Alexa Cheater, Social Media & Public Relations Manager at Kinaxis, remembers fondly watching reruns of the Jetsons cartoon show while growing up. “So what does my nostalgic look back at my childhood have to do with the future of supply chains,” she asks. “Apparently everything.”[1] Well, not exactly everything. We really don’t have hovering housing complexes, flying cars, useful jet belts, and a number of other things featured on the show; but, new technologies are drawing us nearer to that space age world. Cheater explains:
“A recent report, ‘Technological Tipping Points’ by the World Economic Forum (WEF), takes a look into a crystal ball, examining the timing and impact of 21 ‘tipping points,’ which they describe as ‘moments when a specific technological shift hits mainstream society.’ A staggering number of those points are things straight out of the futuristic cartoons and early sci-fi series I loved growing up. Wearable devices, 3D printing, implantable technology, connected homes, automated workforces, driverless cars and smart cities are all on the list. And all of them, once they reach critical mass in the marketplace, will have a staggering impact on the future of supply chain.”
Cheater reports that the study “focuses on five shifts that will directly influence supply chain.” They are:
Sharing Economy — Cheater notes, “A sharing economy is basically a way to enable the optimization of resources through the redistribution, sharing and reuse of excess capacity in goods and services through collaborative consumption. … It’s not just individuals taking part. Big business are jumping on the bandwagon too — utilizing collaborative distribution, reverse logistics and cooperative sourcing to lower costs, improve efficiency and better optimize their supply chain.”
Internet of and for Things — Cheater reports that the WEF study predicted the tipping point for the IoT will be reached in just seven years. When that happens, she observes, “We won’t have enough readily available talent who understands S&OP, analytics and supply chain in the needed context. Smart machines, more workforce automation, and new ways to improve processes will be in place, but what about the education required to teach supply chain leaders how best to utilize these emerging technologies?”
3D Printing and Manufacturing — About the same time the IoT reaches its tipping point, the WEF also predicts additive manufacturing (aka 3D printing) will also come into its own. “The implications of wide scale on-demand production to supply chain are huge,” Cheater asserts. “Those on the manufacturing side will likely need to build new models that accelerate product development and reduce cycle times while finding new ways to lower cost. Not an easy task.”
Robotics and Services — Cheater notes that automation has already hit factory floors (to the tune of 1.1 million of them to be precise). “Everybody,” she writes, “had better get used to the idea. According to Gartner, 5% of companies with complex picking operations will be utilizing self-navigating warehouse robots in the next three years. WEF says by 2021, the automated workforce will reach its tipping point into mainstream and become the norm.”
Big Data for Decisions — “According to WEF,” Cheater writes, “in the next five years, we’ll see 30 billion Internet-connected physical devices, which will considerably impact supply chain operations. How? Data from these legions of devices will result in the ability for faster decision-making. And that means an easier way to ensure end-to-end supply chain health and performance. They say future analytics tools will ‘help make decisions and seize opportunities’ and data-driven organization will be able to access ‘real-time analytics depicting valuable metrics…’ So essentially businesses will have the ability to know sooner and act faster when it comes to critical supply chain decisions.”
The “future analytics tools” to which Cheater refers include cognitive computing systems. Cognitive computing systems are already capable of making routine decisions and are smart enough to know when a decision needs to be brought to the attention of human decision makers. Because cognitive computing systems learn as they work, the number of anomalies needing human intervention will shrink over time. Even if a company only trusts small decisions to cognitive computing systems, Arjen Heeres, Chief Operating Officer at Quintiq, believes those small decisions can have significant impacts.[2] He explains:
“Centralized planning, done well, looks at global orders and uncovers hidden opportunities for optimization by diverting and sharing resources company-wide. However, each decision has to take many things into account — and they aren’t always the same things. Rules, regulations, people and facilities vary from region to region, or even from factory to factory. That is why some hold fast to the belief that planning decisions should be decentralized. That is, made at a local level.”
One of the beauties of a cognitive computing system is that both company-wide and local rules, regulations, and tribal knowledge can be programmed in and the system can deal with conflicts and ambiguities to provide the best overall decision for the company. As Heeres implies, there are way too many variables for human decision makers to deal with. The one thing that all of the trends discussed by Cheater involve is data — big data. Annie Bustos, Director of Marketing at TechBlocks, offers seven benefits of using supply chain data that can promote new efficiencies and uncover hidden cost savings.[3] They are:
1. Managing pricing. Firms are utilizing big data from consumers to set pricing that seeks to get the most profit margins out of every product. They can also use data to correlate different kinds of products that can be sold/packaged together and then adjust their strategy to drive more sales.
2. Leveraging visibility. Big data is fundamentally about having visibility. Within the supply chain, companies can identify cost factors more easily when suppliers, product carriers, and end customer actions are all interconnected. Being able to spot trends and problems early in the supply chain allows companies to fix problems sooner and make adjustments on the fly.
3. Reducing wasted actions. Supply chain data can uncover inefficiencies in how inventory is moved from place to place, or in regards to how many entities need to touch an order before delivery is complete. Perhaps inventory can be more intelligently broken up and shipped to regional centers, or entire processing steps can be eliminated. Data that follows the entire chain of events helps to uncover these problems.
4. Enabling consumer customizations. Product data within the supply chain can be used to create new products or alter products to fit consumer demand. If a product is produced at scale, the costs of introducing a new version are often very low. A company might see data about the swelling orders for a certain t-shirt design, and then offer to produce new patterns or colors based on customer requests.
5. Working with a qualified partner. An integrated and data-driven supply chain makes it simple to move some tasks to a trusted partner. The review of data might show that outsourcing transportation planning or logistics to a third-party firm will result in more focus on revenue-generation, and an overall positive ROI.
6. Measuring Performance. The performance of an operation cannot be measured if there is no data. Reviewing performance metrics regarding inventory levels, on-time delivery percentage, and customer satisfaction helps companies to spot trends and adjust. Perhaps a certain product line is selling well but has a consistently late supplier or is a frequent return. Supply chain data can help management decide if the product line should be eliminated or if processes can be changed.
7. Consolidating Loads. Lowering logistical costs can be realized through analysis of shipping data and spotting areas where loads can be consolidated. Companies are using data to explore various methods, including shipping only on certain days or using truckloads that perform multiple drops for maximum efficiency.
A good cognitive computing system can help orchestrate all of those activities as well as ensure that all necessary data is available to anyone who needs access to it. It may not be exactly what was predicted in the Jetsons; but, back in the 1960s, the technologies and trends discussed above would have been just as amazing to supply chain professionals as the technologies depicted on the Jetsons cartoon show.
Footnotes
[1] Alexa Cheater, “Technology and the Supply Chain: What Does the Future Hold?” 21st Century Supply Chain Blog, 28 September 2015.
[2] Arjen Heeres, “The BIG impact of ‘small’ decisions,” Quintiq, 8 October2015.
[3] Annie Bustos, “7 Best Practices for Using Supply Chain Data,” Business to Community (B2C), 4 October 2015.
