The Future of Supply Chain Management, Part 3

Stephen DeAngelis

December 20, 2012

Bill Vaughn once said, “The groundhog is like most other prophets; it delivers its prediction and then disappears.” No supply chain forecaster that I know claims to be a prophet. They understand how quickly something unexpected can occur that can change everything. And, unlike Vaughn’s disappearing prophets, supply chain forecasters stick around after making their predictions. The next brave souls to make predictions are Adrian Gonzalez and Steve Banker. Gonzalez admits, “Predicting the future has never in easy.” [“Supply Chain and Logistics Predictions for 2013,” Logistics Viewpoints, 19 December 2012] To remind readers how spectacularly wrong predictions can be, Gonzalez provides a couple of past examples. He writes:

“Back in 1943, Tom Watson, the president of IBM at the time, said ‘I think there is a world market for maybe five computers.’ And in 1995, Robert Metcalfe, the founder of 3Com and the co-inventor of Ethernet, made this astonishing prediction, ‘Almost all of the many predictions now being made about 1996 hinge on the Internet’s continuing exponential growth. But I predict the Internet will soon go spectacularly supernova and in 1996 catastrophically collapse.'” The bottom line is that even great leaders and innovators like Tom Watson, Robert Metcalfe, and many others don’t always get it right when it comes to envisioning the future. Steve and I take comfort in knowing that if we are completely wrong about our predictions for 2013, we’ll at least be in great company.”

Gonzalez is first to offer up his predictions. He makes eight of them.

 

1. Big Data, Social Media, Cloud Computing, and Mobile Technologies will continue to dominate the headlines.

 

Since we remain near the beginning of what has been called the Era of Big Data, I believe that Gonzalez is safe with first prediction. He calls these “dominating trends,” and I agree. He offers some quick thoughts about each trend. He writes:

Big Data: continued progress with predictive analytics and sentiment analysis, continued challenges with data quality.
Social Media: more startups, more acquisitions, more case studies.
Cloud Computing: the biggest value will come from B2B connectivity and the insights derived from network-level data and analytics.
Mobile Technologies: tablets and smartphones are quickly becoming the preferred computing platform for business professionals, and we’ll see more enterprise applications designed and optimized for these devices in the years ahead.”

2. User Interfaces for Supply Chain Apps Will Get a Social Makeover.

 

Supply chain analysts have been predicting for some time that social media capabilities will find their way into supply chain processes as companies try to collaborate better and increase visibility. Gonzalez believes that time has finally come. He writes:

“Software vendors will transform the look and feel of their user interfaces by adding capabilities similar to Facebook and Google + (think of creating ‘Circles’ of your carriers, suppliers, customers, and even other shippers), Twitter (to send short status messages), and Dropbox (for sharing purchase orders, invoices and carrier credential documents). The Holy Grail is a user interface that allows a person to access business intelligence information, execute transactions, and communicate/collaborate with others (via embedded email, chat, microblogging, video calls, and VOIP) all from a single screen.”

3. “Siri” Comes to Enterprise Apps.

 

Unless you’ve been living on a desert island, you know that Siri is an intelligent agent that has been embedded in an iPhone to help users obtain desired information more quickly. I agree with Gonzalez that voice driven artificial intelligence systems are now sophisticated enough to be of use in the supply chain industry. Gonzalez writes:

“Instead of manually executing tasks with a mouse or touch screen, why not speak them? We already see this in the consumer realm with smartphones, and in the warehouse too with voice picking technologies. It’s only a question of time before speech recognition gets embedded into other enterprise and supply chain applications. A TMS user, for example, can say to the system, ‘Show me all uncovered loads,’ or an inventory manager can ask, ‘Which stores have less than three days inventory of product X?’ and up come the results on the screen.”

Although that sounds like something right out of Star Trek, artificial intelligence-enabled systems are becoming more fact than fiction. Which is true in the area involved in Gonzalez’ next prediction as well.

 

4. The Robots Keep Coming.

 

I’ve written a number of posts about robots and how they are changing the business landscape (for example see Robots and the Future of Manufacturing and Managing Robots. Gonzalez writes:

“Amazon’s acquisition of Kiva was one of the biggest stories this year, which basically underscored the changing nature of automation in the warehouse. But robots and automation are playing a bigger role in other areas too, such as the rise of driverless cars and the use of robots to track inventory in stores. Where does that leave us humans? As Erik Brynjolfsson and Andrew McAfee from MIT state in their book, Race Against the Machine, ‘Our technologies are racing ahead but many of our skills and organizations are lagging behind. So it’s urgent that we understand these phenomena, discuss their implications, and come up with strategies that allow human workers to race ahead with machines instead of racing against them.'”

5. Continued Focus by Retailers and Service Providers on Innovating the Final Mile.

 

Consumers have come to expect perks like free shipping or the option to pay for same-day delivery. They want either a good deal or instant gratification. To remain competitive, retailers are biting the bullet (which can be expensive) and giving consumers what they want. Gonzalez writes:

“Amazon, Walmart, Google, eBay, and USPS all launched or ramped up their efforts to provide same-day delivery to consumers this year. … Earlier this month, Google acquired BufferBox, which provides lockers for customers to receive packages from online e-commerce retailers (very similar to Amazon Locker). Couple this trend with urbanization and omni-channel retailing, and you can see why innovating ‘final mile delivery’ will remain a priority for retailers and service providers in the years ahead. Optimization and mobile technologies will play an important role here, as will couriers and public transportation.”

