Digitized Supply Chains Take Center Stage
IoT and AI-enabled supply chains help businesses win in ecommerce.
The benefits of a digitally enabled supply chain are well known and well documented, but many organizations leave value on the table by continuing to treat the supply chain as a support function and nothing more. Supply-chain executives themselves hold this idea. A recent research report from Accenture revealed supply chain executives were more likely to view their role within their organizations as a support function (68%) or a cost-efficiency driver (60%) than a growth enabler (53%) or a competitive differentiator (48%).
But in an age in which customers demand personalization and speed to market, supply chains could be so much more. In fact, thanks to the IoT (Internet of Things) and related technologies like big data, data analytics, blockchain, and AI (artificial intelligence), among others, it’s not technology that’s holding supply chains back, it’s often leadership.
Accenture says 43% of CSCOs (chief supply-chain officers) point to a lack of a clear business strategy for their function’s inability to drive value for their organizations, while 48% cite an inadequately skilled workforce and 44% cite incompatible legacy systems.
Change isn’t easy, though, and historically, the supply chain was the last place scarce capital was allocated, says Tim Lindner, a senior business consultant with a leading supply chain software company.
However, this began to change when Amazon came along. The Amazon Effect, according to Investopedia, refers to the impact created by the digital marketplace on traditional brick-and-mortar business models.
When Amazon set up shop in the 1990s, it started making waves that would turn the tide in retail and supporting sectors, including logistics, supply chain, and manufacturing. Lindner says businesses quickly realized that to compete with Amazon, order fulfilment costs had to be dramatically reduced, and technology improvement was the only way to do this.
A fourth reason a device may be abandoned by its original developer is cybersecurity. “When a product has a cybersecurity issue, a company may decide to abandon it, especially if updating is difficult,” adds Sarma. Whether a product has a security issue before abandonment or not, these devices can become unsafe after they lose support. When devices are left to their own devices, stranded without access to software updates and security patches, these devices are left exposed and their end users left vulnerable.
Supply Chain Tech Opps
In reverse-engineering a supply chain, there are myriad opportunities for technology or, depending on the company, technology improvements. In the case of, say, romaine lettuce, Lindner first points to tech opps in the produce display case at the supermarket. There are water misters on timers or sensors, shelf labels with barcodes customers can scan with their smartphones for price and product information, and, in the near future, technology allowing customers to check out without going through a register.
Before the display case at the supermarket, connectivity had already impacted the produce’s journey to and from the retailer’s DC (distribution center). “The product arrived in a trailer that is temperature-controlled,” Lindner explains. “This trailer has a cooling unit with sensors that report on its ‘up time.’ The driver has GPS through his smartphone.
Tech Challenges and Planning
Peggy is joined by Carol Bartucci, president, Crisp Consulting, who says her goal is to really help people with IT—including developing a strategy and planning. She says companies can do a five-year plan, but they have to be constantly reevaluating it. She says it is good to do pilots and proofs of concept and it is essential to have integration with existing systems. The reality is people don’t like failure because it sets them back and there is a loss of money, but sometimes companies have to go through multiple iterations. She suggests setting expectations. Still, she says the challenge is companies take a leap, buy new technology, invest in a new product, and it doesn’t deliver—and it takes months for it to work. When it comes to women in the industry, she says women don’t understand the roles. Today, we need to get more people to be involved—and high school is almost a little bit too late. Finally, she says trying to get everyone to agree on a forward path is hard. crispllc.com
The truck may have sensors that report its ‘up time’ to the fleet manager. Inside the trailer, there may be RFID (radio-frequency identification) sensors on the products and around the truck, continuously recording the ambient temperature to a monitoring system via a cellular or satellite network. Before the trailer left the DC, the store was sent a notice of every item it would receive and the approximate delivery time. This information was generated from the DC system on a server and travelled over an Internet network to a server in the store.”
By the end of 2020, what role will the supply
chain function play in your organization?
Source: Accenture – Is your supply chain in sleep mode?
Back it up even further, and the list of opportunities for connectivity gets longer. For instance, before the lettuce got to the DC, it had arrived on a truck from the grower/processor, and technologies like RFID sensors and other sensors embedded in equipment were probably used to monitor the DC environment, as well as the truck transporting it there in the first place. Before that, the lettuce was seeded, grown, and harvested with the help of sensors monitoring temperature and moisture, and informing water distribution systems to turn on or off as required.
Jett McCandless, CEO and founder of project44, a platform provider for shippers and third-party logistics firms, says the IoT is set to revolutionize the supply chain thanks to all of the opportunities for operational efficiencies and new levels of actionable data connectivity, accuracy, and transparency within each link.
Applying IoT to BI
BI, or business intelligence, is changing, as a result of the IoT (Internet of Things). Data is a new kind of currency in today’s connected world, and it seems like just about everything we do in life and business generates data and it’s not just humans that are generating data. We are seeing all kinds of connected machines and smart devices generate unfathomable amounts of information every minute of every day.
AI Data Predicts for the IoT
Advances in AI (artificial intelligence) is having a profound impact on the IoT (Internet of Things) and it’s one of the most exciting ways our world is changing today. It’s frequently listed as one of the top areas of growth and innovation. We are all witnessing a historical shift in how we view machines, how we rely on them to complete tasks, and how we derive value from AI-enabled insights.
IoT and the Supply Chain
The challenges and opportunities for digital supply chains are vast and that is why the IoT (Internet of Things) and AI (artificial intelligence) is stepping up to play an even greater role than ever before. It wasn’t that long ago when the supply chain wasn’t a priority when it came to capital investments. And, supply-chain executives themselves were considered as nothing more as a support function.
