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Debating the Timetable for Supply-Chain Futureshock

The future is coming. But experts can't seem to agree on when it's going to show up.

That, at least, was the chief takeaway from this year's Supply Chain Predictions Panel, an annual event presented by the San Francisco Roundtable of the Council of Supply Chain Management Professionals.

Each year, the S.F. Roundtable offers up a select group of industry leaders, who venture guesses about the next wave of innovations to roil supply-chain executives. Each prediction is then subjected to critical feedback from other panel members, as well as from the audience. The affair is moderated by Carl Guardino, president and chief executive officer of the Silicon Valley Leadership Group.

Here, there, are the panel’s visions for 2018 and beyond:

Prediction: Driverless technology for interstate trucking will be approved for prototyping in 2018, according to T.S. Khurana, vice president of global sourcing and operations engineering with Facebook. He believes automation “will disrupt the way we move freight around this country by 2025.” Last year, Khurana noted, there were 120,000 deaths related to big rigs on the nation’s highways, and 95 percent of them were ascribable to human error. The continuing death toll will motivate regulators to move more quickly than one might expect, he suggested.

Response: Panelist Mike Thomas, vice president of logistics with Grocery Outlet, disagreed — but mostly about the timing. “Seven years to make that happen is a little bit too quick,” he said. The major stumbling block will be the nature of urban transportation, in particular the “final mile” of delivery within cities. That piece of the puzzle will still be subject to human control beyond 2025, Thomas said, and most members of the audience agreed.

Panelist Kerry McCracken, a former senior vice president with Flex Connect, thought Khurana might be on the right track after all. She noted the rapid transformation of society wrought by the iPhone in its 10 short years of existence. “I don’t think this is insurmountable,” she said.

Prediction: Rumors of the death of brick-and-mortar retailing are entirely premature, said Thomas. “Even in 2030, people will still be going to the grocery store.” Those who believe otherwise are likely to reside in the Bay Area, he suggested, which has a blinkered view of technology. “There’s a huge chunk of the country to the East that’s a little bit different from what we experience out here,” he said.

Response: Thomas received no opposition from the panel, but some audience members noted the growing dominance of the Amazon.com model, whereby even the most basic commodities can be ordered online and delivered to homes almost instantly. Millennials are especially fond of the practice, they said.

Prediction: Within two to three years, a large original equipment manufacturer or supply-chain company will be “completely upended” by a startup entity, said McCracken. The reason: the blockchain. The ability to create a secure, reliable system of record within the public sphere will obviate the need for transactions within traditional enterprise resource planning (ERP) applications, she said. “Companies that take advantage of this technology are going to leapfrog, just like Uber did to the taxi industry.”

Response: The panel was split. Again, the disagreement was over timing. “Two to three years is too soon to see that level of destruction,” Thomas said. “Maybe five years from now.” Audience members agreed that blockchain will have a disruptive impact on industry, but said it will take time to happen. A significant portion of the audience admitted to not knowing exactly what blockchain was.

McCracken reiterated the iPhone and Uber analogies, while noting that the latter is taking over passenger transportation one city at a time. “But we’re going to see some exciting things happen in the next two to three years,” she said. McCracken also predicted that blockchain will come to play a major role in consumer commerce, especially in areas such as prescription drugs.

Prediction: Oil prices “will not change appreciably” over the next six to seven years, said Khurana. He pointed to the huge reserves of oil discovered in Australia, which will pose a challenge to Mideast producers. As a result, Khurana said, “there will be no big change to the China or Mexico mass-manufacturing model.”

Response: Again, a split panel and audience. Thomas said many companies will be switching to greener technologies in spite of high oil reserves. Governments, meanwhile, will push for alternative fuels as a hedge against the impact of extreme weather events that disrupt petroleum flows. But Khurana stressed that low oil prices will keep current manufacturing models in place for some time to come. “Cheap energy is here to stay,” he said.

Prediction: Addressing the issue of driverless passenger vehicles, Thomas predicted that many grocery shoppers will still be driving to the store in their own cars — driven by themselves — in 2030.

Response: “The grocery store will come to people. People will not go the grocery stores,” countered Khurana. McCracken said the cost of cars will make ownership unattractive. But Thomas insisted that Americans will cling to the “tremendous freedom” of car ownership, as least for the next 13 years or so. While ownership and human driving “may eventually go the way of the dinosaurs,” he said, “it’s not going to be in 2030, for the vast majority of people.”

Prediction: Artificial intelligence and machine learning will have a profound effect on the supply chain, in areas such as customer service and education, said Khurana. “It will prompt us to rethink how we educate our population,” he said. Lower-impact jobs of relatively less value will be automated, with robots performing them “more efficiently than humans can possibly imagine.”

Response: McCracken disagreed that people will need to be extensively retrained to adjust to the new technology, which will feature an intuitive interface. “Smart shelves” will make purchase suggestions, she said. “It’s going to feel more natural to people.”

Prediction: Within the next 12 months, corporate tax rates will dip below 30 percent, international tax loopholes will remain in place, and the Dow Jones Industrial Average will break 23,000, said Khurana.

Response: Not so fast. McCracken doubted that the two political parties “can get their act together on real tax reform.” They might pass some version of a bill, she added, but only enough to help their standing in the polls. Thomas said a 30-percent corporate tax rate won’t make that much of a difference anyway. Others thought Khurana’s predictions were either off base or too optimistic on all three fronts. As one audience member remarked: “Government is in a complete rathole.” Which hardly requires a crystal ball to see.

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