6. Further Blurring of the Lines Between 3PLs, Tech Providers, and Consultants.

 

“Over the past few years, we’ve seen 3PLs offering technology-only solutions to customers, software vendors introducing managed services, and consultants offering technology and managed services in addition to their standard project-based services. As I said in a recent posting, a successful 3PL today is an operations manager, a consultant, and a technology provider all rolled into one. You can say the same thing for software vendors and consultants.”

7. Increased Adoption of Alternative Fuel Vehicles.

 

I believe Gonzalez will be proven correct with this prediction. As I noted in a post entitled Natural Gas Usage in Trucking Sector on the Rise, infrastructure is finally being put in place to support greater use alternative fuels. Gonzalez writes:

“Frito-Lay, UPS, Ryder, Sunny Delight, FedEx, Waste Management, Staples, AT&T, and Mohawk Industries are among the many companies that have started using alternative fuel vehicles — including natural gas, electric, and hybrids — in their transportation operations. The rising cost of diesel and sustainability goals have been the main driving forces, and they’ll continue to lead other companies in this direction in the months and years ahead.”

8. More Programs and Partnerships to Address the Talent Shortage Problem.

 

This may be one of Gonzalez’ safest predictions. A number of supply chain analysts, including Lora Cecere, have lamented that not enough is being done to attract, train, and retrain talented people. For more on that subject, see my post entitled More Supply Chain Talent Needed. Supply chain analyst Bob Ferrari also addresses this topic (watch for his comments in the next post in this series). Gonzalez writes:

“There is a shortage of supply chain and logistics talent in the industry. One way to address this problem is for companies to partner with local universities and community colleges to create training programs that align with their talent requirements. The partnership between TNT Express and Tilburg University is one example. Other examples include the AllianceTexas logistics park and its partnership with the Tarrant County College Corporate Training Center, which trains people to become certified logistics associates (CLA) and certified logistics technicians (CLT), and the partnership between MIT and the Zaragoza Logistics Center in Spain. Software vendors are also donating their solutions to colleges and even high schools to give students hands-on experience using supply chain and logistics software before entering the workforce.”

Gonzalez’ partner, Steve Banker, is next to offer up his predictions. His list is a bit shorter and covers some of the same ground.

 

1. Retailers will continue to address the challenges associated with omni-channel marketing.

 

Banker notes, “Omni-channel retail is a trend we have been talking about for a few years, prematurely for the most part.” Today, however, it is rare if a traditional bricks-and-mortar retailer doesn’t also have a large online presence. Banker continues:

“Retailers, particularly big box retailers, are facing pressure from two directions — Walmart’s low prices and Amazon’s e-commerce driven convenience. This year several of these retailers began reinventing themselves by embracing omni-channel commerce, which aims to deliver a seamless consumer shopping experience through all available channels — i.e., mobile devices, personal computers, bricks-and-mortar stores, catalogs, and so forth. For omni-channel to be successful, retailers need to address the appallingly bad inventory accuracy that exists at many stores. For years, retailers have bought automatic identification (AutoID) solutions to improve inventory accuracy in their warehouses. Next year retailers will make big investments in AutoID solutions to use in their stores.”

2. More social media in the supply chain

 

Banker agrees with his partner on this point. He writes:

“This year Infor (an ARC client) took a real step forward with its innovative new user interface. The Infor solution blends traditional process flows, in-line analytics, and logical opt-in social community groups. Social media is something that many logistics professionals still struggle with, but I suspect that many of them who view the Infor solution will be as impressed as I was. I believe we will see other software vendors providing the sincerest form of flattery by copying the look and feel of Infor’s user interface.”

3. More robots too.

 

Banker also agrees with Gonzalez on this point. He writes:

“Kiva is another successful company that others will copy. This material handling robotics firm was purchased at a high price by Amazon. We are already seeing material handling firms making questionable assertions that they also provide robotic solutions. But I think we will see innovative new autonomous, mobile robotic solutions emerge and gain traction in the coming year. Now here are a few predictions that I am certain of, although it might take longer than a year for them to come true. Mobile and autonomous robots will change the layout and look of warehouses. Traditional warehouses have 40 foot ceilings; robots can operate in facilities with much lower ceilings or even in multi-floor buildings. I believe we will begin to see traditional strip malls bought and modified (by adding new truck doors) into robotic warehouse facilities. This will often prove to be much cheaper than building a brand new warehouse.”

Banker’s prediction about mall conversion is fascinating; and, I’m sure will catch the attention of real estate management firms wondering what they are going to do with empty malls.

 

4. The backhaul challenge finally gets some needed attention.

 

Banker’s final prediction is that technology has finally advanced enough to address a serious transportation problem. He writes:

“The biggest optimization hole in logistics is around the difficulty of arranging for collaborative, multi-party backhauls. Too many trucks still go out full and come back empty. I believe transportation management systems with a multi-tenant architecture and new LinkedIn-style logistics communities will begin to provide us with a real solution to this problem.”

Gonzalez admits that there is so much going on in the field of supply chain management and logistics that the challenge is winnowing what to discuss down to a manageable number. With each new list that someone offers, the number of insights grows.