Executive Briefings

The New Age of Supply Chain Technology

A conversation with industry experts on the latest technological advances in supply-chain processes, supported by new and developing applications in transportation and warehouse management.

The New Age of Supply Chain Technology

Supply-chain technology is moving ahead faster than the physical goods it was designed to manage. We’re seeing an endless stream of new applications, with the ability to control an increasing number of activities both in transit and in the warehouse. Following are conversations between SupplyChainBrain editors and industry thought leaders about how technology has transformed the supply chain, and what innovations we can expect to see in the years ahead.

Q: Do you feel that logistics executives understand the urgency of addressing new technologies in their businesses today?

Dwight Klappich, Research Vice President, Gartner: I would say no. Many of them feel that they’ve got time to wait. It’s one of the key challenges for businesses today. In 2007, for example, there were three mobile phone companies that dominated: Motorola, Ericsson and Nokia. Then came along this little company called Apple, which wasn’t even in the mobile phone business. Those three companies had 90 percent of the profits; today Apple does. It’s not just about incremental improvements. We’re pretty good at that. It’s about being transformative, about new industries and the ability to survive. Logistics people have to understand that their role is going to change over the next decade. These technologies are not the same that we’ve had in the past, where they were tools that you used to do your job. These are becoming the job.

Nagesh Kadaba, Senior Advisor, ipCapital Group: What’s happening right now is that supply chain innovation has been inundated with enabling technologies that are disrupting whole supply chains, from drones to 3D printing, automated unmanned vehicles and Big Data. These are the ancillary technologies that are enabling innovation within supply chains.

Mario Proietti, Founder and Chief Executive Officer, LocationSmart: There are a huge number of disruptive technologies. Connective devices are proliferating like crazy, and the cost of connectivity is dropping. In five years, 50 billion sensors will be connected to the internet, whether through Wi-Fi or cellular. It’s making it easy for businesses to get access to information from mobile devices that are online. Those sensors are including location information that’s determined through the network, so you don’t need a GPS chip. The cloud and APIs [application programming interfaces] are making that data easily accessible through systems that used to take a lot of engineering time and infrastructure to develop. Now it’s easily available.

Robert Colosino, Vice President Marketing, Tecsys Inc.: Technology is being used both by consumers and supply-chain organizations. Consumers are entering their own orders and tracking their own shipments. They’re making decisions based on how efficient the supply chain is going to work for them. The storefront is in the palm of their hand. It’s a dramatic shift. We’ve seen the same impact in other industries – Airbnb, Uber and Amazon. It’s happening everywhere.

Proietti: Access to location is getting to the point where any device can be a location probe. Knowing where it’s connected on a network provides insight as to where that device is. It can be on a cell network, or an IP address used as a proxy for location. The cell tower or Wi-Fi access point that a device is connected to can give location relevance. It can be a very simple wireless communication device. It’s gotten to the point where there are disposable trackers, which are wireless devices with no GPS – just a SIM card and built-in battery. It can be inserted into goods to be transported. Ideally it would be returned, but if not, it’s a very low-cost piece of disposable equipment that provides a very high value in transit.

The state of the art in location services is quite broad right now. GPS has come down to a low price point and can be embedded in almost any mobile or wireless device. Network location through cellular networks is possible without any specialized equipment. Any device that has a phone number can be located through networks. Wi-Fi and Bluetooth beacons for indoor use are proliferating, along with RFID. There’s a plethora of technologies that are now available to enable supply-chain location.

Klappich: In the first machine age, the Industrial Revolution, you saw exponential growth. Today we’re in the second machine age, which is all about digitalization and smart machines and robots. It’s going to fundamentally change the way we manage businesses, and will have the same exponential impact.

Q: What technology do you believe has the potential to be the single most disruptive force on supply-chain management in the years ahead?

Klappich: The convergence of smart machines and algorithmic business. It’s applying math to decisions. We’ve had that at a high level for years, but now we’re starting to embed the logic right inside business processes, which are being performed by machines, whether robots or autonomous vehicles. They need the ability to respond to instantaneous, real-time information. That’s a fundamental change from where we’ve been before. The beauty of it is, the cost of sensors and the technology we need to provide that real-time information is approaching almost zero. What we need to figure out is, now that we have this massive data, what we do with it? And that’s where the algorithmic business comes in, including embedding some of that inside things that used to be dumb processes. Before, we had to map out everything we did. Now we need that intelligence right at the point that something happens.

Lance Robinson, Sales Manager, 4SIGHT Supply Chain Group: Right now there’s a big gap in the yard, dock and gate-management piece. A lot has been built up on the warehouse side, and there’s been a lot of progress in that area. From a technology perspective, customers have reached the point in the warehouse where operations are optimized. On the transportation management side, there are still some areas for growth, mainly around forecasting when vehicles are arriving in the yard, and being able to use more logistical algorithms to make changes on the fly. The yard space is the last piece that is touched in that area.

