As a “Chief” of some facet of your enterprise, it is very likely you have been exposed to what may seem like hyperbolic adjectives such as “transformative”, “revolutionary”, “disruptive”, “game-changing”, “explosive” applied to Internet of Things (IoT), Predictive Analytics, Artificial Intelligence (AI), big data and other new technologies. The fact is significant change IS happening in supply chain operations. Baby-boomer, GenX and Millennial generational leaders are learning, creating, adopting, adapting and driving exponential change. There is first-mover advantage in this cycle of change, but rest assured you are not too late. Yet, you must start now, get up to speed quickly and keep moving.
Supply Chain Technologies
Industry 4.0 has been illustrated, by Bill Marr, contributor to Forbes Magazine by explaining “When computers were introduced in Industry 3.0, it was disruptive thanks to the addition of an entirely new technology. Now, and into the future as Industry 4.0 unfolds, computers are connected and communicate with one another to ultimately make decisions without human involvement.” Industry 4.0 also includes the broad swath of automation and data exchange in manufacturing technologies. It includes networked data-physical systems, Internet of Things (IoT) devices, cloud computing and cognitive computing.
Today’s Impact on Logistics
The surge of disruption events hitting the logistics function is being driven by desires to use innovation to bypass the typical ‘continuous improvement” cycles to deliver quantum-leap cost savings solutions. Let’s face it, it is a tough slow road to revise entrenched, functional silo-based business processes.
If your business includes using freight forwarders for international or domestic shipping for inbound raw materials or to delivery your company’s products to your business or consumer customers, you may see logistics as a not particularly important value-add segment of your supply chain. Understand that this segment for supply chain has an outsized opportunity for cost savings and risk reductions because of the disproportionately high number of manual processes. Email, phone calls and paper documents are still the norm and are inherently-plagued by errors and the resulting delays. They all conspire to increase your costs, drive up inventory and displease your end customers with delayed shipments.
So, as a C-Suite leader, how do you provide the top-down mandate to deliver costs savings, balance sheet improvement and risk-mitigation via logistics digitalization?
Dear Chief of Chiefs
CEOs, as the Chief of all chiefs, you are looking at your organization’s alignment with an eye toward your customers, their future product desires, the future supply chains to deliver those desires and your shareholders’ desire for wealth creation. While all of these are unpredictable, you must continuously reevaluate your supply chain assets’ ability to deliver the company’s long-term strategic ambitions.
You may decide to position your team to lead an Industry 4.0 transformation of logistics from within or align your people, processes and systems to ride changes coming from outside the scope of your supply chain. Those that do neither will soon recognize the missed opportunity to wield a competitive weapon in the fight to realize your strategic ambitions and yield economic sustainability.
Dear Operations and Procurement Chiefs
The Operations and Procurement Chiefs need to recognize the technology-leveraging operations logistics manager and bring alongside him a technology-progressive logistics procurement manager to consider a new approach to developing their collaborative partnership. Together, they should be challenged to redefine the company’s demand profile for logistics services, determine what entities can deliver the optimal match of logistics services which strikes the proper balance of costs, breadth of services and reliability for transportation and back-office services. This collaborative team-of-two-must be supported with autonomy and authority. You and your planning, inventory management, quality, human resources and operations execution heads must give this team your careful attention to their plans for leveraging industry 4.0 solutions in Logistics.
Dear Human Resource Chief
There is a widening and deepening logistics skills gap. Census figures tell us we are at the start of declining situation where we progressively suffer from the deficiencies of skills in the evolving logistics function. We cannot start too soon to recruit and retain talent in a function with so much potential.
The counter to this dim view of qualified headcount future is recognition that the digitalization of support functions will result in headcount reductions for roles related to managing information in traditional non-digitalized processes including hazardous goods declarations, import/export paperwork, procurement and invoicing. Now is the time of opportunity to recognize and rejuvenate those members of your processing staff that have retraining potential to be transferred into the fewer, more technology-driven roles where exception management, problem-solving, data-analytics skills and an agile mindset will win the day.
Dear Quality Chief
In a recent trial, we attached Intel’s IoT devices to products ocean-freight shipped and road freight shipped from Northeast US into Mexico. I can see an example of the future with the Intel® Connected Logistics Platform soaking up data from devices tracking location, temperature, humidity, luminosity, angle and shock at every pallet, drum and carton across all manufacturing segments and industries. In the trial, the devices proved to be perfectly capable. Further, it is clear to see how the devices will drive intelligence from information in a cost-efficient manner, while monetizing and providing opportunity for continuous optimization. In the near term, Chief of Quality, if you could monitor the environment of every package through all n-tiers of your supply network to the customer’s door, will you be the first in your industry to differentiate your product with verified quality metrics against your competitors’ offerings?
Logistics Digitalized Future
Supply Chain leaders, who wish to be looked upon favorably for their guidance through this Industry 4.0 digitalization era, must recognize there is little time to contemplate the change. Technology adoption is happening with a scope and pace not seen in any arena of human existence. Logistics professionals need to accept a significant change - traditional forwarders, brokers and shipper processes will cease to exist in their current form. C-suite leadership must ready their workforce to speak the languages of EDI and APIs and develop collaborative, professional relationships with their data scientist colleagues. Supply chain leaders at all levels must define a structured and disciplined approach which is aligned with supply chain goals. Today, the digital transformation of the $2 trillion global freight forwarding sector, as well as the even larger $7 trillion global logistics industry is well underway. It is inevitable that logistics digitalization is in your supply chain future, the decision is to let it happen or to make it happen in your enterprise in an orchestrated manner aligned with achieving your supply chain ambitions.