Supply Chain Innovation — Part 2

Stephen DeAngelis

May 5, 2015

In Part 1 of this two-part discussion of a recent MHI/Deloitte report about supply chain innovation entitled “The 2015 MHI Annual Industry Report Supply chain innovation — Making the impossible possible“, I discussed technologies in the first of three technology categories identified by the authors — maturing technologies. Technologies included in that category included: inventory and network optimization tools; sensors and automatic identification; cloud computing and storage; and, robotics and automation. In this article I will discuss the remaining two technology categories identified in the report: growth and emerging technologies.

 

Growth Technologies

 

The MHI/Deloitte study asserts that “early adopters [of growth technologies] may gain an advantage over their competitors. The two growth technologies discussed in the report are predictive analytics and wearable and mobile technology.

 

Predictive Analytics

In an article entitled “Predictive Analytics becoming a Mainstream Business Tool,” I noted there is some confusion concerning the difference between forecasting and predictive analytics. In that article, I indicated that one difference between the two is granularity. The MHI/Deloitte report states:

“Predictive analytics is the application of advanced statistical analysis of structured and unstructured data sources to identify patterns and predict future events or outcomes. For example, predictive analytics can provide companies with a look into the future and give them opportunities to identify emerging patterns in the marketplace that can lead to highly effective and personalized customer engagement strategies. Companies are no longer limited to looking in the rearview mirror to see what happened after the fact. Instead, they can take their data, and in some cases pair it with third-party data, to do predictive modeling and scenario analysis.”

The report adds, “Predictive analytics lets supply chain managers manage inventory better, plan more reliable transportation networks and reduce variability in lead times. This can enhance service levels, lower costs and improve the bottom line.” Dave Blanchard (@supplychainDave) reports that some companies are already using predictive analytics to improve their supply chain visibility.[1] He explains:

“Not that long ago, supply chain visibility tended to be an internally-focused process, one that allowed manufacturers to know when exactly they could expect to receive inbound goods and materials from their suppliers so they could plan and adjust their production schedules. While that’s still an important capability for companies to have, the Age of the Consumer has shifted the focus of visibility initiatives in the direction of the customers. Manufacturers still need a complete view of their supply chain as it exists now, of course, but just as crucial is being able to know where their supply chain needs to be. And that’s where predictive analytics come into play.”

 

Wearable and Mobile Technology

Mobile technologies (especially smartphones) have been changing the face of business for several years. Wearable technologies, on the other hand, are still in their infancy. There can be little doubt, however, that the future of wearable technologies is bright. The MHI/Deloitte report provides an excellent overview of the future.

“Wearable and mobile technologies give people convenient and immediate access to information wherever they happen to be working. Mobile technology includes smart phones, tablets and other wireless devices that have become ubiquitous in recent years. Wearable technology is a new product category that includes smart glasses and watches as well as voice-directed, hands-free wearable scanners. These devices give the people who wear them ready access to a world of information and can also collect and display data about the wearer and surrounding environment. Transportation devices, such as on-board or in-cab computers, are another arena where mobile devices are gaining traction. Near-real-time data such as routing information, signature captures for proof of delivery, and driver hours of service can bolster efficient operations and improve customer service. The ability to track where vehicles are located provides more accurate and timely information about where assets are at any given time. These devices can also capture real-time traffic information and suggest alternate routes to avoid delays. They provide geo-fencing to confirm an appointment automatically once a truck moves within a certain distance of a DC. This capability can improve delivery times and help set customer expectations with more accurate ETAs. Applications for wearable devices such as smart glasses are still emerging but have significant potential for desk-less workforce applications. They enable real-time information to be overlaid onto actual work environments through a hands-free, intuitive interface. Manufacturers, distributors and their partners are experimenting with these technologies to expedite processes, improve worker safety and increase transparency within the supply chain to proactively free up potential bottlenecks.”

 

Emerging Technologies

 

The MHI/Deloitte report distinguishes between growth and emerging technologies by noting that emerging technologies “may significantly disrupt their industries over the next six or more years” whereas growth technologies will definitely have an impact in the near future. The two technologies the report places in the emerging technologies category are 3D printing (aka additive manufacturing) and driverless vehicles and drones.

 

Additive Manufacturing

Had I authored the MHI/Deloitte report, I probably would have placed additive manufacturing in the growth technology category. As I have noted in several past articles, additive manufacturing is already having an impact in some industries (see my latest article “Additive Manufacturing’s Future Still Looks Bright“). The report states:

“3D printing can be a potentially disruptive force because the barriers to manufacturing (requiring investment in infrastructure) are effectively removed. For example, a small firm can now create a 3D computerized model of a toy and then send it to a 3D printer locally or even around the world to China for production. 3D printing changes the concept of economies of scale by providing the ability to customize at no incremental cost and produce fewer items at lower cost than with assembly-line production. Perhaps the real news in 3D printing is the capability to print quickly with high-performance metals. That capability will be of great benefit to companies that need to decrease the time between when they complete the initial phases of product design to the prototyping and refinement phases.”

 

Driverless Vehicles and Drones

 

Autonomous vehicles are coming on land, in the air, and over the sea. It’s just a matter time. The only thing that will delay their widespread adoption is the public’s concern about safety. The MHI/Deloitte report asserts, “Self-driving vehicles and drones use a variety of technologies including cameras and advanced driver assistance systems to handle some or all functions of operating a vehicle. By 2017, 20% of logistics organizations will exploit drones as part of their monitoring, searching and event management activities. What’s more, by 2030, vehicles capable of driving autonomously are expected to represent approximately 25% of the passenger vehicle population in mature markets.” As logistics professionals know, there is currently a shortage of truck drivers and that shortage is not predicted to ease. Undoubtedly, that fact will help speed up the adoption of driverless trucks.

 

Scott Sopher, a principal with Deloitte Consulting, states, “I believe that we are at the dawn of an innovation wave that will soon hit the material handling industry. The convergence of big data, faster and cheaper computer power, and the increasing demands of customers will accelerate the growth of innovative products and services in the material handling industry.” The MHI/Deloitte report concludes: “The non-stop spiral of higher service levels at lower prices is pushing supply chain capabilities and infrastructure to the breaking point. Companies that continue to rely on traditional supply chain models will likely find it increasingly difficult to stay competitive and meet customer expectations for orders that are complete, accurate and on-time.” Supply chain professionals have always had to be creative in order to improve service while keeping costs down. Fortunately for them, new tools can now be placed in their kit to help them innovate even better.

 

Footnotes
[1] Dave Blanchard, “Predictive Analytics Let Manufacturers See More Clearly into their Supply Chains,” IndustryWeek, 27 March 2015.