As executives begin to make vital decisions about technology deployment, strategy, capacity and pricing, the next-gen supply chain transition is upon us. A balancing act needs to be maintained with improved efficiency as wages increase. Inaction and turtle-like malaise will leave those in a pre-technology state unable to integrate with new advances; this simply is not an option. Yet we are barely acknowledging the innovation and potential before us. One wake-up call for those of us who still use paper products:

“American Airlines saved $1.2 million a year on fuel by substituting iPads for 40-pound protocol manuals in every cockpit.”^[i]

Every aspect of your business will be affected as traditional business models are challenged. If you manage your own warehouse, your first step is simply learning about and testing new technologies. If you outsource, work closely with your third-party warehouse operators to collaborate on upcoming capacity restrictions and rising costs. A turtle with a broken leg, dialup internet and a rotary phone can get this done. Luckily, you have two good legs, lightning-fast bandwidth and a smartphone! 

Working Together

Begin building partnerships across the value chain. We won’t be able to work together unless we’re connected and digitally capable across the board: on the road, in parcel, on rails, in the air and on the sea. We will redefine relationships between shippers and carriers.

“Partnerships should be based on trust and a strategic mindset, rather than a transactional focus. Define clear goals and empower the experts to make it happen. The right external relationships are more important than ever [to] accomplish a lot in a relatively short time,” says Miguel Gonzalez, director of global logistics at DuPont.

The supply chain industry is poised for revolution. Increased connectivity just scratches the surface; we’ll also integrate advanced analytics, artificial intelligence (AI), wearables and robotics, as the industry transforms and automates itself. Decisions by regulators and policymakers will govern the speed and direction, but the movement is inevitable. Choose your tools wisely. Just like the internet, you will soon need them to operate.

It's Already Begun

Some warehouses and distribution centers have already implemented self-driving vehicles (SDV)s with AI software to move large payloads, like racks and pallets, through industrial settings. They use high-tech mapping software such as LIDAR (light detection and ranging) systems and 3-D cameras to get the job done without the aid of magnetic strips or grids of barcodes in transport lanes. 

Bin-picking robots are streamlining supply chain operations and saving companies money through increased efficiency and lower labor costs. They’re taking order-fulfillment and box-handling to a new level.

Managers are using new mobile apps to monitor warehouse floor activity, measure performance with analytics and adjust labor costs in real time. These systems have generated up to a 25% savings for companies focused on labor optimization.

AI applications assist humans with repetitive tasks that allow us to determine the best business methods and make critical decisions. They can calculate large volumes of data, but humans must translate it and decide how to apply the knowledge. 

Businesses with fully integrated systems capable of responding quickly to constantly changing customer needs will outperform others.

Beyond the Warehouse

Technology is reshaping operations in all stages of the supply chain. Self-driving trucks allow for improved driver focus, directly impacting safety by removing the human error that’s responsible for 80-90% of all Class 8 tractor accidents. They maintain steadier speeds, reducing wear and tear, improving fuel economy and decreasing carbon emissions. Just like autopilot systems on aircraft, this technology assists rather than replaces drivers. 

Shipping and rail carriers will continue to seek economies of scale through automation as they consolidate to lower costs. Advanced, cloud-based analytics, image-recognition sensors and real-time connectivity will help carriers deliver and track packages faster and more accurately.

In the next year, warehouse operators will have to navigate these trends while building flexible networks. Let go of your paper files and carbon paper along with your 8-track tapes, VCRs, landlines and dot matrix printers, and don’t look back. Take the first step now, because it certainly doesn’t end there.

It’s estimated that in five to 10 years, the use of quantum computers will create the unlimited power and integration necessary for the internet of things (IoT), and exceed the ability of the human mind to comprehend the full process^[ii]. If this statement doesn’t bite your butt, nothing will.

Sources:

[i] Reed, D., 2018. MHI Solution Q4, Cybersecurity in Supply Chain
[ii] Fortuna, N., 2018. Learning Fast, IN SECTION: FEATURE, Artificial Intelligence Poised to Have Big Impact on Supply Chains