Proietti: I think the biggest Holy Grail, in terms of shortcomings in today’s technology, is in the ability to get precision location information down to centimeter accuracy. We’re always getting asked about devices that can do that. Bluetooth beacon detection and RFID are getting there. But it requires local sensors. A way to do that, and deploy that infrastructure, would be a game-changer.

Robinson: There are still a lot of companies with homegrown warehouse-management applications. From a pure integration standpoint, that’s going to pose some challenges. A lot of companies are just now starting to open up more to cloud-based technologies and two-way talking between software and applications. Before, it was more a matter of data fields and sending information one way. As companies become more comfortable with security and two-way communication, we’ll start to see a lot more advancements in the field.

Q: What do you think are the big disruptive technologies today, as they impact supply chain?

Wade McDaniel, Vice President Solutions Development, Avnet: I think it’s going to be the algorithm. I was having a discussion with a colleague the other night about customers and how they interact with us. The decisions that are being brought forth by the sales people are a negotiation, but the negotiated outcome is very similar. I proposed to him, “Couldn’t an algorithm do that?” When do our customers start working with an algorithm to achieve their outcome, and how can those algorithms be perpetuated down the supply chain to drive demand? I see this stuff coming right around the corner. It used to be that you bought something on a website, you would be offered something else. Now in the B2B world, it’s the same thing. Negotiating with an algorithm happens to us already, and I think it’s going to come into the B2B space.

Kadaba: We are trying to look at what other ways we can take these enabling technologies and use them in the supply chain from source to customer, and come up with innovative techniques to make that happen.

Robinson: There’s going to be better technology that we don’t even know of yet, which is going to give us better ways to track and manage inventory. We’ll see a lot more integration between the warehouse and transportation management sides. Yard management will be an area where it’s going to drive more advanced technology.

I think the biggest ROI is in the yard. That starts to change how quickly we can move in the yard, how quickly the warehouse needs to respond, and how adjustable and adaptable a transportation-management system is going to need to be. Eventually, it will link together and operate as one piece of software. It’s going to blow up the supply chain in a really good way.

Colosino: All these varying technologies – how we orchestrate them all? It’s not so much about what’s the next big technology. Is it a drone? A car? An AGV? A self-driving robot? We tend to fixate on that. But it’s really about how we are going to manage all these things. Some don’t even exist today. As a supply chain organization, it’s not about managing one technology; it’s how you orchestrate all of these elements together, to work efficiently and ultimately run a proper supply chain.

Resource Links:
Gartner Inc.
ipCapital Group
LocationSmart
Tecsys Inc.
4SIGHT Supply Chain Group
Avnet

Supply-chain technology is moving ahead faster than the physical goods it was designed to manage. We’re seeing an endless stream of new applications, with the ability to control an increasing number of activities both in transit and in the warehouse. Following are conversations between SupplyChainBrain editors and industry thought leaders about how technology has transformed the supply chain, and what innovations we can expect to see in the years ahead.

Q: Do you feel that logistics executives understand the urgency of addressing new technologies in their businesses today?

Dwight Klappich, Research Vice President, Gartner: I would say no. Many of them feel that they’ve got time to wait. It’s one of the key challenges for businesses today. In 2007, for example, there were three mobile phone companies that dominated: Motorola, Ericsson and Nokia. Then came along this little company called Apple, which wasn’t even in the mobile phone business. Those three companies had 90 percent of the profits; today Apple does. It’s not just about incremental improvements. We’re pretty good at that. It’s about being transformative, about new industries and the ability to survive. Logistics people have to understand that their role is going to change over the next decade. These technologies are not the same that we’ve had in the past, where they were tools that you used to do your job. These are becoming the job.

Nagesh Kadaba, Senior Advisor, ipCapital Group: What’s happening right now is that supply chain innovation has been inundated with enabling technologies that are disrupting whole supply chains, from drones to 3D printing, automated unmanned vehicles and Big Data. These are the ancillary technologies that are enabling innovation within supply chains.

Mario Proietti, Founder and Chief Executive Officer, LocationSmart: There are a huge number of disruptive technologies. Connective devices are proliferating like crazy, and the cost of connectivity is dropping. In five years, 50 billion sensors will be connected to the internet, whether through Wi-Fi or cellular. It’s making it easy for businesses to get access to information from mobile devices that are online. Those sensors are including location information that’s determined through the network, so you don’t need a GPS chip. The cloud and APIs [application programming interfaces] are making that data easily accessible through systems that used to take a lot of engineering time and infrastructure to develop. Now it’s easily available.

Robert Colosino, Vice President Marketing, Tecsys Inc.: Technology is being used both by consumers and supply-chain organizations. Consumers are entering their own orders and tracking their own shipments. They’re making decisions based on how efficient the supply chain is going to work for them. The storefront is in the palm of their hand. It’s a dramatic shift. We’ve seen the same impact in other industries – Airbnb, Uber and Amazon. It’s happening everywhere.

