Technology empowers the Supply Chain

by Mark Millar International Keynote Speaker, Commissioned Author, Trusted Advisor and Supply Chain Thought Leader

Technology underpins and empowers our supply chains, but needs to be nurtured for maximum effect.

The accelerating adoption of digital technologies across the supply chain is resulting in a data explosion, which needs specialist expertise to fully exploit its potential for competitive advantage.

As today’s supply chain ecosystems become ever more connected, strategic and complex, they embrace a myriad of business partners, frequently spanning many countries, languages, cultures and time zones.

These ecosystems comprise profound interdependencies amongst and between the network of stakeholders, with an inherent need for information gathering and sharing across different information technology systems.

The expanding adoption of multiple technologies throughout today’s complex supply chains is resulting in a massive explosion of data across the ecosystem.
The ability to harness the raw power of this deluge of data – and transform it into useful actionable business intelligence – requires capabilities and expertise which may be beyond the scope and reach of all but the largest corporations.

However, to capitalise on the opportunities for technology to underpin and empower our supply chains, it must be nurtured with application and diligence.

Digital Disruption

The rapid evolution of new and emerging technologies is resulting in more widespread manifestations of Digital Disruption – which is the change that occurs when new digital technologies and business models impact the value proposition of existing goods and services.

It is interesting that for the most part, digital disruption is not led by the incumbents. It emerges from outside of the established business models – everyday examples of the modern era are Uber, AirBnB and NetFlix.

Many emerging technologies have now reached the threshold of becoming commercially viable solutions, meaning that supply chains are at the forefront of experiencing digital disruption.
Companies will need to refine their supply chains, to capitalise on the data surge created to create competitive advantage.

Supply Chain Complexity

One of the challenges of harnessing the power of technology is the complexity of twenty-first-century supply chains. The extensive portfolio of business partners in any single supply chain will undoubtedly include a wide range of information system capabilities.

Many companies will be encumbered by their legacy systems, others will be using leading-edge software tools. Datasets will be captured and collected from numerous sources throughout the supply chain and stored in a variety of different formats, ranging from the most sophisticated of IT systems to the most basic.

However, every supply chain principal needs to collect, collate and correlate these disparate data flows into a single exchange, and enable the efficient and seamless flow of electronic information throughout the ecosystem.

Microsoft Excel is by far the most widely used planning solution for supply chain professionals in manufacturing and retail, with 61.5 percent of respondents saying they use spreadsheets as their planning solution.

Meanwhile, Forbes reports that 88 percent of all spreadsheets have “significant” errors in them and even the most carefully crafted spreadsheets contain errors in one percent or more of all formula cells- the majority of errors being caused by human error.

Enabling Technologies

Key technologies that enable the proliferation of data throughout the supply chain include Cloud Computing, the Internet of Things, Autonomous Vehicle Technology, and of course Artificial Intelligence.

Cloud Computing permits cost-effective access to computing applications and storage via the internet, providing a range of services including specific software application tools, secure data storage and pure processing power.

Coupled with Software as a Service (SaaS) business models, this allows small and medium-sized organisations to use much more sophisticated IT solutions than would be available from their own modest budgets and limited in-house expertise.
Companies can substantially reduce the cost and complexity of owning and maintaining their own information technology infrastructure, both hardware and software – and the related supporting resources and technical expertise.

By utilising cloud infrastructure and software services on a pay-per-use basis, they save on both capital expenditures and ongoing maintenance costs, entrusting specialist IT services to the experts in that particular field.

The Internet of Things (IoT) takes advantage of the prevalent deployment of sensors and automatic identification devices throughout the supply chain, to capture and accumulate a greater range of data on a more timely basis.

Much more than just location tracking, such applications can now measure and monitor – in real-time – the temperature, humidity, pressure, movement and vibration of products, even as they are transiting the globe, whether by truck, train, ship or plane.

Converting these vast amounts of data into useful information (which is easier said than done) empowers much better informed – and more responsive – supply chain decision-making, thus optimising the allocation of resources and enhancing overall performance.

In turn, this results in Big Data, which then enables the Predictive Analytics that can turbo-charge the effectiveness and responsiveness of your supply chain. The iterative process leverages the network effect – in this scenario also known as the Data Flywheel.

