How AI and automation could impact supply chain roles
While the technology is being widely adopted, it is constant...
Innovations such as AI and automation have been tipped to kickstart the Fourth Revolution.
While the technology is being widely adopted, it is constantly evolving. Therefore, there is uncertainty surrounding its overall impact, particularly on professional roles within the supply chain.
Some fear that the technology will replace its human counterparts, while other experts suggest it will work in unison with humans, supporting them to focus on higher value opportunities. Amidst all of this uncertainty one thing is for certain: AI and automation will change how we operate.
One side of the coin: a workforce replaced
Recent advancements in AI and automation mean that the skills of computers and robots will soon surpass that of workers in numerous tasks. Consequently, when these advanced technologies also become more cost effective, the workforce will be automated away.
Workers will not just be substituted in low skilled jobs such as warehousing and transportation. But with advancements in automated forecasting, exception handling and supply chain planning, skilled roles are also at risk. One study has forecasted that about 47% of US jobs are at risk of computerisation. Another study looked at the impacts of robots in employment opportunities in US manufacturing and found significant decreases in both employment and wages.
On the flip side: a work force enhanced
The opposing and more hopeful view is that there will be an AI-driven shift in the workforce, as technology increases the ability of workers who are not in direct competition with it. Whilst technology will likely depress employment for some forms of labour, it has the potential to produce new needs and openings through “creative destruction”. This gives rise to the potential for a complementary effect.
The complimentary effect is illustrated by looking at the introduction of the spreadsheet in the early 1980’s, first with VisiCalc and then Lotus 1-2-3. This made working with large quantities of related data much easier without time consuming and error-prone methods. Suddenly, you could change commodity costs, currency exchange rates, component prices or interest rates and instantly see the impact on revenues and profits into the future. In the finance and accounting discipline (e.g. in “supply chain finance”) it simplified routine bookkeeping and made many tasks simpler like modelling alternate scenarios.
The spreadsheet hugely impacted the demand for bookkeepers (44% less in number between 1985 and 2017) but greatly increased the need for people who could run the numbers on this new software like accountants, financial managers and management consultants. In the United States between 1985 and 2017, the ranks of accountants and auditors had grown 41% to 1.8 million, while financial managers and management consultants had nearly quadrupled to 2.1 million.
A professional opinion
Some take the pessimistic view, believing that advances in AI and automation are at a tipping point, after which machines will soon be better than humans in many activities. Then when access to this technology becomes mainstream, it will be the “default choice” for businesses. Consequently, there will remain a few highly paid workers employed and the rest will struggle to find work, or be stuck in jobs that are poorly paid, unstable and stressful.
Economist Roger Bootle takes a more optimistic view in his book “The AI Economy: Work, Wealth and Welfare in the Robot Age”. Bootle believes that AI and robotics will ultimately drive economic growth and release people from performing mundane, boring and unfulfilling tasks, while creating new roles in areas that will always need a human touch and those which require social, collaboration and design skills.
Despite both sides putting forward believable arguments, recent history has not been able to support convincingly the optimists or the pessimists. Unemployment is a record low, which suggests that automation has not led to labour displacement. On the other hand, economists have been pointing out that the growth in overall productivity attributed to technology has been consistently disappointing. Though Erik Brynjolfsson, who studies the economics of information technology, suggests in his explanation of the productivity paradox, that measurements of the impacts may be time delayed and that the wrong (“old economy”) measures are being used.
When one door closes, another one opens
Whatever side you support, what is certain is that technology AI and automation are set to change many supply chain roles as we know them. This will cause tremendous disruption in supply chains and for workers to remain necessary, they will have to consider re-inventing themselves.
Changing customer expectations are also set to have a monumental impact on supply chain roles. The rise of ‘next day’ delivery means consumers expect products and services in their hands more quickly. Whilst the rise of AI and analytics mean a more personalised experience has become the norm. To provide these businesses must invent an entirely new way to architect, design and manage supply chains across broader ecosystems, new technologies and new roles and skill sets.
Whilst there are roles being replaced, new supply chain roles are also being created. These jobs are increasingly focused on working directly in consumer facing departments. The new customer co-creation paradigm will drive the need for supply chain professionals, that can orchestrate the silos across organisations, while at the same time leveraging the latest modelling and analytical tools for insights and decision making.
These new highly cooperative roles will require the leveraging of AI and automation. This will help to make intelligent decisions around new product attributes, product portfolios, product pricing and distribution, network design, product flow paths, capacity, inventory placement and transportation modes. Digital Twin technology will be key to making those interconnected trade-offs, in order to deliver in an environment of ever-changing customer needs, at new levels of speed and scale.
Adoption of AI and automation is becoming widespread across the supply chain, and it’s only growing. However, the technology needs to assist existing workers, not replace them. Now is the time to focus on achieving a harmonious relationship between humans and machines, working hand-in-hand to deliver a more efficient and sustainable supply chain to deliver better business outcomes.
For more information on procurement, supply chain and logistics topics - please take a look at the latest edition of Supply Chain Digital magazine.
Upgrading RFID and Automated Track and Trace Solutions
During the COVID-19 pandemic, global supply chains faced the challenge of rapidly adjusting their business priorities to new customer preferences. Local supplier backlogs, winter storms, and the Suez Canal backup in March underscored the need for efficiency and visibility across the supply chain.
