Agility and flexibility in the age of digital supply chains – Insights from the 2017 Supply Chain & Logistics EMEA summit & expo

Dr. MadhavDurbha

2017 Supply Chain & Logistics EMEA summit & expoAs supply chain professionals, we can grow insular in our thinking, as on a day-to-day basis we risk confining ourselves narrowly to our domain of responsibility or solving challenges specific to our regions. However, from time to time, it is important to find opportunities to network with our peers from different regions or from different functional domains and learn from each other. The 2017 Supply Chain & Logistics EMEA summit & expo was one such opportunity. About three hundred supply chain professionals from various pockets of the world representing manufacturers, retailers, logistics providers, and technology vendors took part in the summit. It was a 3 day event with some very provocative content while providing sufficient opportunities for networking and peer-to-peer learning. Here are the key takeaways for me from the event.

1. Innovation in the warehouse: Markus Kückelhaus of DHL trend research, in two separate panels gave very compelling presentations on the innovation DHL is driving in the warehouse. One of them is Augmented Reality (AR). Through the pilots that DHL conducted, AR is showing tremendous productivity gains in the warehouse such as a 25% gain in picking productivity. Through the use of wearables, employees are able to navigate, scan, pick, and put away product. These wearables are eliminating the need for the associates to carry scanners, freeing up both hands to be more productive. There was also some discussion around AR vs VR (Virtual Reality). While VR has some potential in terms of testing out layouts and such, Markus observed that for the most part the potential for VR seems to be fairly minimal in the warehouses as compared to AR.

In a separate session Markus talked about pilots they are conducting with the Logistics robots. One observation he made was about how different logistics robots need to be compared to manufacturing robots. Manufacturing robots tend to be stationary, focusing on repetitive tasks while logistics robots within a warehouse setting need to be more adaptive and humanlike as they need to move around the warehouse, picking, putting away, and cleaning. To perform such versatile tasks, the robots need to be able to see (through computer vision), have brains (through artificial intelligence) and be willing to be trained (machine learning). Markus said these robots also have an interface to humans, i.e., the face of the robot on which something as simple as a green light to show that the robot understood the instructions, to something more complex, such as a facial expression. Markus mentioned that given the shift to picking of eaches due to omnichannel, logistics robots have challenges picking packages of certain shapes and sizes. But I left with the feeling that in light of the accelerating innovations, this is something that will be addressed in the near future.

2. Digital disruption upending the seaports: In quite a fascinating panel discussion with Jordi Torrent of the port of Barcelona and Matthijs van Doorn of the port of Rotterdam, they talked about how the seaport business is turning quite volatile. 3D printing is shifting manufacturing closer to the point of consumption. This will cut down the need to move components and/or finished product around the world. Jodi quoted a pwc study suggesting that 3D printing will result in 41% reduction in air traffic and 37% reduction in sea traffic. One advantage with 3D printing is that there will be more commodities and raw materials being shipped to the points of consumption and these commodities and raw materials cube better than finished products because of their shape. The discussion also included other trends contributing to increased volatility, such as the direct rail transportation from China to deep into Europe, and potential opening of the Arctic shipping way with the melting of polar ice.

3. Macroeconomic factors driving supply chain volatility: In a panel discussion on the topic of macroeconomic factors, Peter Roerig of Royal FrieslandCampina talked about the trends/events impacting the dairy supply chain, though these have broader implications to other industries as well. Some of the examples he cited include Russian dairy import ban, Ebola travel ban, Arab spring, oil crisis (lack of foreign currency for oil dependent nations when the price of oil fell), inflation in certain countries such as Mexico and Brazil stripping consumer buying power, Haiti earthquake, terrorism, US elections and increase of protectionism, Brexit etc. All in all Peter’s message was to “expect the unexpected, and be prepared”. An audience member made a very apt observation that why all the macro factors were to do with negative events. It made me pause and reflect. Yes. Positive events can cause supply chain disruptions as well. For example a new large order or a new product or promotional offer performing exceedingly well can be quite disruptive to the supply flow. However, I suppose fear can be a great motivator and hence often times we fall back on negative examples to highlight disruption. I am no exception to this!

4. The future of jobs in light of increasing automation: There was plenty of discussion around the future of work and human jobs in light of machine intelligence and automation. One of the attendees told me that they are having trouble finding enough qualified workers in the warehouse due to the rise in omnichannel activity. He viewed automation as a blessing to counter this capacity crunch. However, in general, there was consensus amongst the attendees that as the machines get smarter, humans will need to consciously consider investing in retraining and retooling their skills. In my view, the governments and private sector will need to take some ownership in providing avenues for motivated individuals to retool their skills. There was also some discussion on skills shortage isolated to certain markets, which automation can alleviate. One attendee mentioned that since announcing Brexit, the migrant workforce from eastern Europe to UK dropped by 90%. Quite a challenge indeed!

5. Supply chain agility or Supply chain nervousness?: Christoph Glatzel of McKinsey made a very compelling presentation on how planning needs to be touchless and real time in light of the digital disruption. On a related note, in a very energetic panel discussion that I took part in along with Zoltan Pekar of Roland DG, Michael Ginap of APICS Supply Chain Council, and Patrick van Gent of AIMMS, Michael made a very provocative comment that all the talk around “supply chain agility” is turning a bit hysterical. An apt comment! It is easy to get caught up in all the hype and talk about agility and digitalization, and introduce “nervousness” in the name of “responsiveness”. Practices such as supply chain segmentation, inventory target setting, and smoothing of production and distribution schedules and bringing consistency and repeatability into them, are all ways to build shock absorbers into the supply chain systems. Speed of responsiveness driven by real time planning is not about having knee-jerk reactions. It is about having the latest information at the finger tips to decide on whether to act and how to act.

2017 Supply Chain & Logistics EMEA summit & expo6. A time to reflect on how far we came: In an evening boat cruise hosted by the Port of Barcelona for the attendees, I couldn’t help but notice the thousands of containers sitting on the port. The shipping container is perhaps one of the most impactful supply chain innovations that stood the test of times. It has truly made supply chains global by providing an efficient and cost effective means of transporting massive amounts of materials and products around the world. With all the talk around drones, AI, 3D printing etc, it is often easy to forget such innovations that may look mundane. This mini excursion gave me an opportunity to reflect on such innovations.

All in all it was quite an exciting and engaging event. The camaraderie and the conversation among the attendees served as yet another reminder that regardless of whether one is a practitioner, technology provider, consultant, or an analyst, we are all members of the close-knit supply chain family, with the purpose of making a difference in the world!

Dr. MadhavDurbha

As Vice President of Industry Strategy at Kinaxis, Madhav serves as a trusted advisor for our customers through sales and implementation, ensuring success. He also engages with our strategic customers and key industry leaders to drive thought leadership and innovation. Madhav joined Kinaxis in the summer of 2016, bringing many years of experience in Supply Chain Management across various industries. Madhav started his professional career at i2 (which was later acquired by JDA). During his 17+ year tenure at i2/JDA, Madhav played numerous roles in Customer Support, Consulting, Presales, and Product Management. During his illustrious career, he was instrumental in helping enable numerous large scale transformational supply chain opportunities. He is very passionate about Supply Chain Management and the role it plays in making the world a better place. He shares this passion with others through his engagements and writings. Madhav has a Ph.D. in Chemical Engineering from University of Florida and a B.Tech. in Chemical Engineering from Indian Institute of Technology (IIT), Madras. Madhav received the ‘Supply Chain Pro to Know’ recognition in 2017 by Supply & Demand Chain Executive magazine.

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