The Digital Disruption in Supply Chain – LogiSYM November/December 2019
Supply Chain Analysts are saying that in 10 years, fewer workers will be required to support a growing population of non-workers, and labour supply will shift to undeveloped regions of the world that are less educated and less technically skilled.
Additionally, however, there will continue to be a shortage of workers willing or wanting to work in low skill, manual positions. This will cut across developed and less developed countries alike as the demand or need for low skill workers in supply chain roles will continue to outstrip supply. Individuals who claim that technology will displace workers who currently fulfill these roles are not really considering that many supply chain operations are today challenged to find people with the right skills and mindset willing to perform these manual tasks.
Planning for this talent shift or lack of low skilled talent is just one area that supply chain leaders need to focus to build a successful future supply chain.
To compound this ever-evolving issue around labour, supply chain leaders want to make the right business decisions and invest in the right technology to prepare their organisation for the future. There are, however, so many factors to consider and so many unknown variables that “getting it right” seems almost impossible and the “noise” created by incumbents and newcomers alike in this space makes deciding what is the “right” path or approach is even more challenging.
Understanding trends and impacts is a challenging task for supply chain leaders responsible for identifying and putting in place strategies to build the right set of capabilities. With digitalisation and Industry 4.0, we all expect our supply chains to undergo a major transformation process but many of us are unsure where to start and where we will end up. In the Middle East, this opportunity is further compounded. Not only do we have to contend with the plethora of digital supply chain tools as shown in Figure 1, it is also a region where supply chain expertise is at a nascent stage and the geographic conditions are not replicated in any other area or region so we are not able to use best-in-class examples to help us design our customised solutions.
Identifying this opportunity is what led IQ Fulfillment to set up in the MENA region as a springboard to China and the ASEAN region – especially in supporting SME’s where IQ Fulfillment centres will be the gateway to increasing the growth footprint of SME’s who are on the path in their respective digitisation journeys.
So where do we start? According to Gartner, four factors will converge as we move toward this digital transformation.
The labour supply is shrinking
To reemphasise the point around the shortage of labour that we made at the beginning of this piece, world labour supply hit an inflexion point in 2012 when the proportion of non-working-age population growth became greater than the working-age population. This trend will continue and will have a major impact on supply chain talent planning. Programs to attract and bind talent are a necessity and one of the key things organisations can do is to highlight to newcomers in the industry how relevant, interesting and technologically advanced the supply chain industry is – and needs to be to keep up with future demand. This is one of the consideration we had in mind when IQ Fulfillment, made significant investments to set up our facility in Dubai as a showcase for the MENA region.
One of the most important skills of the future supply chain workforce will be digital dexterity. The ability to adapt to technology at a rapid pace and the readiness to use advanced analytics and artificial intelligence (AI) in decision making will be crucial in an increasingly automated environment.
Machines are intelligent
The full potential of AI has not yet arrived. This will rapidly change over the next few years, especially when it comes to supply chain use cases such as demand planning and order-to-cash processes.
The predictive analytical capabilities of technology that many are touting as the best and greatest in AI is not really “intelligent”. Often it is simply algorithms coupled with superior computing capability. Real AI capability is still over the horizon.
Virtual is the new reality
The soft drinks industry uses image technology to understand out-of-stocks and retail store conditions in near-real-time. 3D digital products, such as 3D printing, enable on-demand production and personalization. These are two examples of virtual capabilities that will continue to emerge and impact the supply chain.
Supply chain leaders should watch for digital twins, a technology that will redefine supply chain models. Digital twins create a digital representation of not just physical products or assets but also process characteristics. As such, digital twins are perfect for experimentation and modelling to test for critical variables.
Circular is the mainstream economy
The traditional economy is linear: Take resources, make a product, use the product, dispose of the waste. The future looks different, as avoidable waste production will be considered unacceptable by society. This means that supply chain leaders have to embrace a circular economy in which a used product is returned, recycled and then reused in some way.
For such a solution to be efficient, it must be automated, and this is where the previous factors come into play. Using technologies such as digital twins and AI in an automated fashion enables the supply chain to execute against circular-economy principles by acting on its own and ultimately becoming its own ecosystem.”
BARRIERS TO IMPLEMENTING A DIGITAL STRATEGY
This table from Korn Ferry Institute highlights the main challenges organisations highlighted when asked what prevented them from implementing a digital strategy.
The main challenge identified was the lack of a digital strategy. Second however and perhaps more important to us – as it is people who design, implement and drive strategy – in order to deliver the full potential in a function, is the need for talent to deliver this change. The war for supply chain talent to drive digital transformation is further intensifying.
With digital disruption changing markets everywhere, top executives around the world are changing their priorities. For example. Korn Ferry International surveyed 100 senior supply chain executives, along with interviewing academics and consultants, to explore issues that leaders face and their approach to building and organising the required talent to support this transformation. More than half of the respondents (53 per cent) had a formal position to lead digital supply chain management, with most (92 per cent) reporting to a COO, Chief Supply Chain Officer (CSCO), or to a supply chain leadership member.
With the centres eventually being set up by IQ Fulfillment, more and more individuals will be introduced and trained to leverage the latest technologies and we will play in some small part, a role in developing – and digitalising the Supply Chain industry from MENA to the rest of the world.