When you hear the phrase “supply chain,” what do you think about? Whatever it is, you’re probably right — the supply chain is less a thing and more a complex global network of linked persons and things. This global network is responsible for transporting the breakfast you ate this morning, your grandmother’s prescriptions and the screen you’re reading this content on. Plus, now there is a digital supply chain.
The supply chain has always been around in one form or another, from the earliest roadways gouged into the dirt. As technology has gotten smarter, we’ve transitioned into a new kind of supply chain — a digital-physical one — that brings exciting implications for industries of all kinds. Naturally, it also comes with some risks.
Where Did the Digital Supply Chain Come From?
The “digital supply chain” isn’t a separate entity from the “traditional” supply chain that we know, which consists of warehouses, conveyor belts, forklift operators, picking and packing specialists, truck drivers, inspectors, compliance officers, and many other types of professionals. Rather, the digital supply chain unites each of these functions, and many more, with suites of hardware and software that span entire facilities and operations.
The supply chain was always destined to evolve in this way — technology seeks to help us do more work with less time and fewer resources, and that mission only becomes more urgent with time. The digital supply chain delivers on that promise with new tools and technologies for each of the departments and teams that keep the world’s supply chains functioning.
Building a digital supply chain was the logical next step in a series of industrial revolutions, each one building on the unlocked potential even further. Briefly, the first three industrial revolutions were as follows:
- First: Harnessed steam and water power and introduced basic mechanization.
- Second: Introduced electricity and mass production.
- Third: Brought the beginning of large-scale IT projects along with the beginnings of automation.
The digital supply chain is a part of the “Fourth Industrial Revolution,” which is the marriage of cyber and physical systems. Given the geographical distribution of supply chains and the sheer number of people, machines, vehicles and facilities involved, it makes sense that supply chain would be one of the first industries to seize the potential here.
So what is that potential? To find out, let’s look at some of the technologies in the digital supply chain and their benefits.
Enterprise resource planning platforms provide powerful analytical tools and easy-to-use dashboards to visualize facility processes and even anticipate future demand and other trends.
Analytics is important to the digital supply chain because it’s part of what enables LEAN and just-in-time manufacturing and shipping. Manufacturing, holding or shipping any kind of freight when it isn’t needed is wasteful. In the food industry, it leads to spoilage and waste that resembles a humanitarian crisis. And in any industry, it’s a waste of money and effort.
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Robotics and Automation
Automating basic physical processes — like palletizing or re-palletizing products, picking orders from warehouse racking and sorting incoming or outgoing freight — will free up your human workforce to pursue higher-value work while bringing down error rates.
Human error can be reduced in a warehouse or other supply chain location when you know what to look for, but automation brings us one step closer to eliminating it entirely.
The idea of bringing robots and “cobots” — collaborative robots that work safely alongside humans in environments requiring physical effort — into the supply chain is hardly a sci-fi narrative anymore. The cost, learning curve and other barriers to entry are dropping all the time, and companies can even add sensors and autonomous mechanization to some existing pallet trucks and vehicles.
Rapid Manufacturing and Customization
Additive manufacturing, including 3D printing, could become one of the biggest contributors to the digital supply chain.
For a start, 3D printing will physically transform the world’s supply chains by positioning the means of production — printers — closer to the end users. If we could stop into a FedEx store and print a set of coasters just as easily as we can print estate-sale fliers, what’s the point of having a near-identical product flown or trucked to you from afar?
What the supply chain hasn’t excelled in thus far is the timely delivery of customized and small-batch products, but 3D printing provides a lot of exciting potential for companies to distribute region-specific and even individualized products.
Highly Efficient Last-Mile Delivery
In logistics and ecommerce, the “A word” is “Amazon.” Nobody quite knows what’s going to happen now that Bezos and Co. has access to Whole Foods’ network of cooled warehouses, which puts them in the position of delivering fresh groceries, lightning-fast, to a substantial (80%) portion of the U.S. population.
Last-mile delivery is the holy grail for every company that operates in the supply chain, but advanced analytical models can increasingly help plot consumer trends and predict specific purchases. This process can make sure fast-moving products are ready to go.
Drones play a role in last-mile delivery too, of course — for pizzas and other food as well as, say, those last-minute camping supplies you forgot to buy. If your weekend begins in four hours, but you’ve forgotten some specialty item on your shopping list that you’ll desperately need, only a drone could bring it to your doorstep in 30 minutes. At least, that’s the dream.
What’s certain is that the digital supply chain greatly reduces the number of human interventions required to move something from point A to B.
How Do You Manage a Digital Supply Chain?
So how do you manage one? It presents many of the same processes and challenges as the supply chain we all know and love along with several of its own.
One challenge of managing a digital supply chain is hiring people who understand data science and digital-physical systems. Everybody knows that data science and other technology disciplines are the future of business. That’s why every business is staffing up in this area. Based on analyses of job-seekers’ online behavior, it’s expected that companies will continue to post more job openings in data science than can be filled by qualified applicants.
Companies can do several things to prepare themselves. One thing is to relax some of the educational and experience requirements in job postings. Major technology companies are doing so, instead favoring driven, self-starting candidates who can learn on their feet.
Another challenge unique to the digital supply chain is knowing the (digital) risks. The digital supply chain is the convergence of digital and physical systems. That means introducing internet connectivity into processes and areas of your warehouse or facility where it was never present before. You can receive condition monitoring data from conveyor belts and lift trucks — but how secure is your software vendor? Do your connected HVAC systems and your other IoT devices carry relevant security certifications?
There are lots of advantages and technologies to get excited about here, but operating on this type of supply chain means fully understanding the potential gains as well as the risks before making a technology investment. But companies that thread the needle well will have a serious competitive advantage on their hands — to the benefit of all the customers waiting downstream.