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Supply Chains Are Turning to Tech to Plug the Expectation Gap

May 15, 2017
Humans need to step up their game if they want to keep pace with their automated co-workers.

We're living in a golden age of supply chain technology, an era characterized by so many game-changing innovations and solutions that the very nature of the material handling and logistics industry has been altered. Scott Sopher, principal and leader of Deloitte Consulting's global supply chain practice, says that supply chains are evolving to something more like a digital supply network, one that is on-demand and always-on.

"As digital capability fuels customer expectations to unprecedented heights,"Sopher says, "the next-generation supply chain must be proactive and predictive, with all of its links interconnected and synchronized to the same drumbeat of consumer demand.”

Sopher, along with George Prest, CEO of MHI, recently produced the 2017 MHI Annual Industry Report and discussed their findings at last month's ProMat 2017 trade show in Chicago. Based on a survey of 1,100 supply chain and manufacturing industry leaders, the report disclosed pretty much what we already knew: thanks to customers expecting and demanding timely deliveries ("timely"generally meaning "right now”), companies are increasingly turning to emerging technologies to plug that "expectation gap.”

It's all about gaining and keeping a competitive advantage, Prest points out. Sixteen percent of respondents believe that the "always-on"supply chain has already become the predominant model for the industry, and another 64% think that model will be firmly in place within the next five years if not sooner. So companies opting to wait to see whether emerging technologies really have the potential to change their operations have chosen a self-destructive strategy.

The 10 technologies identified as those most likely to disrupt supply chains while providing a competitive advantage to those companies who are prepared for them are (in order of likelihood):

  1. Robotics and automation
  2. Predictive analytics
  3. Internet-of-Things
  4. Driverless vehicles and drones
  5. Sensors and automatic identification
  6. Inventory and network optimization tools
  7. Wearable and mobile technology
  8. 3-D printing
  9. Cloud computing and storage
  10. Blockchain.

While only 37% of respondents say they're currently using robots and automation within their facilities, that number nearly doubles to 71% over the next three to five years. The reason for the rise in automation is largely one of speed: quicker deliveries and omni-channel order fulfillment are requiring supply chains to become exponentially quicker to keep up, Sopher notes, and human workers just can't scale up like that.

Whereas the past couple decades of supply chain management have been characterized by an ever-widening search for cheap labor, we seem to be on the road to embracing an era of no labor. But that strategy won't really work, either, unless enough skilled workers enter the field to program and operate the robots and autonomous vehicles. Hiring and retaining a skilled workforce is the biggest obstacle confronting supply chain professionals, according to the survey, and half (50%) say that training their current workforce to use new technologies is a top priority. The talent gap also is widening as the adoption of automation increases.

However, Jeff Rufener, president of Toyota Material Handling U.S.A. Inc., points out that for all the current talk of fully automated warehouses, the conversation isn't exactly new. "We've actually been talking about automation for the past several decades, but it's never really gotten traction," Rufener reminds us. "Instead of focusing on reducing labor, we should be focusing on moving products and increasing picking volumes and velocity."

When you get right down to it, surveys tend to reflect what people think will happen rather than what actually does happen. While the Deloitte/MHI report clearly indicates that the need-for-speed is turning supply chains upside-down and inside-out, not every company in the world has the ability to throw large amounts of money at fulfillment problems the way an Amazon or a Walmart can do. While technology may ultimately prove to be an answer, that's not the same thing as it being the only answer. I suspect that the human element will still represent a huge part of the supply chain equation for quite some time to come.

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