The Digital Supply Chain and the Confluence of Emerging Technologies

Stephen DeAngelis

February 13, 2018

There is no denying we live in the Digital Age and logic dictates organizations need to transform themselves to take advantage of emerging technologies. Since supply chains are essential parts of most organizations, it follows supply chains must digitize as part of the transformation process. As the Centric Digital staff notes, “The key elements of any successful digital transformation of the supply chain include analytics, optimization and traceability. One of the most significant trends in the supply chain sphere is a movement toward relying on big data and sophisticated predictive algorithms to serve customers as well as internal needs. Companies that don’t — or can’t — take advantage of the coming digital opportunities in supply chain management run the very real risk of falling behind.”[1] In the digital transformation journey, more emphasis needs to be placed on transformation. Merely using a few digital technologies does not amount to transformation. Lora Cecere (@lcecere), founder and CEO of Supply Chain Insights, writes, “I writhe in my seat at most conferences and count the number of times the word ‘digital’ is used in presentations.”[2] She explains the reason she feels such discomfort is because “consultants and technology leaders are rebranding under a ‘digital umbrella’ without clear definition.” For Cecere, “the term digital supply chain is the transformation of the atoms and electrons within the supply chain to unleash new levels of value.”

The confluence of emerging technologies

Cecere asserts digital supply chain transformation requires leveraging the convergence of six technologies that rely on open source analytics. Those technologies are: cognitive computing; blockchain; the Internet of Things (streaming data); additive manufacturing (aka 3D printing); robotics (both physical and virtual); and wearables & mobility. She believes the convergence of these technologies will “define the autonomous supply chain; drive the availability of data at the speed of business for decision-making; [result in] the evolution of learning systems to sense, act and learn; and [help organizations create] outside-in processes/the automation of B2B value networks.”

Cognitive Computing

A survey conducted by Cecere’s company in late 2017 found that users and vendors believed four technologies would prove to be disruptive in the years ahead. They were: cognitive computing; blockchain; software robots; and drones. Cognitive computing’s disruptive potential lies in the fact it can affect operations across an organization. Cecere suggests planning and analytics are two areas where cognitive computing’s disruptive potential will be evident. She explains:

“The market for supply chain planning using linear optimization fades as companies start to replace current APS systems with prescriptive and cognitive analytics. The uncertainty around SAP’s APO strategy will drive the need for replacement earlier, pushing companies to test-and-learn with deeper and more meaningful engines. Traditional companies like Adexa, E2open, JDA, Logility, Kinaxis and OM Partners will play catch-up as new startups like Aera, Anaplan, BlueCrux, Enterra Solutions, Lokad, Solvoyo, ThinkIQ, and ToolsGroup define new capabilities for machine learning/cognitive computing. IBM Watson will not be able to mobilize fast enough to make an impact.”

How pervasive will cognitive computing become? Kevin Kelly (@kevin2kelly), founding Executive Editor of Wired magazine, tweeted, “In the very near future you will cognify everything in your life that is already electrified.”

Blockchain

Despite recent volatility in cryptocurrencies, blockchain technology is likely find a home in numerous economic sectors. In the years ahead, Cecere predicts, “Blockchain as a technology begins to redefine B2B and becomes the system of record for the extended value network.” Hailey Lynne McKeefry (@HaileyMcK) writes, “Distributed ledger technology, as blockchain is also called, boasts good security and a lot of promise. Supply chain professionals are bullish on the potential of the technology to give organizations who use it a competitive edge.”[3]

Internet of Things (IoT)

At last fall’s Gartner Symposium/ITxpo in Orlando, the company’s analysts predicted, “By 2020, IoT technology will be in 95 percent of electronics for new product designs. … Once this technology emerges, buyers will rapidly gravitate to Internet of Things-capable products, and interest in and demand for IoT-enabled products will rapidly snowball. Every supplier must, at the very least, make plans to implement IoT technology into its products, for both consumer and business buyers.”[4] The Digital Age is all about data and the IoT will provide the connectivity that connects device-generated data to cognitive analytics platforms that can make sense of the data.

Additive Manufacturing

The growth of additive manufacturing (i.e., producing products using 3D printers) has been stunning. Not long ago, 3D printers were a novelty that printed small plastic figurines. Today, 3D printers are producing everything from replacement parts to full-size houses. The benefits of additive manufacturing are numerous. First, production can be placed close to customers reducing transportation costs. Second, personalization and customization of products becomes cost effective. Third, entirely new designs are now possible. Finally, the number of materials that can be used is constantly increasing. Additive manufacturing will never totally replace more traditional manufacturing methods, but it will have a significant impact on how supply chains function.

Robotics and Automation

The changing nature of supply chain operations is especially evident in warehouses where autonomous robots now roam the floor. Robotics and automation will continue to change supply chain operations in the years ahead as drones, driverless vehicles, and co-bots enter the workforce. Software bots will also play a transformational role. Todd Smekens (@ToddSmekens) explains, “In essence, using robotic process automation in business allows specially-tailored software to mimic the activity of a human being to carry out various repetitive and routine tasks. Now, this doesn’t sound particularly revolutionary, as we have been automating functions for decades and have moved on to more sophisticated uses of AI. But one key differentiator of RPA vs. other AI is that this technology is run by a business owner or virtually any other employee — not just your everyday programmer. And these solutions are beginning to be rolled out at an enterprise level with tremendous success.”[5]

Wearables and Mobility

Wearables haven’t yet impacted the consumer market in the way many analysts thought they would but mobile technologies (especially smartphones) have had an even greater impact than anticipated. Companies will eventually figure out how these technologies can help make the supply chain more efficient. My prediction is wearable and mobile solutions will mature in tandem with the IoT.

Summary

Digital supply chain transformation involves much more than adopting a few digital technologies. Cecere writes, “Companies will begin to realize that ‘an Integrated Supply Chain’ is not a desirable end state. The reason? The traditional definition is too rigid. New approaches — using the confluence of new technologies along with innovation in analytics — will drive a more agile supply chain response.” Transformation connotes more than a little change. Transformation means a thorough or dramatic change in form or appearance. The confluence of digital technologies can be leveraged to make the transformation.

Footnotes
[1] Staff, “How Digital Transformation is Revolutionizing the Supply Chain,” Centric Digital, 30 June 2016.
[2] Lora Cecere, “2018: What Will It Look Like?Supply Chain Insights Blog, 18 January 2018.
[3] Hailey Lynne McKeefry, “Supply Chain Bets on Blockchain Benefits,” EBN, 9 February 2018.
[4] David Weldon, “Top 10 predictions for IT in 2018 and beyond,” Information Management, 10 October 2017.
[5] Todd Smekens, “Robotic Process Automation: Are You Ready for This New Digital Employee?,” Muncie Voice, 14 October 2017.