Today’s executives are not only faced with traditional challenges such as cost, speed, quality, and market share but will also need to deal with constant change. It is important that executives consider global trends when designing supply chain networks – trends such as emerging markets, mega-cities, and e-commerce while paying attention to disruptive forces.
The tools we rely on to manage end-to-end supply chain have the potential to further disrupt the supply chain industry quickly. To stay at the forefront of these factors, I will a highlight few trends that I think are likely to have major impact: drones; 3D printing; cognitive calculation; and big data/predictive data analytics.
A prominent emerging technology, drones are a game-changing substitute for traditional processes. The possibilities for last-mile delivery provided by drone and/or autonomous vehicles have attracted companies such as Google and Amazon. In August 2014 Google announced ‘Project Wing’, an initiative designed to use drones to efficiently reduce product delivery time to end-customers.
Gartner estimates that, by 2017, 20% of logistics organisations will use drones for monitoring, searching, and management.
Despite the advantages, several challenges must be overcome before drones become a mainstream tool. The increased use of drones has raised concerns about surveillance and privacy violations. Google and its competitors would benefit from dispelling public concern with comparisons to existing technologies used for these purposes.
Furthermore, drones may improve the supply chain industry in numerous ways. For one, drones could be used in ports and in the air to make deliveries that require fewer individuals to handle materials. For example, PINC Solutions, a provider of yard management systems, utilises drones to identify the location of trailers, shipping containers, and other assets in hard-to-reach areas. The drones are equipped to carry GPS, RFID, OCR, and barcode readers that can quickly locate and identify assets that have been tagged in a yard or port.
During the holiday season in 2015, Amazon released a video of the Amazon Prime Air drone designed for the home delivery market.
With the use of drones, Amazon could increase sales during the last days of the holiday season, when it is too late to make deliveries with conventional parcel delivery services.
Health care industry are also experimenting with high-speed drones. Students at the Delft University of Technology in the Netherlands rigged a defibrillator and a webcam to a drone that can be delivered to patients with cardiac arrest faster than an ambulance can drive to the scene. Similarly, after the Haitian earthquake in 2012 drones were used to deliver small aid packages to remote disaster areas.
While technical difficulties and legal challenges for drones remain, the technology will find its place in supply chain management.
3D printing: Cutting out the middleman
The key advantage of 3D printing is speed: With on-demand manufacturing, supply chains become less complex. Materials and components are supplied, as needed, eliminating the need for excess inventory, and significantly reducing related costs.
As one example, the use of 3D printing by SpaceX, a California-based aerospace company, led to the construction of the emergency escape rockets on its new manned Dragon spacecraft. SpaceX developed materials, quickly and efficiently, that can withstand the demands of space travel. That kind of lead-time reduction has cut costs and enabled SpaceX to outstrip NASA in developing and maintaining emerging contracts.
New developments in cognitive calculation and smart computing can reduce the need for human contributions in the supply chain.
Baxter, a robot developed by Rethink Robotics for collaborative industrial applications, is a classic example of cognitive calculation and artificial intelligence (AI) application in the supply chain. Using advanced AI, Baxter is “manually trainable by in-house staff, reducing the time and cost of third-party programmers [and is] flexible for a range of applications and re-trainable across lines and tasks,” per its manufacturer.
Therefore, one robot alone can handle line-loading, machine-tending, packaging, and materials-handling. Furthermore, when it finishes a task at one station, it can be easily deployed to another station and trained to conduct the next task.
Applying these technologies within supply chains means that robots can perform monotonous tasks and free up skilled labour for more value-added tasks.
Big data/predictive data analytics
Technology plays a vital role in the foundation of the supply chain of prominent organisations. For instance, Walmart has the largest information technology infrastructure of any private company in the world. Its state-of-the-art technology and network design allows Walmart to accurately forecast demand, track and predict inventory levels, create highly-efficient transportation routes, and manage customer relationships and service response logistics.
Big data has certainly changed in the supply chain industry. For example, using sensor data from its network of service stations and convenience stores, a fuel retailer knows in near real-time what its product mix and consumption rates are in each area of its geographical territory.
Armed with such information, retailers can achieve better revenue positioning because product offers can be instantaneously changed to respond to customer demands.