The principle of the Data Flywheel is that the more participants there are in the ecosystem (users, sensors, etc) then the more data you collect. The more data you have, the better you can enhance the learnings therefrom – for example, build better algorithms. With better algorithms you can develop better solutions or products, which in turn attracts more users into the system, thus further fuelling the rotational momentum of the flywheel.

Autonomous Vehicle Technology has many developments under trial in pilot projects; but there are already many high-profile examples in action, especially drones which have seen enormous take-up in the consumer sector.

We can expect to see more and more adoption of autonomous vehicle technologies across multiple dimensions of the supply chain, impacting the various modes of transport:

  • In the Air – drones travelling through controlled airspace; also flying and spying within the warehouse and around the container yard;
  • On the Road – self-driving long-haul trucks and the platooning of truck convoys
  • Across the Water – a fleet of autonomous container ships managed centrally from a land-based control centre
  • Last Mile Delivery – small autonomous ground vehicles, patrolling inner city roads and pavements to deliver parcels to consumers – the digital postman of the 21st century?

Commercial deployment of autonomous vehicles is no longer held back by technological developments. The remaining barriers to adoption are the regulatory frameworks governing licensing, safety and security aspects, as well as the legal responsibilities and liabilities when accidents do occur.

Artificial Intelligence (AI) is poised to have a profound impact on all aspects of business. In the supply chain sector, we can expect AI-enabled productivity enhancements across a whole range of activities, including:

  • Supply Chain Optimisation: by analysing factors such as transportation costs, lead times, and supplier performance, AI can help identify the most cost-effective routes and sourcing strategies.
  • Supply Chain Visibility: AI can aggregate and analyse data from multiple sources to provide real-time visibility into supply chain operations.
  • Inventory Management: AI algorithms can optimise inventory levels by continuously analysing data on factors like lead times, supplier performance, and demand variability.
  • Demand Forecasting: AI can analyse the huge amounts of data being generated by other related technologies to provide more accurate demand forecasts, which will help optimise inventory levels and reduce stockouts.
  • Warehouse Automation: AI will help streamline warehouse operations, by powering robotics and automation systems to automate picking, packing and sorting activities.
  • Last-Mile Delivery: AI algorithms can optimise last-mile delivery routes based on numerous factors including traffic patterns, delivery windows and customer preferences.
  • Customer Service: AI-empowered chatbots can take on the first-line support, providing real-time customer service on a 24-hour basis.

AI has the potential to transform supply chain management, helping companies to lower transportation costs, reduce lead times, improve inventory availability and increase customer satisfaction.

However, a YouGov January 2024 multi-country survey of transportation and logistics companies in Germany, the UK and the USA found a significant gap in the adoption of basic data analytics and AI. Only 50 percent of transportation and logistics professionals across the three countries reported their organizations utilising basic data analytics in their operations – and just 25 percent of all respondents are making any use of Artificial Intelligence. Cost barriers, disruption to existing services and lack of know-how were quoted as the top barriers to further technology implementation.

Conclusion

Capitalising on the potential for technology to empower supply chains will require specialist expertise with determination and diligence, underpinned by commitment, investment and perseverance from senior management. The digitalization journey is one of a thousand steps, the most important of which is the first. There will be challenges along the way, so perseverance and commitment are critical for success.

About the Author

Mark Millar
Feature Article by Mark Millar International Keynote Speaker, Commissioned Author, Trusted Advisor and Supply Chain Thought Leader

Mark Millar is an internationally renowned keynote speaker; a respected authority on supply chain and logistics; and author of the widely-acclaimed book Global Supply Chain Ecosystems.
A LogiSYM Thought leadership Champion, Mark leverages 30+ years’ global business experience to provide knowledgeable and independent perspectives that empower executives to make better-informed decisions.
A Visiting Lecturer at Hong Kong Polytechnic University, Mark is on Advisory Boards at the Logistics and Supply Chain Management Society and the Foundation for Future Supply Chain, and serves as an Advisor to companies large and small, helping clients with their strategic growth objectives and supply chain strategies.

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