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How to Deal with 'Always-On' Supply Chains

April 20, 2016
This new form of supply chain can boost productivity and sustainability, drive new markets, encourage innovation, and create new, high-paying jobs.

A host of potentially disruptive technologies are creating digital "always-on" supply chains that will provide better efficiency, visibility, and customer service across a variety of industries. It will also challenging companies to find the talent to manage them, according to a new study by MHI and Deloitte.

The 2016 MHI Annual Industry Report Accelerating Change: How Innovation is driving digital “always-on” supply chains was first released at MODEX 2016. The study is based on responses from 900 supply chain industry leaders.

The study identified eight technologies are enabling these "always-on" supply chains. They include:

• Predictive analytics

• Robotics and automation

• Sensors and automatic identification

• Wearable and mobile technology

• Driverless vehicles and drones

• Inventory and network optimization tools

• Cloud computing and storage

• 3-D printing.

A full 83% (up from 75% last year) of survey respondents believe that at least one of these eight technologies could either be a source of competitive advantage or a source of disruption for supply chains in the next 10 years.

In fact, respondents considered each of them to be an even greater source of competitive advantage and disruption than just one year ago.

Of these technologies the top four include:

  • 51%  Robotics and Automation
  • 48%  Inventory and Network Optimization Tools
  • 47%  Sensors and Automatic Identification
  • 44%  Predictive Analysis

The survey also found that two of these technologies (robotics and automation, driverless vehicles and drones) have already had a bigger and more rapid impact on supply chains than previously predicted. This accelerated pace of change is dramatically altering the way supply chains work, how they are managed, and how the always-on network is evolving.

With change comes challenges, and the top three challenges were:

  • 58%  Hiring and retaining skilled workforce
  • 57%  Customer demand for faster response time
  • 56%  Customer demand for lowered delivery costs

“The supply chain has become part of the customer experience,” explains Todd Farwell, who is with the Analytics and Innovation group for Caterpillar. Farwell says that companies need to “diagnose the fitness and health of our supply chains.”

Part of the changes in the future, says Farwell, is that warehouses will shrink. They will also become more flexible spaces.

Along with flexibility new models of operations will be created, according to Tim Brown, manager director, Supply Chain and Logistics Institute, Georgia Tech. He believes that the industry will look to crowd-sourcing for their transportation needs. Shippers can offer an open modal type of structure that is guided by predictive analytics. And carriers will benefit by making optimal use of their assets.

Supply Chain Talent Gap

While it is no surprise that there is a talent gap in the supply chain sector, the breadth of the need might not be apparent to all. By 2018 will be 1.4 million new jobs, according to U.S. Roadmap for Material Handling & Logistics.

When asked what the survey respondents about their concerns about the workforce, 58% said they face both a significant challenge in hiring and retaining a skilled supply chain. Training their workforce to use new technologies is a top priority for 56%. And 38% believe there is a lack of adequate talent to utilize technologies effectively.

The workforce has also changed its attitude explains Randy Bradley, assistant professor at Haslam College of Business, The University of Tennessee. “Young supply chain professionals want a challenge,” he says “not a job.” He cites the need for what he calls “purple people.” If the blue people have business acumen and the red people have skills sets, we need to combine the two to create purple people.

Farwell agrees with that point but explained it a little differently. “I want to hire people who are obsessed with customer service,” he says. And his workforce must be “owners of the process.” This attitude dovetails with the Millennial workforce desire to understand their role in the big picture.

Given the challenges of workforce and technology on the “always-on” supply chain the study suggested some action steps:

  • Prioritize workforce hiring and training strategies.
  • Take an “invest-test-and-learn” approach to adoption to gain familiarity with the new technologies, while building a framework for greater expansion.
  • Collaborate with trading partners and leading solution providers to bridge the gaps to the integrated, and digitized networks required for “always-on” supply chains.
  • Explore opportunities to leverage the technology to leapfrog competitors.

“The ‘always-on’ supply chain has the potential to deliver massive economic and environmental rewards for our industry and society,” says George Prest, CEO of MHI. “It can boost productivity and sustainability, drive new markets, encourage innovation, and create new, high-paying jobs,” Prest adds. 

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