According to Christof Backhaus, Digital Lead Product Supply and Smart Label Project Lead at Bayer, companies must now place critical importance on tracking and tracing their products. “All large enterprises in the world dealing with finished goods,” he said, “seek functional and technical solutions to real-time channel inventory.”
Indeed, RFID’s real-time tracking data allows executives to make quick, well-informed decisions in moments of supply chain crisis - and rather than unfolding across days or weeks, it only takes a matter of minutes.
Why does RFID remain relevant despite digital disruption?
Essentially, RFID uses radio frequency waves to transfer data wirelessly between a scanner and a tag. In contrast to barcode technology, which requires a stationary scanner, RFID tags can be pinged from anywhere in the world, allowing companies to track real-time movement through the supply chain. RFID tags can also scan unique SKU numbers and distinguish between varying product sizes, colours, and styles: a critical feature for increasingly personalised end-user products.
Though the first patent for RFID tags appeared in 1973, higher accuracy rates, lower costs, and advances in sensor and data technology have made it newly accessible to a wide range of companies. Today, the technology is used in logistics networks, manufacturing and delivery networks in the pharmaceutical industry, and any business where efficiently tracking and monitoring product location is critical: raw materials, consumer products, cars, electronics, retail, and agriculture.
What are the key benefits?
Overall, automated track and trace solutions keep labour costs low, optimise operating costs, mitigate security risks, use capital effectively, and assist companies in adhering to regulatory requirements.
Below are three in-depth dives into how RFID benefits major industries:
- Pharmaceuticals: RFID tags help manufacturers safeguard sensitive products such as vaccines, tracking where they are and when they will arrive in real-time. Sensors closely monitor temperatures to ensure regulatory compliance. If anyone tampers with a shipment, the sensors alert the company.
- Logistics: RFID identifies process gaps and frequent anomalies by monitoring a product’s lifecycle from shipment to delivery. This data helps decision-makers predict the most efficient routes and therefore optimise their distribution schedules.
- Retail: Sensors help guard shipments against theft and provide critical intelligence when shipments go missing. Before adopting RFID technology in 2203, UK retailer Marks and Spencer relied on barcodes to scan inventory. When they made the switch, their productivity increased from a maximum of 400-600 items scanned per hour to up to 15,000 items scanned per hour. Building on their initial success, the retailer expanded the use of the technology and is still using it today.
Regardless of the industry, RFID promotes accuracy, immediacy, and efficiency. Companies reduce human error by automatically scanning products, keep track of inventory even in geographic locations with poor connectivity, and help streamline warehouse operations by identifying exact product locations.
Which recent innovations have changed the game?
With recent developments in cloud technology and IoT, a multitude of cloud-based alternatives have emerged to challenge traditional RFID technology. One of these cutting-edge solutions is Sony’s Smart Label - an intelligent shipping label that runs on AT&T’s global cellular network.
As with any good innovation, Sony’s proprietary technology started with a customer need ready to be solved: the Bayer Crop Science Division lacked an international IoT solution that could track seed products from start to finish throughout its distribution channel. Millions of dollars of revenue stood at stake, so Bayer turned to Sony to develop a smart label that would set the organisation up to manage its supply chain with end-to-end visibility.
Sony’s printable and disposable adhesive label allows companies to track the condition and location of their products worldwide and act upon the vast amounts of data it collects. The process is simple: the label activates when attached to the package, connects to AT&T’s secure LTE-M network, and sends data to the Smart Label Cloud in real time.
In sharp contrast to other smart label solutions that place trust in a patchwork combination of Wi-Fi, radio-frequency identification, and other limited coverage connections, the Sony Smart Label connects solely through a secure and universally-available cellular network. “Working with Sony,” says Robert Boyanovsky, the vice president of Mobility, IoT and 5G at AT&T, “we provide full visibility of every item shipped.”
Most importantly for companies on the edge, the Smart Label integrates with existing enterprise systems to achieve full visibility, thus adding value without disrupting supply chain process flow.
Why is this important now?
Companies that previously delayed introducing RFID and other automated track-and-trace technologies can capitalise on recent developments that lower costs, improve accuracy, and supercharge traceability.
Clearly the technology has value in today’s uncertain global marketplace, and can help decrease the costs of tracking goods. To quote Christof Backhaus, the Project Lead at Bayer, “the Smart Label indicates how much product is in the market, from the packaging line to the end customer.” Companies no longer have to spend a small fortune to take advantage of recent IoT developments. “Due to the technical composition [of the label],” Backhaus explains, “we don’t require additional infrastructure, manual scanning, or other expensive tools.”
Over the decades since RFID was first introduced, support for introducing it to company supply chains has also improved. AT&T’s IoT Professional Services Organisation, for example, supports companies through the end-to-end design and integration process--from installation to deployment and project management.
Companies that invest in traceable and visible supply chain solutions stand the best chance of survival, adjusting in real-time to natural disasters, shipping backups, and slowed-down supplier turnarounds as a result of the global pandemic. “Smart Label promises to help businesses like Bayer realise the full potential of the IoT,” says AT&T’s Boyanovsky. “[We can] deliver improvements in revenue and cost savings and make supply chains more efficient.”
Certainly, company executives will be hard-pressed to ignore recent innovations. In an age of uncertainty, RFID and its challengers herald a welcome sense of supply chain security. The next step? “Our sales team,” Boyanovsky adds, “is prepared to engage with prospective customers now.”