functions as perhaps among the least adaptive to technological change. This is even true of those within the department.” Stated another way, when the area least likely to transform is transforming, other supply chain areas must also be in the midst of a metamorphosis. According to Webb, the driver of all this change is technology. Some of those technology-driven changes will require supply chain professionals to update their skills as automation eliminates some jobs and creates others. Below are some of the technologies and trends altering the supply chain landscape and forcing change.

Warehouse Automation

It’s no secret many warehouse operators are automating their operations. Steve Banker (@steve_scm) notes, “Automation and robots will decrease the need for warehouse workers. ARC did a survey on investment priorities in the warehouse this year and about 15 percent of warehouse executives said that procuring autonomous mobile robots in the next three years was a priority for them. … There is a critical inflection point to watch for: at what point do the vision and tactile systems in robots make it possible for robots with arms to actually pick items off of shelves? Solving this is a very difficult technical problem. And I don’t believe that that there will be a robust solution to this in 2017. But when it is solved, we will start to see warehouse jobs disappear at a rapid rate.”[2]

Cognitive (or Autonomous) Supply Chain

“Big data and analytics already allow supply chain managers greater insight into their operations,” writes Abe Eshkenazi (@aeshkenazi), CEO at APICS, “which enables increased efficiencies and greater data-driven insights. The number of data sources in the supply chain is expected to grow exponentially, which will offer managers even more opportunity for contextual intelligence and more knowledge sharing across and between organizations. For example, with additional data, planning and decision-making will improve across an organization, which can lead to decreased costs and time spent on operations. Data-driven insights have the power to decrease risk, improve transparency, identify trends, and initiate automatic responses where it wasn’t possible before. The supply chain of the future will build on these benefits to become even more streamlined and efficient than it is now. However, it’s imperative that organizations are open to learning new processes for harnessing and interpreting this data, otherwise they may face intense pressure from more agile competitors.”[3] In the past, it took some imagination to envision a cognitive supply chain because discussions about cognitive computing, digital transformation, robotic process automation, and the Internet of Things (IoT) were still fairly new. As these technologies have matured the picture has become much clearer. Lora Cecere (@lcecere), founder and CEO of Supply Chain Insights, writes, “Cognitive learning’s potential to drive value is exciting. … Supply chains will learn as we sleep, and the insights will be deeper and richer with fewer people. It is coming. It is real. Are you ready?”[4] She believes it will eventually lead to an autonomous supply chain. She provides the attached graphic to show how technology leads to this outcomes.

cognitive-learning 640

The Internet of Things (IoT) and Supply Chain Visibility

Sufian Farrukh (@sufian_farrukh), a self-proclaimed Tech Geek and Millennial Professor, asserts, “What supply chains were missing can now be achieved with the combination of mobile computing, and cloud services, all of which are influenced by the rise of IoT. This will change how the delivery & fulfillment companies are performing their operations & related services. … IoT will also leverage the warehousing functions performed usually to store inventory. With the latest supply chain technology and IoT, a ‘smart’ warehouse will serve as a hub to boost efficiency and responsiveness throughout the supply chain. This will involve the role of wearables (smart watches) to sensors, smart equipment and other IoT devices.”[5] Supply chain visibility is one of the most important benefits of a mature IoT. Farrukh notes, “Managers will be able to know the real-time status of related operations. … Getting such information in real-time is a dream which will be fulfilled with the integration of IoT at all levels. This will enable managers to optimize their fleets by identifying potential problems as and when they occur.”

Blockchain and Secure Information Sharing

Secure information sharing has long been a desirable aspect of business transactions. Blockchain technology could help make supply chain transactions more secure. Analysts from Business Insider Intelligence explain, “Blockchain is a distributed database that serves as a secure and unalterable ledger of activity, enabling companies that use it to ensure accountability and reliability. … As more and more devices create mass quantities of data and companies aim to leverage the IoT to create and employ those data, security and accountability will be major hurdles. The incorporation of blockchain databases into IoT solutions could be one way to secure those data and ensure that devices are accurately registering and reporting information.”[6]

eCommerce and Logistics

This past holiday season demonstrated that eCommerce is on the rise and having an increasingly significant impact on logistics. Extrapolating this growth in eCommerce into the future, Banker notes that logistics systems could be in for a big challenge. “When it comes to e-commerce and logistics,” he writes, “when e-commerce goes from 9 percent of retail to 30 percent, how feasible will it be to deliver all those packages? This problem is also an opportunity. Large 3PLs, like DHL, are investing in drones and crowdsourcing solutions; and large automakers, such as Mercedes Benz, are investing in some very interesting last mile delivery vans.” Amazon recently applied for a patent involving airship warehouses that would deliver packages using drones. Fleets of driverless trucks are also predicted for the near future. The last mile challenge is only going to grow as a result of the increase in the digital path to purchase.

Summary

“Although we will never be able to predict the future,” writes Eshkenazi, “with a bit of extrapolation and foresight, we can try to imagine it. Today, advances in science, technology and supply chain management may only be constrained by the limits of our imagination and ingenuity.” The technologies discussed above are only some of the technologies that will change the face of the supply chain forever. How will it change the supply chain? No one knows for certain; but, borrowing from Nobel Prize winner Bob Dylan, “The answer, my friend, is blowin’ in the wind. The answer is blowin’ in the wind.”

Footnotes
[1] Jonathan Webb, “2017: The Year For Supply Chain Transformation.” Forbes, 30 December 2016.
[2] Steve Banker, “Supply Chain Trends To Follow In 2017,” Forbes, 15 December 2016.
[3] Abe Eshkenazi, “Envisioning the Future of Supply Chain,” EBN, 15 December 2016.
[4] Lora Cecere, “Not the Jetsons: Ten Use Cases for Cognitive Learning in Supply Chain,” Supply Chain Shaman, 7 December 2016.
[5] Sufian Farrukh, “How Internet Of Things Will Revolutionise Supply Chain,” Huffington Post The Blog, 12 September 2016.
[6] BI Intelligence, “Blockchain and IoT devices could revolutionize the supply chain,” Business Insider, 28 November 2016.

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