November 2, 2021

Future Supply Chain Automation Sounds Boring (and that’s a beautiful thing)

Prominent British economist John Maynard Keynes (1883–1946) once predicted that society would become so efficient in its work that the biggest problem facing future humankind would be what to do with all its leisure time. He foresaw a 15-hour workweek, where the world’s people had met all of their material needs and simply faced a long day of badminton or some such thing. Of course, he predicted this just before the Great Depression, which gave people plenty to do, and before humans could spend an infinite amount of time arguing about politics with strangers over a mobile phone.

Still, hyper-efficient work that leaves you with an abundance of time is an enticing ideal. And it’s a vision that the discipline of supply chain management is well positioned to accomplish in 2022 and beyond. A confluence of technologies, trading models and streamlined workflows are enabling more efficient supply chain functionality than ever. Looking to the horizon of how organizations connect and trade, many of these trends have the potential to redefine how we allocate our time, resources and attention at an accelerated rate. So what does a future with less drudgery and more profitability look like in the world of supply chains?

Artificial Intelligence Puts in the Work

In the future, artificial intelligence and robotic process automation will remove the need for humans to perform low-value manual tasks so they can focus on more strategic and high-impact activities. Artificial intelligence will also deliver unprecedented tools that will help transform productivity. We’re already seeing this with phenomena such as the “digital twin,” a virtual model enabled by massive processing power that lets you model out the results of alternative product or business scenarios. Companies will see less cost and risk, and more profitability, with AI on board.

Right now, many organizations are still finding their footing in the world of AI. The American Productivity and Quality Center reports that only 13 percent of organizations using AI have been deploying it for more than two years. But according to research by IBM, 46 percent of supply chain execs already consider AI/cognitive computing and cloud applications to be their largest investment areas over the next three years.

Decisions are Simplified Through Analytics

Speaking of AI, new advances in artificial intelligence will have seen out the era of “Big Data” and ushered in the age of “Big Answers.” Over the last few decades, our supply chain environments have grown more and more capable of data collection and aggregation. But this hasn’t always translated into data value. In addition, the battle for data quality has long been an issue for most organizations.

In the future, processing power, artificial intelligence, cloud computing and other technologies will enable us to find and verify data that delivers real value for supply chain stakeholders and decision-makers. Today these advanced analytics are mainly found in the world’s leading corporations. In the future, enterprises of all sizes and industries will be able to economically build models and create systems that address specific supply chain challenges and learn how to solve for them more effectively and efficiently.

Improved Visibility Makes Things Easier

Today, everyone wants more visibility across their supply chain. And in the future, they're going to get it—with more accuracy, flexibility and cost effectiveness than ever. More than 80 percent of supply chain executives recently reported that visibility was their number one challenge. Integrated hardware, software, communication and process advances mean tomorrow’s supply chains will be more informed than ever.

Manufacturers will be able to maintain awareness of supplier, inventory, process and order status in real-time. Tech such as the Internet of Things (IoT), RFID, 5G and other technologies will have filled in blank spots on the factory floor and in the field. And operational, commercial and logistical stakeholders will be able to adjust in real time as challenges arise to minimize risk and cost.

Sustainability Progress is Real

Everyone knows that supply chains have a huge impact on the environment. In fact, research from Boston Consulting Group reports that the supply chains for just eight specific industries are responsible for more than 50 percent of all global CO2 emissions. Of course, because we’re a part of all these industries—which range from automobiles to food to construction—that means we’re all responsible. And each of these industries has pledged to run more sustainably.

Tomorrow’s digital supply chains will enable more proactive, informed and intelligent planning capabilities that will help minimize CO2 emissions by maximizing efficiency. Already interconnected systems are helping plan logistical routes, schedule pick-up time slots and perform other digital collaboration that makes logistics more climate-friendly. Digital supply chains will also go further in helping qualify trading partners with strong ESG performance. In the future, we’ll also be able to integrate a number of other carbon-friendly technologies, financial instruments and business models to find the lowest-impact way to make, buy, move, sell or check products.

What’s interesting about this future state is that if stakeholders reduce global warming, we could all actually reduce the frequency or severity of disruptive supply chain events such as hurricanes and floods. Will we be able to decarbonize supply chains enough to make that kind of impact in the future? We’ll see.

Disruption Prevention is Everywhere

Globalization has been one of the great equalizers, and enablers, of our lifetime. Paired with the logistical advances such as the shipping container, regional economic partnerships and new financial instruments, a refinery on the Houston ship channel is as likely to buy a valve made in Germany as it is one made just five miles down the road.

In the wake of COVID-19, however, every industry will approach its supply chain with a renewed intensity for disruption prevention and mitigation. Globalization will continue to advance. But key industries might reshore. Procurement departments will stack purchase categories deep with potential suppliers, and give each more scrutiny than ever. Larger enterprises may explore vertical integration for more economies of scale and less risk.

Much of the industry’s newfound modelling capabilities will be used not just to think through product changes or resource allocations but also determine how to minimize the impact of wildfires on West Coast manufacturing concerns or build more contingency resilience in the supply of precious metals for manufacturers of batteries for electric vehicles.

ERPs are Now NRPs

The deployment of Enterprise Resource Planning (ERP) software has helped redefine productivity for the world’s leading corporations over the past decade—adding billions of dollars’ worth of value to the Global 5000. In the future, these systems and their successors and adjuncts will have evolved into Network Resource Planning (NRP) systems. Pushing past the enterprise, these networks of interconnected trading partners will leverage leading edge technology to optimize resources across the supply chain.

Reacting with the intelligence of a living organism, these interconnected environments will be able to make adjustments that result in more strategic supply chain performance for everyone involved. A problem at a manufacturing facility in China could spark contingencies for a hundred interconnected businesses in an effort to prevent disruption, cost or delay. To have these connections will be to have an advantage. And, as will always be the case, advantage will beget even more advantage.

Supply chain management is not a field for those afraid of hard work. So the bad news is that having 35 hours of free time to work on your badminton game is not looking good. But the good news is that the next decade has the potential to make your supply chain more intelligent, cost-effective, resilient, lean and sustainable than ever. In short, more boring. And, let’s face it, after the strain of the last few years on supply chains worldwide, having some boring old time to help address big-picture challenges sounds pretty great.