A Future-Proof Supply Chain

Modex 2018 looks at how technology is altering the supply chain

May 4, 2018
by Michael Power

Image: Dorothy Jakovina

From the April 2018 print edition

The current speed of business and the massive changes to manufacturing and the supply chain being driven by advancing digital technology dominated much of the agenda at the Modex 2018 Conference in Atlanta, GA in April. The biennial tradeshow features a range of supply chain solutions and the latest equipment and technology from companies from around the world. The tagline for the show, “Future-proof your business,” applied to much of the show’s content, as supply chain and logistics professionals walked the show floor and attended education sessions to discover what’s new in the field.

Andrew McAfee, co-director of the MIT Initiative on the Digital Economy, addressed this topic during a keynote presentation entitled Harnessing Our Digital Future. Technology, he told the audience, is now rewriting the business playbook and companies and organizations must adapt to this new reality. “If we continue to follow the old one we’re going to find ourselves in some trouble,” he said.

Process is one area in which technology is rewriting that rulebook, McAfee noted. Until recently, the rule has been that computers are better than people at problems involving math and computation. This has supported the notion that organizations should give tasks related to these areas to machines. At the same time, people excel at decisions involving judgment and knowing how the “real world” works. When CEOs retire, for example, they write books about “making calls from the gut.” “What we’re supposed to be doing is exercising our judgment,” McAfee said of human involvement in the world of commerce.

Organizations often make decisions by “HIPPO”, an acronym that McAfee said means using the “highest-paid person’s opinion.” In most organizations, a team assembles to make decisions using a HIPPO approach, with those decisions then passed down to the company’s rank-and-file workers to execute. By contrast, the “geek” within an organization makes decisions based on evidence. When it comes to successful decision-making, McAfee stressed that the evidence-based decisions made by the geeks have better outcomes. But the studies conducted that show the superiority of evidence-based decisions were done in the world of small data. In today’s world of big data, machines are now progressing faster than experts had expected they would. “We’re seeing machines demonstrating excellent judgment in the domains where we thought we needed us,” he said. As well, due to the sheer number of users, the Internet has access to “billions of brains.” As the business playbook continues to be rewritten, McAfee suggested keeping in mind that the crowd is often wise.

Organizations should bear in mind that the optimal division of labour between human minds and machines is shifting rapidly, and it’s shifting in the direction of machines. People still have lots to contribute, he stressed, but not in the ways in which we thought we would.

MHI industry report
Also during the conference, the US-based Material Handing Institute (MHI) and Deloitte Consulting released the results of their fifth-annual survey report on supply chain innovation, entitled Overcoming Barriers to NextGen Supply Chain Innovation. The survey and resulting report aim to shed light on the shift towards digital supply chains and the impact of 11 key innovations on supply chain operations and strategies. MHI and Deloitte presented the survey results along with commentary from a panel of industry experts. Scott Sopher, principal and leader, global supply chain practice at Deloitte, presented the findings.

Among the key findings, the report found that 11 technologies are at play in creating “next-generation” supply chains that are digital and on-demand. Among survey respondents, eight of 10 believe that these supply chains will be the main model within five years. The top technologies that respondents say can serve either as a disruption or a competitive advantage to companies include robotics (65 percent); predictive analytics (62 percent); the Internet of Things (59 percent); artificial intelligence (53 percent); and driverless vehicles and drones (52 percent). According to the survey, the top-three barriers to adoption of these technologies are: making the business case for NextGen supply chain investments; tackling the supply chain skills gap and workforce shortage; and building trust and security in digital, always-on supply chains. Sopher noted that among these technologies, the adoption rates are highest for cloud computing and storage, followed by sensors and auto identification. Robotics and automation was next, followed by the Internet of Things (IoT).

The report also touched on cybersecurity within the supply chain. The sophistication of hackers and “threat actors” is seen among survey respondents as the biggest risk (44 percent), followed by the lack of awareness of the threat within organizations (40 percent) and poor cybersecurity practices among suppliers (37 percent). As cybersecurity concerns grow among supply chain professionals, the survey found that the demand for transparency at every level of the supply chain is also growing as consumers increasingly expect full information about the origin and history of the products they consume.
In discussing the report’s results, several panel members agreed that the use of the Internet of Things (IoT) would increase.

Panelist Jay Kim, chief strategy officer at Upskill, said that while big data is growing constantly, the question remained regarding what to do with all that data being collected. The concept of IoT isn’t just about connecting to machines, but rather connecting to human beings. People have to turn that data into action, Kim said. If people aren’t part of a connected operation, then an organization won’t get maximum mileage from that connectivity. Kevin Condon, director of engineering and network strategy at Kroger, agreed that people are the key to developing competitive advantage. Success not only involves the robots an organization uses, but the people who work alongside those robots.

The panel also discussed the skills gap and workforce shortage in supply chain. Randy Bradley, assistant professor of information systems and supply chain management at the University of Tennessee, noted that organizations often wait until students get to college before promoting careers in supply chain. But Bradley suggested starting that process earlier. Potential employees don’t necessarily have to be trained to go into supply chain, he said. Even experience outside of the field can be relevant. Organizations need people who can use both the left and right sides of their brains.

Ultimaltey, Modex 2018 provided attendees with a look at not only what supply chain and logistics solutions exist today, but also what the future holds for the field. Supply chain and procurement professionals would do well to ensure they are up to speed on these developments going forward.

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