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Disruptive Technologies in Supply Chain

Professor Nick Vyas, Executive Director and Co-Founder, USC Marshall’s Center for Global Supply Chain Management

Professor Nick Vyas, Executive Director and Co-Founder, USC Marshall’s Center for Global Supply Chain Management

Global supply chains are evolving at a rapid rate. Today’s executives are not only faced with traditional challenges such as cost, speed, quality and market share but also have to deal with ever changing horizon. It is important that executives act, adapt, and pay attention to these global trends when designing supply chain networks. Trends such as emerging markets, mega cities, millennial consumers, and e-commerce while analyzing the disruptive forces.

While trends may be disruptive, the tools we rely to manage end to end supply chain; have the potential to further disrupt the supply chain industry in a short timeframe. To stay informed about these factors, I will highlight few trends that I think is likely to have major impact: Drones, 3D printing, Cognitive Calculation, Big Data/Predictive Analytics. The question we are faced with is how can we re-design our supply chains to adopt new technologies and continue to be apart of the evolution?

Drones:

A prominent emerging technology, drones are a game-changing substitute to traditional processes. Despite initial military applications, in recent years, drones have caught the attention of the private sector. The possibilities for last-mile-delivery provided by drone and/or autonomous vehicles have attracted companies such as Google and Amazon. In August 2014, Google announced “Project Wing,” an initiative designed to use drones to efficiently reduce product delivery time to end customers.

Gartner estimates that by 2017, 20 percent logistics organizations will use drones for monitoring, searching, and managing deliveries.

Despite the advantages, several challenges will have to be overcome before drones become mainstream. The association of drones with the military has raised concerns about drone use in surveillance and privacy violations. Google and its competitors would benefit from dispelling public fear with comparison to technologies and its initial military purpose. Before microwaves and the World Wide Web became part of the fabric of our lives, they were apprehended with suspicion. Similarly, public perception of drones too can change.

Furthermore, drones may improve the supply chain industry in numerous ways. For one, drones could be used in ports and in the air to make deliveries that require fewer individuals to handle materials. For example, PINC Solutions, a provider of yard management systems, utilizes drones to identify the location of trailers, shipping containers, and other assets in remote areas. The drones are equipped to carry GPS, RFID, OCR, and barcode readers that can quickly locate and identify assets which have been tagged in a yard or port. The operation of drones will create new jobs for employees with technical training and logistical knowledge.

Technology plays a vital role in the foundation of the supply chain of prominent organizations

During the holiday season in 2015, Amazon released a video of the Amazon Prime Air drone designed for the home delivery market.

By using drones, Amazon could increase sales during the last days of the holiday season when, for instance, it is too late to make deliveries with conventional parcel delivery services while shoppers were about to prefer stores.

Industry like health care industry is also experimenting high-speed drones. Students at the Delft University of Technology in the Netherlands rigged a defibrillator and a webcam to a drone and made it deliverable to patients with cardiac arrest faster than an ambulance could reach the scene. Similarly, after the Haitian earthquake in 2012 drones were used to deliver small aid packages in remote disaster-hit areas.

While technical difficulties and legal challenges for drones remain, the technology will find its place in supply chain management.

3D: Cutting Out the Middleman

The key advantage of 3D printing is speed: With on-demand manufacturing supply chains become less complex, materials and components are supplied, as needed, eliminating the need for excess inventory, and significantly reducing related costs. Given myriad of advantages, various industries ranging from fashion to automotive are using3D printing to create products on demand.

For example, the use of 3D printing by California-based aerospace company SpaceX led to the construction of the emergency escape rockets on its new manned Dragon spacecraft. SpaceX developed materials, quickly and efficiently, that can with stand the demands of space travel. The lead-time reduction has reduced cost and enabled SpaceX to outstrip NASA in winning contracts for space station supply chain.

Cognitive Calculation:

New developments in cognitive calculation and smart computing can reduce the need for human contributions in supply chain management

Baxter, a robot developed by Rethink Robotics for collaborative industrial applications, is a classic example of cognitive calculation and artificial intelligence (AI) application in the supply chain. Using advanced AI, Baxter is “manually trainable by in-house staff, reducing the time and cost of third party programmers [and is] suitable for a range of applications and re-trainable across lines and tasks,” according to its manufacturer.
Therefore, one robot alone can handle line loading, machine tending, packaging, and materials handling. Furthermore, when it finishes a task at one particular station, it can be easily deployed to another station and trained to conduct the next task.

Applying these technologies within supply chains means that robots can perform monotonous tasks and free up skilled labor for more value-added tasks.

Big Data/Predictive Data Analytics:

Technology plays a vital role in the foundation of the supply chain of prominent organizations. For instance, Walmart has the largest information technology infrastructure of any private company in the world. Its state-of-the-art technology and network design allow Walmart to accurately forecast demand, track and predict inventory levels, create highly efficient transportation routes, and manage customer relationships and service response logistics.

Big Data has certainly changed the supply chain industry. For example, using incoming Internet of Things (IoT) sensor data from its network of service stations and convenience stores, a fuel retailer knows in near real-time what its fuel product mix and consumption rates are in each area of its geographical territory.

Armed with such information, retailers are able to achieve better revenue positioning because product offers can be instantaneously changed to respond to customer demand shifts.

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