The Future of Supply Chain
We just returned from spending a few days in Phoenix attending the Supply Chain Insight Global Summit. It was a meeting of a diverse group of consultants, practitioners and vendors who focus on supply chain innovation. The goal was to think about what supply chains would look like in 2030.
Lora Cecere’s driving observation is that despite all the investment in technology and processes companies are not improving their supply chains based on objective metrics such as inventory turns and financials. This is because the processes today do not address the complex and global supply chains that are the reality for most large companies.
So who are the companies that do it right? The winners of Lora’s “Supply chains to admire” award: BASF, Clorox and Cummins presented their approach. The common theme across these presentations and several others such as Schneider Electric consistent leadership and strategy, a tailored supply chain approach, and effective balancing of tradeoffs.
- Consistent leadership and strategy, combined with effective collaboration enables real innovation across the value network
- Balancing tradeoffs in a way that aligns with strategy enables value network performance
- Tailoring supply chain within the value network to meet the differentiated needs of customer segments requires data and the voice of the customer
Where do innovation and technology fit in?
Technology is essential to performance and is critical in the following areas:
- End-to-end visualization
- Network design and evaluation of tradeoffs
- Inventory management
- Supply chain segmentation using machine learning
And using newer technologies to improve operations – Costa Coffee uses the Internet of Things to redefine replenishment and improve in-store availability of materials. This is done through their coffee machines which are aware of what is consumed and report it back to headquarters so that replenishment is forecast based on actual operations data. They have seen tremendous growth by making many changes that enabled use of technology.
- Bioengineering to replace certain materials and produce them in a more environment friendly environment as shown by Amyris
- Reduce transportation impact as the Dutch flower co-op Floriculture figured out how to transport flower by container through reducing their temperature during transportation
- Heavy investment in China in robotics – we saw a demo of Rethink Robotics’ Sawyer which is a robot that can learn from human handlers and does not need to be programmed
- Sensors on the factory floor – the use of sensors will be prevalent and enable more quality production.
Finally, one of the most thought provoking presentations was around the autonomous supply chain. The discussion started with the pace of introduction of driver-less cars and trucks and the new business models they enable. The four phases of the digital eras according to Jeremiah Owyang are:
- Internet era (mid 90s)
- Social media age (mid 2000s)
- Collaborative economy age (Now)
- Autonomous World Age (Emerging)
Autonomous world is “a future state when intelligent technology systems, operating without human participation, enable new business models in a more efficient society.”
How are companies preparing for this?
Corporate innovation teams typically focus on product, operational, customer experience and to a lesser extent business models. The autonomous world age will disrupt many existing businesses as it already has for taxis and car manufacturers who are busy trying to get ahead of these changes. Every business will need to address these changes or risk its business.
Companies that include supply chain into this kind of thinking tend to fare better than most. It is hard to predict all the way to 2030 but what is clear is that the role of operations and supply chain will be enhanced in future years and will require new technological capabilities in particular around automation and analytics.