Supply chains everywhere are under immense pressure. Driven by globalisation and customers whose power to dictate to suppliers is ever greater, supply chains in every sector and niche are becoming more complex and subject to greater degrees of risk and volatility. At the same time, technology is advancing apace and offering opportunities for innovation which supply chain organisations are seizing upon to remain competitive and meet the challenges they face.

Supply Chain Costs

Three Key Areas of Innovation

In the next 10 to 15 years, we can expect to see almost perpetual innovation in the following three aspects of supply chain management:

  1. Visibility: As supply chains grow in complexity, it becomes ever more necessary to follow the flow of materials, information and money through those chains in real time.
  2. Connectivity and collaboration: Few are the organisations today that can meet customer demand without collaboration. The next few years will see an increase in multi-party collaboration, supported by increasingly sophisticated webs of interconnected and interoperable systems.
  3. Automation: Many developed countries are suffering a depleting pool of talent from which industrial and commercial entities can recruit. If this situation continues, many companies will be looking at how much they can automate their supply chains to operate with fewer employees and less expense, without sacrificing customer satisfaction.

Taking each of these areas in turn, it’s worth looking at them in a little more detail, just to explore the trends we can expect to see as emerging technologies drive ideas and provide the means to turn them into practical reality.

 

1) Supply Chain Visibility

Supply chain leaders quite understandably spend a lot of time talking about visibility. However, few of them proclaim success in their efforts to attain it. Organisational silos all too often get in the way and when it comes to taking definitive action, cost containment seems to trump visibility every time in terms of invested capital and effort.

This is a shame, since improving supply chain visibility increases the opportunities to reduce cost. It’s all very well to say “what gets measured gets done”, but before you can measure anything, you must be able to see it.

There is however, a focal shift towards visibility that’s slowly gaining momentum. Add the fact that technology is ready and ripe for exploitation and we have every reason to expect that for example, combinations of RFID and sensors will play an increasingly important role in tracing the status of materials through the supply chain.

Seeing Beyond RFID

While it seems that RFID labelling and tracking has only recently matured into a mainstream feature of supply chain monitoring, we could soon be seeing it take the next step in its evolution. This will likely be in the shape of RFID labels with additional sensing equipment on board, offering more than simple confirmation of labelled items’ presence.

With active sensors on board, RFID labels will be able to provide valuable information about the status and condition of materials and products in transit. This is incredibly important, given current difficulties in ascertaining who should bear the cost of goods that are damaged or spoiled in transit.

Possible uses of RFID labels with on-board sensors include:

  • RFID with embedded moisture sensors to detect the onset of corrosion to auto parts
  • RFID tags with light sensors to identify when containers are opened without authorisation
  • RFID with temperature sensors to monitor transport and storage of vaccines and serums or temperature-sensitive foodstuffs

These “smart RFID” labels will be able to take measurements and time-stamp them, so supply chain companies can reconstruct events which led to product spoilage or damage—or possibly even to monitor those events in real time and intervene to prevent losses.

Smart RFID is just one example of how supply chain visibility may benefit from innovation. The innovations themselves will be enabled by the rise of the Internet of Things (IoT) which connects “dumb” objects, via sensors to monitoring software.

Other Supply Chain Uses of Sensor Technology

Outsourcing and Supply Chain InnovationAlong with enhanced RFID, other uses of sensors can be expected to increase across supply chains, from the factory floor to the premises of end-customers or even consumers. Inventory for example, will be able to count itself, enabling automatic replenishment and prevention of out-of-stock situations. Transportation units will transmit data relating to speed, location, load status and other vital information telling shippers and customers a real-time story of asset performance and location.

When it all comes together and sensors populate every aspect of the supply chain, all the way to the retailers’ shelves and beyond, real opportunities will exist to reduce latency by sensing, rather than translating demand. It’s unlikely however, that any one company will be able to leverage sensor technology effectively on its own. To ensure the picture is whole, we’ll need innovation to prevail in another area—connectivity and collaboration across complex supply networks, to share data and ensure material and information flows are seamless.

 

2) Connectivity and Collaboration

I’ve grouped connectivity and collaboration together, since in a supply chain context, one will not be able to take place without the other. Furthermore, both these elements are essential to achieve the total supply chain visibility facilitated by sensor technology. Innovation in supply chain over the next few years will not be purely technological, as companies must find ways to break down silos and work together to generate visibility and capitalise on it. If we don’t find ways to innovate in terms of collaboration between say, retailers and suppliers, all that sensor data will be of limited value.

Collaboration

CollaborationIronically, many of the answers to collaborative challenges do lie with technology. Think of the following example, which although not related to supply chain (except perhaps, incidentally), illustrates how important a part technology plays in commercial collaboration.

I’m talking about remote project management; a growing trend that transcends industrial sectors and international boundaries; one that connects teams of individuals from around the world to deliver project objectives. These projects are only possible because of advances in software and Internet technology, which enable project workers to share tasks in real time.

Perhaps we’ll find a way to use collaborative technology in supply chain in a similar way to remote project teams. Right now, technology can help with collaboration, but it also has its limitations. Strings of ERP platforms belonging to disparate organisations, no matter how well they interface, will not be likely to promote collaboration, although they may help to some extent with the sharing of data.