Retail Takes on AR, VR, and the IoT
There is a lot of discussion about how AI (artificial intelligence) is impacting supply chains and with good reason. So for this column, I thought I would focus specifically on the retail sector, and take a deeper dive into how emerging technologies like AR (augmented reality) and VR (virtual reality) are playing a key role at both frontend and backend processes.
Security: I just can’t say enough and there’s even more to say when we talk about it coupled with blockchain technology. For this column, let’s delve in to how blockchain is being used globally to increase security in all kinds of situations—from peer-to-peer energy transactions to national elections and everything in between.
First, though, it’ll take a mindset shift on the part of leadership. “As the shipping and logistics industry continues to face significant technological disruption, including the increasing use of data and analytics, automation, and (the) IoT, it is imperative that we find new ways and processes to lead our businesses,” he says.
In today’s connected world, the rules have changed. McCandless says it’s no longer about businesses growing or not growing; it’s about growing faster than yesterday.
“Unfortunately, many organizations still look at the supply chain and transportation/logistics as a cost center,” he adds. “Until supply-chain leaders start recognizing that they actually control the ability to drive a differentiated customer experience, the supply chain will not digitize and transform at the pace it needs to.”
AI is playing an important role in transforming supply chains. While aspects of today’s supply chains still rely on manual processes and human intervention, AI can go a long way in providing automation where possible and assistance for human workers everywhere else. AI is already playing a role in the sector via robotic picking and packing, and these systems are increasingly precise and accurate, but there remains room for improvement.
Abe Eshkenazi, CEO of APICS (American Production and Inventory Control Society), says AI is pushing organizations to evolve by forcing them away from traditional supply-chain operating models, which are typically inflexible and slow, toward a more dynamic model with true end-to-end segmentations. “AI is poised to significantly improve supply-chain planning, customer order management, and inventory tracking, just to name a few,” Eshkenazi says. “For example, AI enables more automated and efficient planning of multiple supply chains that meet the needs of specific customer micro-segments as well as managing business relationships and exceptions.”
The fact that the IoT can turn virtually anything that uses electricity into a potential data supplier provides immense value to supply chains, because it allows businesses to know exactly what’s going on in their operations—including what’s working and what’s not working. However, Eshkenazi adds: “With this influx of data and digitization comes a displacement of traditional networks, which is affecting all supply-chain elements and forcing organization leaders to rethink how they do business.”
…AI can go a long way in providing automation where possible and assistance for human workers everywhere…
AT&T and 5G: Speed, Latency, and
Adoption of the IoT
For instance, AI will force change in the role of supply-chain professionals. APICS recently launched an organization called ASCM (Assn. for Supply Chain Management) that seeks to prepare businesses and professionals for the future of supply chain—a future that will require human talent in the form of data scientists, risk managers, and business development leads, among others.
“Advances in technology will not make supply chain experts obsolete. Quite the opposite, in fact,” Eshkenazi says. “To truly create value for the business, humans and machines will have to work together. This does mean, however, that the role of the supply-chain professional will change. To fully embrace the future, leaders must work to reskill and shift people to other areas of the business where they can more effectively add value.”
Mark Dickinson, head of North America IT solutions at SSI SCHAEFER, a products and systems provider for intra-company material handling and waste, similarly says strategy is critical for supply-chain professionals putting AI and the IoT to work for their organizations. “The majority of the problems in the market today are mostly from retailers and consumer goods manufacturers trying to compete in an ecommerce marketplace without having an omni-channel distribution strategy in place or the system to make it work,” Dickinson says.
For supply-chain leaders, step one in creating a strategy is educating themselves about what’s out there. Dickinson says step two is picking the right solutions partner. “Pick a supplier that can evaluate an application need or challenge, but that supplier should also be able to supply and service the entire system and technology long-term,” he advises. “The investment that’s made into implementing an automated system with a robust WMS (warehouse management system) will need to achieve an ROI (return on investment) and meet or exceed strategy expectations for decades. It’s an investment that needs a well-known, proven, and trusted supplier.”
A lack of C-suite strategy when it comes to the adoption of IoT and other technologies in the supply chain can create a fractured, frustrating situation.
Legacy technology may also create bumps in the road. Tim Lindner says: “Many companies have a starting point that is based on antiquated systems and applications. In logistics and supply chain, this is more the norm than the exception, especially with SMBs (small and medium businesses). Executives are not ‘up’ on the new technology, and they do not understand how to develop an ROI perspective for new technology acquisition.”
“AI is poised to significantly improve supply-chain planning, customer order management, and inventory tracking, just to name a few.”
Abe Eshkenazi, APICS
And, because the state of supply-chain technology is antiquated within many companies, there comes a time when leaders must come to terms with the fact that their legacy systems need to be replaced in order to support technology upgrades, forcing the cost of change to rise. Lindner says there is a wave of SMBs that currently find themselves in this boat, and these businesses will face some tough, potentially costly decisions in the next year after years of neglect.
However, once supply chains are treated like the growth drivers and competitive differentiators that they are (or at least, that they could be with the help of technology), businesses will be able to deliver the correct item, on time, with less cost, while having realtime visibility into the entire distribution fulfillment process. “It’s an exciting time right now for both supply chain and material handing industries,” says SSI SCHAEFER’s Dickinson. “The technology inside the fulfillment process is allowing the frontend and backend to finally connect in ways like never before, and organizations who are realizing this are moving forward and winning in ecommerce.”
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A Strategy for Cybersecurity
October 23, 2018
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