Smart Automation and Patterns of Digital Supply Chain Disruption

[3 MINUTE READ]

The following guest post was composed by Michael Hu and originally appeared on his website. It is not an endorsement or recommendation and should not be construed as such. It is intended solely for informational purposes. The views and opinions expressed are those of the author and do not necessarily reflect the opinion of Supplier Connection or its corporate or regional growth partners.

The post is intended to provide small and diverse suppliers with a forecast on the future of supply chain management, so they can prepare and begin to position themselves to win upcoming procurement opportunities. Buyers also may benefit from its projections, which would represent a significant departure from current supply chain frameworks.

 

Advances in smart automation are increasingly disrupting both B2B and B2C supply chains. The pattern of disruption will likely manifest in two waves.

Wave 1: Localized Disruption

In the next three to seven years, supply chain functions such as planning or warehousing or delivery will be transformed by innovative applications of smart automation. For example, DHL recently announced testing augmented reality wearables in its warehouses to improve picking productivity and accuracy.

Startups such as Dispatch and Starship Technologies are rolling out self-driving vehicles to compete head to head with Amazon and Google drones to enable Same Day last mile delivery.

Beauty companies are piloting automated chat-bots to bring enhanced experience in its after-sales customer service.

The above examples all highlight the imminent trend of smart automation enabling supply chain functions to break free of traditional trade-offs.

Instead of picking between offering a lower cost or faster delivery or better service, companies can offer each. Consequently, supply chains will become simultaneously lower cost and more agile.

However, this is just the beginning.

The near term impact of smart automation on supply chain will likely be localized, that is to say, a specific set of smart automation technologies impacting a specific supply chain function or activity.

These patterns of disruption are largely predictable. Progressive companies will likely anticipate and leverage against these emerging disruptions.

Wave 2: Large Scale Platform Disruptions

Over the longer horizon, we will experience a second wave of less predictable and more transformative pattern of disruption – this will fundamentally redefine today’s supply chain structures. There are two drivers for this.

First, as underlying advances in artificial intelligence, sensors, 3D printing and miniaturization accelerates, they will combine and converge in unexpected ways to unlock more transformative smart automation.

For example an A.I. powered beauty advisor app on a consumer’s phone could trigger an order to a Beauty manufacturer’s 3D printing/forming facility to produce a batch of cosmetics tailored to their skin chemistry profile.

Second, as supply chain functions become more digital, they will increasingly exhibit and benefit from digital platform characteristics.

Platforms will re-organize supply chain functions to become horizontal “plug and play” stacks that cut across organizations. Companies will then build and coordinate their supply chain functions on top of these shared supply chain stacks.

Future retailers and CPG companies can shed their internal operations and unlock massive transportation synergies by adopting an “Uber-sharing” of line haul trucks.

The platform owner offers a flexible fleet of autonomous driving trucks coordinated for maximum efficiency via connected sensors and a cloud based A.I. engine that manages route optimization, cross-firm scheduling, preventative maintenance sensing.

The rise of digitized supply chain platforms will create significant challenges and opportunities for companies as they redefine today’s supply chain paradigm.

Michael Hu is a principal with A.T. Kearney where he works with global consumer and retail clients in areas of supply chain innovation and strategy, omnichannel fulfillment, digital transformation and A.I.  He can be reached at Michael.hu@atkearney.com.