Proietti: Access to location is getting to the point where any device can be a location probe. Knowing where it’s connected on a network provides insight as to where that device is. It can be on a cell network, or an IP address used as a proxy for location. The cell tower or Wi-Fi access point that a device is connected to can give location relevance. It can be a very simple wireless communication device. It’s gotten to the point where there are disposable trackers, which are wireless devices with no GPS – just a SIM card and built-in battery. It can be inserted into goods to be transported. Ideally it would be returned, but if not, it’s a very low-cost piece of disposable equipment that provides a very high value in transit.

The state of the art in location services is quite broad right now. GPS has come down to a low price point and can be embedded in almost any mobile or wireless device. Network location through cellular networks is possible without any specialized equipment. Any device that has a phone number can be located through networks. Wi-Fi and Bluetooth beacons for indoor use are proliferating, along with RFID. There’s a plethora of technologies that are now available to enable supply-chain location.

Klappich: In the first machine age, the Industrial Revolution, you saw exponential growth. Today we’re in the second machine age, which is all about digitalization and smart machines and robots. It’s going to fundamentally change the way we manage businesses, and will have the same exponential impact.

Q: What technology do you believe has the potential to be the single most disruptive force on supply-chain management in the years ahead?

Klappich: The convergence of smart machines and algorithmic business. It’s applying math to decisions. We’ve had that at a high level for years, but now we’re starting to embed the logic right inside business processes, which are being performed by machines, whether robots or autonomous vehicles. They need the ability to respond to instantaneous, real-time information. That’s a fundamental change from where we’ve been before. The beauty of it is, the cost of sensors and the technology we need to provide that real-time information is approaching almost zero. What we need to figure out is, now that we have this massive data, what we do with it? And that’s where the algorithmic business comes in, including embedding some of that inside things that used to be dumb processes. Before, we had to map out everything we did. Now we need that intelligence right at the point that something happens.

Lance Robinson, Sales Manager, 4SIGHT Supply Chain Group: Right now there’s a big gap in the yard, dock and gate-management piece. A lot has been built up on the warehouse side, and there’s been a lot of progress in that area. From a technology perspective, customers have reached the point in the warehouse where operations are optimized. On the transportation management side, there are still some areas for growth, mainly around forecasting when vehicles are arriving in the yard, and being able to use more logistical algorithms to make changes on the fly. The yard space is the last piece that is touched in that area.

Proietti: I think the biggest Holy Grail, in terms of shortcomings in today’s technology, is in the ability to get precision location information down to centimeter accuracy. We’re always getting asked about devices that can do that. Bluetooth beacon detection and RFID are getting there. But it requires local sensors. A way to do that, and deploy that infrastructure, would be a game-changer.

Robinson: There are still a lot of companies with homegrown warehouse-management applications. From a pure integration standpoint, that’s going to pose some challenges. A lot of companies are just now starting to open up more to cloud-based technologies and two-way talking between software and applications. Before, it was more a matter of data fields and sending information one way. As companies become more comfortable with security and two-way communication, we’ll start to see a lot more advancements in the field.

Q: What do you think are the big disruptive technologies today, as they impact supply chain?

Wade McDaniel, Vice President Solutions Development, Avnet: I think it’s going to be the algorithm. I was having a discussion with a colleague the other night about customers and how they interact with us. The decisions that are being brought forth by the sales people are a negotiation, but the negotiated outcome is very similar. I proposed to him, “Couldn’t an algorithm do that?” When do our customers start working with an algorithm to achieve their outcome, and how can those algorithms be perpetuated down the supply chain to drive demand? I see this stuff coming right around the corner. It used to be that you bought something on a website, you would be offered something else. Now in the B2B world, it’s the same thing. Negotiating with an algorithm happens to us already, and I think it’s going to come into the B2B space.

Kadaba: We are trying to look at what other ways we can take these enabling technologies and use them in the supply chain from source to customer, and come up with innovative techniques to make that happen.

Robinson: There’s going to be better technology that we don’t even know of yet, which is going to give us better ways to track and manage inventory. We’ll see a lot more integration between the warehouse and transportation management sides. Yard management will be an area where it’s going to drive more advanced technology.

I think the biggest ROI is in the yard. That starts to change how quickly we can move in the yard, how quickly the warehouse needs to respond, and how adjustable and adaptable a transportation-management system is going to need to be. Eventually, it will link together and operate as one piece of software. It’s going to blow up the supply chain in a really good way.

Colosino: All these varying technologies – how we orchestrate them all? It’s not so much about what’s the next big technology. Is it a drone? A car? An AGV? A self-driving robot? We tend to fixate on that. But it’s really about how we are going to manage all these things. Some don’t even exist today. As a supply chain organization, it’s not about managing one technology; it’s how you orchestrate all of these elements together, to work efficiently and ultimately run a proper supply chain.

Resource Links:
Gartner Inc.
ipCapital Group
LocationSmart
Tecsys Inc.
4SIGHT Supply Chain Group
Avnet

The New Age of Supply Chain Technology