The role of technology in supply chain management (SCM) is changing. The internet of things (IoT), artificial intelligence (AI), and machine learning, cloud technology and blockchain technologies are all affecting the ways organizations manage their supply chains. The use of these technologies stretches beyond inventory management and supply ordering and into the other aspects such as customer service, costs, security and risk management, and even hiring and retaining talented employees.
Here's a look at seven technology trends that will affect supply chain management in 2020 and beyond. Hint -- there will be a lot of robots.
1. The Digital Supply Chain Continues to Evolve
IoT, automation and machine learning are transforming supply chain management, optimizing processes while allowing continuous monitoring of crucial equipment. These technologies could also replace people who have traditionally done many of the tasks associated with warehousing, transportation, ordering and other aspects of SCM. IoT and related technologies together can help an organization create a truly digital supply chain.
The benefits of digital supply networks over traditional supply chains include better visibility into processes, improved collaboration among supply chain participants and quicker responses to changing market conditions. However, challenges such as security, data integration and change management still need to be addressed.
2. Drones, Robots and Robotic Automation
Here are a few more statistics on robotics:
Automation is transforming warehousing, transportation and manufacturing, according to expert Pam Baker. "The manufacturing sector is already seeing the effects of automation and robotics -- from AI to IoT sensors to robots on the floor to greater use of robotic process automation -- and that trend will only continue," Baker said. "For example, robots are interviewing candidates, helping out in the warehouse and working in the factory. AI and IoT are increasingly being used to create efficiencies and to help create smart factories as part of digital manufacturing efforts."
- Pick-and-pack robots are expected to make up 9.6% of market share behind welding (15.6%), assembly (11.6%) and other functions (47.5%).
- By 2023, collaborative robots will supplement, but not replace, more than 30% of operational warehouse workers, according to Gartner.
3. Cloud SCM Platforms
Cloud platforms have been around for years, but they still have the potential to be the most influential technology in SCM. A cloud platform can centralize data and offer multiple ways to access that data, which decreases cost and adds data security. Treating data as an asset and a part of your institutional value helps fuel cloud adoption. Companies that want to make the most of that data implement technologies such IoT sensors, AI and blockchain to collect, analyze and protect that data. Cloud platforms are available for inventory or warehouse management, demand forecasting, order management, transportation management, and supplier relationships. The cloud can improve the entire supply chain by migrating manual business processes to automated platforms.
4. AI, Machine Learning and IoT
There is a lot of interest in applying AI and machine learning for in-demand forecasting and predictive maintenance and enhancing supply chain analytics. David Simchi-Levi, professor of engineering systems at MIT, said that machine learning allows you to not only come up with a forecast, "I can also report what the level of confidence is that's associated with the forecast," he said. "I may tell you that the forecast is that the next quarter we will sell 50 articles of this product, but I can also tell you what the level of confidence is in this. Given these two pieces of information, it tells you that you need to redesign your supply chain strategy."
Tracking components across the supply chain is one of the biggest logistical challenges facing manufacturers and logistics providers. Nearly $140 billion is tied up daily in disputes regarding transportation, according to Craig Fuller, co-founder of Blockchain in Transport Alliance. In the past, the industry has been hesitant to implement new technologies into shipment tracking and forecasting, but the benefits of IoT devices, such as embedded sensors, is changing minds.
The package delivery industry has adopted IoT devices as a means of tracking packages. Who hasn't used their phone to watch their Amazon order move across a map toward their home? GPS and digital sensors provide customers with real-time delivery times and supply logistical data to the organization. This type of tracking makes same-day and two-day shipping possible.
AI software and IoT devices can also monitor and manage supply chain processes, said Terence Toland, an associate with the global business policy council at the Chicago-based consultancy Kearney. Digital sensors can keep track of products and send automated notifications when stock gets low. Sensor-enabled assets can provide real-time insight along the supply chain all the way to the end user, Toland said. Applications of this data include predictive maintenance and improved product development.
Same-day delivery has led to high expectations of modern customers, making logistics even more difficult. This is where blockchain technology comes in. A blockchain maintains a permanent and tamper-proof record of data that a cluster of computers manages; it's not owned by a single entity. Blockchain ensures the security of all the data being shared through the cloud with vendors, purchasing departments, production teams, sales, distribution and customers. meeting de. The technology offers many benefits for SCM, including the use of smart contracts to increase transparency, ensure authentication and limit fraud. It could also allow the supply chain to go completely paperless. Blockchain also allows the creation of digital twins.
6. Cybersecurity and the Supply Chain Must Go Hand in Hand
In 2018, Bloomberg reported that Chinese spies had compromised the Department of Defense, the CIA and nearly 30 American companies using a microchip the size of a grain of rice installed on motherboards by manufacturing subcontractors in China. This hardware hack opened a backdoor to any network that included the machines. This incursion is one example of the many types of security challenges manufacturers should expect.
Amazon's investigators found this chip while evaluating video technology for Amazon Prime in 2015. The discovery shows that Amazon was doing its homework on its suppliers. Linda Rosencrance offers some best practices for ensuring cybersecurity in the supply chain.
7. Talent and Technology Will Evolve Together
The manufacturing sector overall is graying and as boomer-aged managers and senior talent retire, institutional knowledge is lost. But replacing those retiring boomers are millennials (and Gen Xers) who have unprecedented levels of comfort with AI, cloud services and shared platforms, according to Gartner. SCM teams will need these digitally savvy workers.
Supply chain and logistics experts say that organizations need to address the skills gap that the digital transformation of the supply chain creates. ERP expert Madhav Durbha said that distance learning and online courses can remove the gap. "Some organizations are having success creating learning opportunities and use a bit more of a carrot-and-stick approach, where they make learning part of their employees' goals and objectives," he said.
Certifications in SCM may also be in the future and encourage people to pursue it as a career. Logistics expert Adam Robinson believes the way to get the best talent to pursue SCM as a career is to offer it as a certification. He says technologies such as IoT are pushing supply chain management towards defining a standard certification process. "This will help encourage effective, efficient deployment of new systems and services, while helping to curb the existing skills gap. If potential employees, students and interested parties can pursue a certification, they are more likely to pursue it as a career option," Robinson writes.
Modern supply chains must be flexible and agile, able to respond to changes on short notice. They must also be secure digitally as well as physically. They require manufacturers, retailers and logistics companies to become more dynamic in managing their supply chains. Technologies such as IoT and blockchain will help meet the challenges of supply chain management such as security and visibility, the global nature of modern supply chains and the rise of same-day micro deliveries.