Supply-chain leaders at Amazon, Google and IBM, among others, discussed the tools and strategies driving their companies through the digital age — and beyond — at this year's North American Supply Chain Executive Summit in Chicago.
Whether a company makes orange juice or fighter jets, the speed of change in the information age can push supply-chain and logistics executives into a sort of option-overload paralysis, according to those who attended and spoke at NASCES in September.
“Information truly is the lifeblood of the new economy,” said Elliott Rodgers, chair of the event and senior vice president of logistics for Ulta Beauty. “Those who are able to take the tools and the mechanisms to take information and act on it quickly are those who are going to own the next industrial revolution.”
The Cognitive Age
In an ever-growing wave of new digital tools, the next big drivers of supply-chain efficiency across all industries will continue to be automation, robotics and artificial intelligence, says Dave Clark, Amazon’s senior vice president of worldwide operations. The e-commerce giant committed to a future in automation back in 2012 with its acquisition of Kiva Robotics — which has since morphed into Amazon Robotics — but deployments remain in their infancy, Clark says.
“Variability is the hardest part of this thing,” he says. “Robots love consistency. They love a six-sided object that they can pick up and handle quickly — especially if it’s the same six-sided object.”
The challenge isn’t so much the mechatronics of a robotic arm, he says: It’s really all about the vision around the controls logic — and the science behind how you program actions. There’s too much fluctuation in warehousing and fulfillment for controls engineers to constantly reprogram and retrain systems, so at Amazon, self-learning is the next step.
“They have to be able to learn on their own,” Clark says, speaking not just about robotics in operations — but out in the field, too. He expects sidewalk robots and autonomous long-haul trucks and drones to be some of the earliest — and best — applications in e-commerce. Amazon is currently beta testing fully autonomous drone delivery in the U.K. for packages five pounds or fewer — a weight category that makes up about 90 percent of the company’s total product deliveries.
This kind of machine cognition will soon be as universal as today’s smartphones, says Joseph Selle, a senior executive at IBM. In what he dubs the “human plus” cognitive era, every employee will have a personalized digital assistant that understands their business needs, provides contextual insights and recommendations, and learns continuously from the employee’s successes and failures — never sleeping or forgetting anything.
Selle has been working on these technologies for years at IBM, where the earliest adoptions happened within supply-chain and procurement teams.
“As we all know, there’s a ton of data there,” he says. “There are a lot of business pain points, and it’s a perfect place to put cognition.”
These teams have access to a host of cognitive tools that make business recommendations or simply gather data that a single employee could never gather alone. Cost savings so far are in the hundreds of millions, Selle says, and more than 100 new cognitive enterprise management projects are in the works.
“There is a lot of value to be unlocked when you think about your teams crunching a process that took four hours and now takes two minutes,” he says. “In the procurement world, an analyst might have spent two days preparing a briefing book for a supplier negotiation. We’ve automated that to the push of a button — and it’s a much better book.”
Human vs. Machine
At the end of the day it all comes down to people, Rodgers says, and it’s easy to lose sight of that when we’re always thinking about the next technology or process innovation that’s going to drive efficiency in an organization.
“No disrespect to [IBM’s] Watson; I have a lot of respect for Watson, but it’s going to be the people in our organization who make things happen,” he says.
And Selle agrees: “It’s really not all about the technology. It’s about the teams and the culture and the people’s adoption.”
A strategic workplace culture is key to inspiring innovation at Google, says Daniel Kaulfus, the tech giant’s global head of logistics and operations. Employees create their own titles. Decision making is decentralized. There’s no forced ranking system for performance reviews. Instead, employees publicly evaluate their manager, director and vice president every six months.
As a result, staffers feel more relaxed and empowered — two big incentives for attracting and retaining millennials. The bowling alleys, free meals and flexible hours help, too.
“All of us in the room should be actively supporting our employees,” Kaulfus says. “Google takes it one step further … I’m incentivized to be an active contributor to their success.”
Collaboration up and down stream becomes even more valuable as companies begin to replace a generation of supply-chain executives who earned their education on the job — and not necessarily through formal schooling.
“A lot of people are talking about supply chain as a discipline — which didn’t exist 20 years ago,” says Geoff Micks, head of marketing and research for event organizer Executive Platforms. “What can we assume these young people already know?”
With today’s pace of change, business leaders seem to agree that job training is in a state of perpetual motion. Amazon or not, companies must scale quickly in order to thrive.
“Many of us in larger organizations cannot go after everything, but we have to be ready to move quickly based on insights,” Rodgers said. He added: Start small, but think big.
The North American Supply Chain Executive Summit
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