A more helpful development might be the adoption of cloud-based services which pool data en masse from participating supply chain players. A step beyond cloud-based ERP or SCM, these platforms will pull organisations together on single instances, controlling access with authorisation rules, but essentially putting hundreds of companies on one system, where data can be shared without the need for passing it via EDI.

Companies that wish to collaborate simply sign up to one of these services, while keeping their own IT platforms as isolated as they wish. They will also be able to decide what data they contribute to the pool and which other organisations they share it with. For want of a better term, we might call these platforms “digital supply chain hubs”.

ConnectivityFree supply chain and logistics training

If visibility is the key to cost containment, then connectivity is the key to visibility. Here we’re not just talking about connecting supply chain partners. That, as already discussed will be critical simply to enable effective collaboration.

When we talk about connectivity in the supply chain of the next decade, we mean everything being connected to everything. Machines will connect to machines. Dumb objects will connect to business information systems. People will be connected to those same systems, but in an ever less active and more supervisory capacity.

RFID will be used to trigger alerts from retail shelves, initiating a Kanban-style process which automatically calls for replenishment when shelf stocks get low. That in turn will trigger an order for replenishment of the store from the distribution centre, or perhaps directly from a supplier. Data from the same system will be utilised by forecasting software, to yield awareness of subtle trends and buying patterns and drive more accurate forecasts.

In a similar manner, transportation assets will be connected to business management platforms, sending constant streams of data which will feed into dynamic planning applications. Machine learning will allow these applications to utilise live data about delays, traffic conditions, and other environmental factors. As a result, logistics companies will be able to plan resources more effectively and improve on-time delivery, as well as to create more efficient routes, generating savings in labour and vehicle running costs.

In the warehouse too, connectivity will greatly surpass the degree to which it’s present today. The connected warehouse of 2030 will literally live up the term “connected”. MHE, operatives, inventory and even lighting and HVAC/temperature control will all be digitally linked, requiring manual management only by exception—that’s in those warehouses which aren’t completely automated and operating with the lights out.

 

3) Automation

Supply chain automation is already commonplace, although typically within larger organisations. Over the next decade or so, we’ll see the costs of robotic technology come down to the point where it’s within reach of smaller companies in the supply chain arena. Perhaps we’ll also see a lot more automated public warehouses and 3PL providers that specialise in lights-out warehousing.

These providers will be able to offer third party services at reduced cost, perhaps even linking into digital supply chain hubs to automatically move inventory out to loading bays in response to automated orders, as well as receiving and putting away automated replenishment orders, all on behalf of their customers.

Lest you concern yourself about what this will mean for the supply chain labour market, it should hardly prove to be an issue. Firstly, it may help to solve the global shortage in labour. Secondly, if multi-channel distribution continues to proliferate, there will need to be a lot more warehouses 10 to 15 years from now. Even if the workforce in each is only 20% of what we’d expect to see today, the real reduction in available warehouse work is unlikely to be significant, at least in terms of technical, maintenance and management personnel.

Automation Outside the Warehouse

Warehouse DesignWhile warehouse automation is already a mainstream feature, transportation is currently lying on the cusp of a technological revolution, as the buzz about drones and driverless vehicles continues to get louder and more insistent. In the next decade or so, it’s not unreasonable to expect that large goods vehicles will be equipped with a much greater degree of autonomy than they have today. Even if trucks don’t become driverless in that time, it’s probable that drivers will play a less active part in direct vehicle control and will even be able to spend periods of time in hands-off mode.

This might in turn lead to changes in drivers’ hours legislation, enabling vehicles to keep their wheels turning for longer; so reducing costs and cycle times. In the United States, the state of Nevada has already licensed autonomous trucks for commercial operation on its roads.

One particularly interesting innovation is the autonomous road train, which was the subject of a project successfully completed in 2012. The theory behind this idea is that trucks will travel in convoys or “platoons”, guided by a lead vehicle driven manually. The vehicles following the leader are linked electronically, allowing them to mimic the lead vehicle and therefore follow closely behind. Drivers in the following vehicles are present only to drive the last miles after the platoon breaks up. Otherwise they are passive occupants.

As with all things transport-related, the challenge for autonomous vehicles and unmanned aerial vehicles (drones) is getting past the legislative barriers and obvious wariness of the public. For that reason, we might not see vehicles go totally “driverless” in the next decade. Similarly, distribution by drone may be further off than some corporations (read Amazon) would like to think. That said, I suspect we will see drones become commonplace in distribution centres; used for building/yard/inventory inspections and similar utilitarian tasks.

 

Don’t be Surprised if You’re Surprised

It’s never easy to predict what will happen next year, let alone 10 years from the present time. All it takes is one innovation, by one organisation, in one area, for a chain reaction to take place. Then all the most educated predictions can be thrown to the wind. So don’t be surprised if a different supply chain problem proves to be the one where innovation proliferates. Visibility, collaboration and automation are simply good horses to bet on right now, based on needs within the supply chain environment and the available technology to help companies to innovate.

 

Rob O'Byrne -Logistics Bureau Group Managing DirectorBest Regards
Rob O’Byrne
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