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Sean Elliott, global chief technology officer with HighJump, describes his view of the supply chain of the future -- as well as the obstacles that stand in the way of that vision becoming a reality.
SCB: What does that term “supply chain of the future” mean to you?
Elliott: Take the supply chain of today as a starting point. What we see is that the traditional vehicles for value and growth are changing. They're becoming less effective in the marketplace. We’ve invested in larger buildings, workforces and racking for the last 20 or 30 years. But the reality of the marketplace is shifting. We're finding that larger boxes are not what we need. We need smaller warehouses that are interspersed among communities to provide faster delivery of product. We need workforces, but people in the labor force today are less attracted to working in the supply chain. As a result, we're seeing a shift to digital technology.
When we look at the supply chain of the future, we see a landscape focused on digital, not on moving boxes. It's still very much a physical arena, but we’re using technology to do that to fulfill customer demand. We’re using digital-first means to create new efficiencies and flexibility. We need to be more reactive to what the consumer is asking for, while maintaining all of the cost functions that are so critical to the supply chain of today.
SCB: What are the biggest obstacles to progress toward the supply chain of the future?
Elliott: Cost is foremost. The supply chain has always been a place of cost control, and that hasn't gone away. However, as we shift from analog to digital means of growth and value, we need to rethink our investment models.
But the biggest challenge isn’t cost – it’s the consumer. The demands of the market are not static. They aren't what they were 10 years ago and they'll be different next week, next month, next year. As a result, we spend a lot of time trying to discover what are the emerging trends that our consumers are asking for, and how we can continually revamp our digital initiatives to align with them.
SCB: The word that keeps coming up here is “digital.” What is the so-called digital lifecycle of the supply chain all about?
Elliott: Thinking about the digital supply chain of the future, there's a critical flaw in the way we talk about it as an industry. We take a very project-oriented approach to digitization. We have conversations like, "The labor force is less available, I'm having turnover issues. My focus is on robotics. I need to make smarter decisions, so I'm going to focus on artificial intelligence." Those are good conversations. What we fail to recognize, however, is that there's not a finite set of projects that we need to attempt. Instead, there's a continual evolution of the supply chain, something we've been doing for 20 or 30 years now. In the digital world, I need new tools, not only robotics and A.I., but also the next set of tools beyond that, to help me take control of the lifecycle of adoption.
We need tools for simulation and design, ones that make it easier to implement digital initiatives. And we need to measure the outcome to better understand how that continued evolution will create value for my business over time.
SCB: How does one create a comprehensive technology strategy?
Elliott: Having a multi-year roadmap of supply-chain initiatives is a critical starting point. It’s understanding what your five-year vision for your supply chain is. What's missing is the underlying layer to our technology strategy, one that allows us to look at the landscape and understand current and future innovation. Business strategy works backward from market demand, but we have to realize that market conditions aren't forecastable right now on a three-to-five-year basis. Instead, they're forecastable on a three-month, six-month, nine-month basis, so we start with the tools that address that reality. We build the multi-year roadmap, forecasting back from market and business demand. Then we build DNA and culture into our business to leverage those tools to become more responsive as the planning horizon changes over time.
SCB: Is there a danger that technology might get in the way of understanding what it is you really need to do?
Elliott: Absolutely. The goal isn’t robotics; it’s more flexible and cost-effective fulfillment of orders to the consumer. Robotics is a convenient technical vehicle for satisfying a business demand, but it’s simply the means to an end. If we start to believe that artificial intelligence is the goal, we've lost the point. What we need to understand is how we can make the business better and faster – and how things like A.I. can help.
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