by Chan Wai Leong, Partner, Eric Salmon & Partners
We live in a demanding world. Businesses and governments have to deliver products and services to customers and citizens who are discerning and vocal. With new technologies and social trends, company boards and public sector leaders have the opportunity – and responsibility – to push for meaningful supply chain innovations.
There is a fortunate confluence of technologies such as:
• Mobile devices that are powerful (PC in your palm) and voice-activated
• Wireless (cellular/WiFi) networks allowing broadband Internet everywhere
• Sensors that are cheap enough to embed everywhere (Internet of Things)
• Location-awareness via GPS and base stations (including those indoors)
• Digital maps enabling analytical computations (travel time, optimal route)
• Image and video processing to identify objects, enabling augmented reality
• Storage and analysis of massive amounts of data (Big Data, Analytics)
• Software that ‘sees’ patterns to predict or prescribe (AI, Machine Learning)
• Drones, autonomous vehicles and smart robotics with adjustable grips
• On-demand access to computing capacity (cloud, opex, scalable)
• Rapid and frequent updates in software applications (Agile, DevOps)
• Open-source software that is free to download yet robust and advanced
• Many organisations use these capabilities to improve their supply chains, seeking real-time visibility and actionable insights to maximise sales and margins.
What does this mean for supply chains?
Companies now know a lot about their internal situations, both operational and financial. They can see trends in Big Data and they have granular information on individual customers. Such ‘small data’ is also vital to enable ‘mass customisation’.
Supply chains – or networks – include third parties. Many companies have integrated their suppliers and logistics partners. A lot of back-end work is often involved. As can be expected, cloud solutions have emerged to address this need. Data uploads automatically into the cloud and alerts go to smartphones of internal and external parties. Silicon Valley has a realtime graphical supply chain dashboard at Elementum – a fairly new company with Dyson and Tesla as customers. GT Nexus (though not new) is another cloud-based company that assists in trade and logistics.
The world of supply chain management is seeing a lot of exciting developments.
If bad weather is imminent, a smart system can predict likely bottlenecks, alert back-up players and prescribe alternative routings – and order scarce materials ahead of time.
If a product is to be painted red instead of blue, it will ‘tell’ the robotic painter along the assembly line to use the appropriate paint – and update its painted status to all who need to know.
If a machine is about to break down, sensors will alert relevant parties – and perhaps adjust operating conditions to ensure it continues long enough until help arrives.
If a replacement part is needed, it could be taken securely from a supplier-managed vending machine – or fabricated with a 3D printer.
Increasing e-commerce means more deliveries to homes. Postal companies (or municipalities) could install secure boxes that would dock with autonomous vehicles to transfer letters and packages.
Consumers might wish to have options for the final delivery, such as the office or at a convenient location on the way home. In an omni-channel world, retail outlets can do e-commerce and stocks on shelves are part of a single virtual warehouse.
A futuristic scenario might involve a solar-powered autonomous box-on-wheels that is paired with its owner and trundles silently alongside. At the office, it can navigate to receive packages from another autonomous robotic delivery vehicle. As needed, it can be pulled along like a small suitcase on wheels.
Increasingly, apart from smart supply chains, there is a trend towards more ‘sharing’ – where assets and information would be shared (in new ways) to create value at the system level. In smart (and safer) cities, there could be greater involvement of independent third parties. Uber and Airbnb are well-known examples. Used right, and with fair regulatory frameworks, this provides win-win-win for platform, provider and consumer.
In Singapore, some bank customers can withdraw cash at selected retail outlets and use smartphones for non-cash online transactions. Banks may not need to buy ATMs, pay rental, replenish notes and printer paper, and send teams to do repairs.
Delivery companies could build an Ubertype platform to rope in individuals to deliver appropriate packages.
Companies can be upfront with customers and allow for opting in to get lower rates. Such investments improve both capacity and flexibility. Global companies can do something similar to get access to the numerous logistics players that cover only specific localities but might be very good where they operate. Companies should want to share details of their supply chains. Consumers want to know the origins of what they buy or what they eat. Companies should have QR codes on boxes to let consumers find out who made the product or where the food was from or what allergens might be present.
GE is creating a digital universe where every machine and component made and sold is represented. If all customers agree to share, GE can track the location of every part, the operating history as well as the condition of wear and tear. From learning across all its customers, GE could provide unique value to help customers use their machines more profitably.
If aware of their role in optimising supply chains, consumers might be willing to share demand data ahead of time to maximise visibility. Lunch providers for office workers could minimise waste if they knew a day ahead exactly what to make – and price accordingly.
Supply chains are unseen but critical – and open to innovation. Commercial and public policy leaders should ensure the function is recognised and enough talented people are going into that field. Tim Cook at Apple is one case where the head of Operations (encompassing Supply Chain) became CEO. There should be more.
About the Author
Chan Wai Leong is a partner with Eric Salmon & Partners. He was a co-founder of DTCA, the high-end boutique executive search firm that was acquired by Eric Salmon & Partners in 2015. Prior to cofounding DTCA, Wai Leong was co-leader of the regional Supply Chain practice at global executive search firm Spencer Stuart, based out of Singapore. He was also leading regional technology searches as well.