How will digital technologies that will transform supply chain management? Read my point of view, originally published in this interview in the Estonian business daily Äripäev on Feb. 18th 2016. Here is the translation.
1. What digital developments have the greatest impact on supply chain management?
Technologies that improve the flow of information in the supply chain will have a positive impact. Today, supply chain management is mostly dealing with challenges such as efficiency, disruptions, security, sustainability and visibility. I think these challenges can be addressed by a strong control around the information flow and across all of the supply chain players. Let me give you some examples:
The Internet of Things will have a huge impact. Take for instance how some manufacturers use RFID tagging so that the product controls the production line. Then these tags can be used to track a shipment all the way through the distribution network and even to recover lost or stolen goods. Autonomous vehicles and advanced robotics connected to the Internet of Things are also value drivers to the flow of information in the supply chain.
With all things being connected and with the right use of analytical tools, supply chains are becoming smarter. Analytics can help supply chain managers in transforming data streams into meaningful insights and predict supply chain risks, prevent security breaches, improve demand forecasting and inventory planning, and find better and more sustainable distribution routes.
I am also very excited with new technologies that are making supply chain professionals matter. Some companies are successfully experiencing with mobile apps and how their use is empowering supply chain employees to transform their jobs.
Looking ahead, I will be following the evolution of smart robots, autonomous vehicles, gesture control, skinput, LED, and in particular 3D printing – a technology that will radically transform the supply chain as we know it.
2. Could contemporary technologies help to foresee future and what opportunities it could bring for supply chain management?
We are entering the Dawn of Artificial Intelligence in which advanced analytics applied to big data together with other technologies are already making more accurate predictions and provide better business recommendations.
A good use of the new torrents of data coming from the billions of connected devices can potentially reveal previously undiscovered insights and propose alternative angles to the decision-making process. In order to make use of this vast amount of data, supply chain practitioners will have to build the right technology foundation: a sound infrastructure based on cloud with a reliable network that safeguards data and serves as the foundational layer for an advanced analytics engine.
We at IBM believe that the Cognitive Era has arrived. A time in which digital intelligence meets digital business. For supply chain management this means a wealth of opportunities. Back to the example before, the use of tracking devices on a product combined with cognitive capabilities can create new data streams that can foresee disruption or indicate alternative routes that meet schedule.
3. Could you bring examples of companies who have been successful in using these digital developments?
Let me give some reference cases; I would, however, refrain from mentioning company names.
The typical example is how the Internet of Things powered by analytics can reduce machine downtime in manufacturing through predictive asset optimization solutions. On top of that, add machine to machine communications to optimize floor operations, and mobile solutions to allow production operators to receive alerts and react quickly to issues. This is the essence of Industry 4.0.
A retailer has developed a pioneering demand-forecasting system based on cognitive computing which uses their own structured data plus several different streams of unstructured data to capture – among others – the consumers’ sentiment and weather patterns. Behaviors that seemed incidental before can now be predicted with the benefit of reducing demand-forecasting errors by 50 % and optimizing stock and store replenishment decisions.
A pharmaceutical company will start using RFID technology to track containers of medication from the manufacturing location down to the pharmacy or hospital. The device is an ultra-high frequency (UHF) tag attached to the cap of the bottle. This simple gadget is relevant to the medical, cosmetic, food and beverage distribution industries since it provides a solution to fight counterfeiting and product tampering, while also allowing tracking of shipments on item level, thus enhancing supply chain visibility.
To increase supply chain visibility and reduce costs, check out the IBM Electronics industry website.