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Mhlnews 7241 Thinkstockphotos 480830308 0
Mhlnews 7241 Thinkstockphotos 480830308 0
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Disruption at the Speed of Supply Chain

May 9, 2016
Disruptive technologies will change the supply chain in many profound ways, but none of it will matter if the workforce can't keep up.

The word disruption used to carry a very negative connotation, being synonymous with words like confusion and rupture and chaos. I used to be a school teacher, back in the prehistoric days of my career, and if there's one thing teachers agree on (and there aren't many), it's that keeping a classroom free of disruptions is a good thing.

Today, however, disruption has taken on a whole new set of meanings, being more closely associated with concepts like innovation and sustainability and empowerment. Now, I would imagine teachers still frown upon unruly students being disruptive in their classrooms, but for businesses—particularly those focused on the supply chain—disruptions can have a positive and powerful effect. And it was those kinds of disruptions that dominated the conversation at the recent MODEX 2016 show in Atlanta.

Entrepreneur Peter Diamandis, chairman and CEO of the XPRIZE Foundation, opened the show with a keynote speech in which he stated in no uncertain terms that companies are thinking too small and too linearly. "You should be thinking in terms of exponential growth," he says. "Rather than aiming for being 10% bigger, you should aim for being 10 times bigger," a big-reach strategy that he describes as "moonshot thinking."

Exponential growth, Diamandis points out, will result from the adoption of exponential technologies, the kind that double in power year after year. He cites artificial intelligence, robotics and the Internet of Things as examples of technologies that are in rapid acceleration. "With faster, cheaper computers come unexpected, convergent consequences," he says. Pretty heady talk for a trade show best known for its exhibits of racks, shelves and conveyors, but then again, the logistics industry isn't exactly known for standing still.

Leaving no room for ambiguity in another keynote, Cisco's Jack Allen proclaimed  that "logistics is an industry that disrupts." As Cisco's senior director of logistics and manufacturing solutions, supply chain operations, Allen is in a prime position to both observe and participate in the digital revolution.

As he sees it, "We're at the threshold of a massive disruption, as digitization both creates and destroys existing business models." He cites a recent prediction that 40% of the companies currently on the Fortune 500 list will no longer exist within 10 years, due to the rapid advance of technology companies and the equally rapid retreat of old-guard companies that failed to respond to disruptive forces in their markets. (Kodak was referenced more than once by several MODEX speakers as an example of a company that allowed itself to be obsoleted.) "Change doesn't happen overnight," Allen observes, "but it's happening faster than ever."

That environment of rapid change has resulted in what Scott Sopher, another MODEX keynoter and a principal at Deloitte Consulting, refers to as the always-on supply chain. "Digitally-engaged consumers are always-on, and as a result, it requires an equally always-on supply chain to respond to their needs," Sopher states.

Sopher, along with George Prest, CEO of MHI, presented the 2016 MHI Annual Industry Report. Based on a survey of more than 900 supply chain industry leaders, the technologies that are most likely to either cause disruption or offer competitive advantage are robotics and automation, and driverless vehicles and drones. That's over the long term. In terms of what technologies have already been adopted, cloud computing and storage, and sensors and automatic identification (think Internet of Things) are at the front of the pack.

"The always-on supply chain has the potential to deliver massive economic and environmental rewards," Prest says. "It can boost productivity and sustainability, drive new markets, encourage innovation and create new, high-paying jobs. However, as with all change, the devil is in the details."

One of those details, which stands out like a sore thumb and threatens to undermine the kind of exponential growth Diamandis rhapsodizes about, is a lack of skilled talent, identified in the survey as the industry's biggest challenge.

Sopher recommends that companies take an "invest, test and learn" approach to the adoption of emerging and disruptive technologies, while building a framework that allows for expansion. The top priority, though, should be to "prioritize workforce hiring and training strategies."

"The growth in digital, always-on supply chains will only widen the talent gap that already exists in our industry," Prest adds. We need to train "a new breed of supply chain professionals," he says, that has the technical, analytical and problem-solving skills to adapt to a world of disruptive technologies.

In other words, the more things change, the more you need people who can change along with them.

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