by Yong Siew Mee, VP Global Marketing, Quintiq
Faster, smarter, and cheaper – 2017 will mark the turning point for a number of technologies, and more importantly, for supply chains worldwide. Technologies that were once thought of as emerging — The Internet of Things (IoT), blockchain, augmented reality, 3D printing, and machine learning— will enter the mainstream and grow at a phenomenal rate. What does this mean and how will it impact you? Let’s take a closer look.
Internet of Things
Internet of Things (IoT), the network of connected physical objects, continues to grow at a blistering pace of five million devices a day. In a recent study, tech research firm Gartner estimates that there are 6.4 billion connected devices worldwide today. That is up 30 per cent from 2015, and we are on track to hit 20.8 billion by 2020.
But IoT is more than just Fitbits and iPhones — it includes the GPS radio in a handheld scanner, the RFID chip in a pallet, and the myriad networked sensors in everything from pipes to machines. And while we probably won’t see any breakthroughs in 2017, we are going to see increased adoption as costs continue to drop.
This trend marks a great opportunity for companies to push for end-to-end visibility in their supply chains, which will give them a tremendous advantage, particularly in today’s volatile markets, in detecting changes quickly as well as in spotting opportunities and threats.
For example, 3PLs could reduce fuel costs by optimising fleet routes based on real-time traffic conditions; bulk logistics providers could ensure temperature stability for their cargo in transit, and manufacturers could prevent stock-outs by monitoring inventory across all their distribution centres.
These opportunities add up: A 2012 study by General Electric estimates that the rail freight sector could save as much as $27bn over 15 years with just a one per cent reduction in system inefficiency; in aviation, an increase of one per cent in fuel savings could translate to $30bn in savings over the same period.
The push for visibility continues with the blockchain. You might know it as the technology behind Bitcoin, but its applications go beyond finance. Blockchain has the potential to simplify the way we track and trade anything of value.
Here’s how it works: Imagine that you have a digital ledger for every item in your supply chain – one that records every transaction that occurs in its journey through your supply chain. But instead of storing it in a central database in the cloud, every supplier is given a copy, in which they will validate any changes by using an algorithm. This system of distributed consensus creates a single, immutable version of the truth — boosting trust, transparency, and efficiency among all parties.
Although still in its infancy, blockchain is worth keeping an eye on in 2017 as we start to see it in action in the supply chain. For example, London-based startup Everledger recently launched a service that helps companies track the movement of diamonds through the supply chain, which will help combat insurance fraud and theft. Similarly, a retailer could use blockchain to validate the origins of the organic produce it stocks on its shelves. And that is just the tip of the iceberg: Gartner reports that it has documented more than 130 different use cases for blockchain across various industries in March 2016.
Like the IoT, we are reaching a tipping point in augmented reality (AR) regarding price and capability. This will drive adoption in 2017, particularly in logistics and warehousing operations, where AR will have the most impact. According to a 2014 DHL report, warehousing operations is estimated to account for 20 per cent of all logistics costs, and the task of picking 55 per cent to 65 per cent of the total cost of warehousing operations.
For the uninitiated, an AR solution enables the user to overlay vital information onto real-world surfaces, just as a heads-up display in a car projects the speed onto the windshield. The Vuzix Smart Glasses, for example, allow pickers to keep their hands free by projecting the picking list into their field of view — letting them move quicker, more accurately and efficiently. In fact, a pilot project run by DHL in 2016 using the Vuzix solution saw a 25 per cent boost in efficiency.
Another key use case for AR is improving on-site repairs. For instance, an equipment repair technician could make a call onsite to an expert if he stumbles upon a problem. The expert will then be able to provide step-by-step guidance based on what he sees, streamed live through the technician’s smart glasses. This way, the technician gains first-hand experience and the job gets done faster; it is a win-win.
3D printing is a US$5bn industry today, but that is nothing compared to what analyst firm Canalys predicts where 3D printing will be in 2019: US$20.2bn. 2017 will see 3D printing take off, as many of the barriers to speed and quality are overcome by new advances in technology.
For example, the new M1 printer by California-based startup Carbon can produce an object 25x to 100x faster than conventional printers using a technology called Continuous Liquid Interface Production (CLIP). What’s more, CLIP also provides a leap in quality, making it possible to 3D print isotropic parts with mechanical properties and a surface finish like injected molded plastics.
These advances are driving adaptations and adoption in the industrial space, too. HP’s entrance into 3D printing in mid-2016, in particular, will be interesting to watch. Its Jet Fusion 3D printers are not confined to just rapid prototyping and can be used to produce thousands of parts at a go.
We are also starting to see the virtual warehouse concept come to life. Mercedez-Benz Trucks, for example, has begun offering its customers plastic spare parts to be 3D printed at a push of a button. And Air New Zealand is 3D printing lightweight cabin components, such as cocktail trays, to save on manufacturing and repair costs.
The volume and complexity of big data continue to grow, and the end of 2016 will mark our crossing over into the zettabyte era. For the first time, global IP traffic will surpass one zettabyte (ZB) per year — that’s 36,000 years of full HD video content, in one year. And according to a 2016 Cisco white paper, that figure will triple in the next five years.
The opportunity and challenge for supply chain professionals here will be to unlock the value within their data with machine learning (ML), and by extension, artificial intelligence (AI). For example, instead of just 3D printing parts on demand, a car company or an airline could predict the maintenance needs of their assets based on data gathered from real-time monitoring of smart devices, and produce the part just as it is needed.
Quintiq has taken a different approach to overcoming big data complexity. Its Self-Learning Supply Chain platform has enabled companies such as DHL, Danone, and Virgin Atlantic to manage and optimize key planning functions as one. This integration, coupled with Quintiq’s worldleading advanced analytics and machine learning capabilities, give planners the intelligence and control needed to navigate an increasingly volatile and unforgiving global economic environment.
On that note, machine learning will be pivotal this year in increasing operational agility and productivity in the supply chain. And with more companies offering ML and AI services this year, it looks like 2017 is going to be a very exciting year for supply chain tech. What can you do to capitalise on these technologies in 2017? Find out in Quintiq’s upcoming webinar on January 25, 2017. Register now!
About the Author
Yong Siew Mee joined Quintiq’s marketing team in 2010 and currently she is the VP of global marketing. With her background in crafting digital user experiences she led the revamp of the digital marketing process and established a marketing shared services centre supporting Quintiq’s global marketing operations. This helped establish Quintiq as a brand and supported its growth of at least 27 per cent y-o-y.