Recently, I was in Silicon Valley meeting with supply chain leaders in the technology sector. Many were still catching their breath after a turbulent 2018. In classic high-tech style, they also had their eyes set firmly on the future. A common topic of discussion was the impact of new digital capabilities on their organizations.
What’s Old is What’s New
Some viewed the latest set of automation and augmentation technologies as simply the next wave to wash through supply chain. For instance, many are already using augmented reality for maintenance and chatbots for customer service. They wondered if these advances are really that different from what planning optimization was a decade ago, in terms of change management.
Either way, the wave is building. Our latest Future of Supply Chain survey reveals that, across the entire community, roles in planning, manufacturing and logistics are ripe for automation and augmentation by the mid-2020s.
Employees whose value was previously derived from gathering, transforming and transmitting order data or manually flowing products through a warehouse will see their roles morph to more customer value-based activities over time.
There are numerous examples of this phenomenon at leading tech companies. I recently attended a talk given by David Warrick, GM of Global Supply Chain at Microsoft. He explained how their supply chain had developed the ability to dynamically steer shipments around real-time disruptions, using prescriptive analytics. Warrick also shared how they had trained customer service robots to accurately respond to the ever popular “where’s my order?” question in less than 10 minutes versus what could take days in the more manual past. What really stuck with me, though, was his position that these new capabilities were not an efficiency play, but rather a necessity for their workforce to manage an increasingly complex supply chain and a higher set of customer expectations.
But What About AI?
Using artificial intelligence (AI) techniques in supply chain is a game changer, but not just for the reasons most people imagine. Yes, AI can improve processing times and accuracy at the step-function level demonstrated by Microsoft and other leading supply chains. But what’s really different from past automation technologies is that, for some applications, we humans will never truly understand what makes them so successful.
For those interested in learning more about this concept, here’s a short video on “How Machines Learn” (thanks to my son for sharing this with me). The gist is that our machine learning technology is not based on humans explicitly telling bots HOW to do their job, but for us to define performance criteria and a series of tests, against which generations of bots are graded. These bots repeatedly evolve, in a process similar to natural selection, until the larger machine finally passes its tests with flying colors. An important note in all of this is that the complex, underlying logic used by the bots is invisible to the human test writers.
One Constant: Change is Still Hard
Overall, the supply chain community is poised to bet big on AI and other digital supply chain technologies, with nearly three-quarters planning moderate-to-significant investments by 2025.
While the business results we hear from Microsoft and others are impressive and enabled by more capable workers, there are still large change management issues to address when it comes to digital supply chain. At the next level, there is a need for a new management mindset and more sophisticated employee skills.
When it comes to decision-making, the aforementioned shift to AI might feel risky to supply chain leaders, managers and staff who only feel comfortable when they fully understand the logic of the latest plan or directive. There will need to be transition periods when both new and old/manual processes run in parallel, so everyone can see that the new way is better.
Digital supply chain also means new skills for the supply chain workforce. Some specialized skills like data scientists might be newly hired or sourced, but the majority of roles will require continuous learning and development of existing employees.
As individuals we own our employability, but leading organizations also need to invest the time and resources required to bridge us to new skills and roles. It’s a brave new world and for those wanting to make a difference, there’s never been a better time to work in supply chain.
Stan Aronow, VP Distinguished Analyst, Gartner