5 Unexpected Trends Impacting The Future of Supply Chain Management

5 Unexpected Trends Impacting The Future of Supply Chain Management

As a futurist, I see countless articles posted about the impacts of robotics, the integration of Internet of Things devices and sensors, and the increase in globalization in the supply chain. Since these are well-covered topics, I’m going to cover some unexpected trends and technologies (or unexpected impacts from expected trends) that supply chain professionals should be preparing for today.

Here are my Top Five unexpected trends for SCM and why they’re important to have on your LiDAR:

Generational Trends

Are you a Digital Native or Digital Immigrant? That depends on when you were born, and the difference is likely more significant than you may think. Anyone born after around 1982 is a Digital Native and typically accustomed to rapid change. Technological change wasn't as rapid for Digital Immigrants as they were growing up — they may have even had the same TV set their entire childhood! This distinction, although obviously a generalization, is important because we can expect increasingly rapid change as technologies emerge and converge. The generations that make up Digital Natives, Millennials and Gen Z, are each already larger than the Baby Boomers and are beginning to be the largest group in the workforce. Their default expectation of rapid change will drive many of the trends and technologies reshaping our world, and their very different perspective should not be dismissed or otherwise ignored by Gen X and Boomer management currently at the helm of most companies and other organizations. Everyone born from now on is going to grow up in a world where things change so fast that there isn’t time for standard practices or business-as-usual mentalities to develop.

How does this impact SCM? Many organizations today are having difficulty attracting, but especially retaining, Millennial talent. And it’s not going to get any easier with the Gen Z’ers just beginning to enter the workforce. Any hiring manager will tell you that there can be a stark difference between Digital Natives and Digital Immigrants, both positive and negative. It's also important to remember that they’re not just your employees and colleagues, they’re also your vendors, suppliers, and customers. Recognizing the difference between those born before the early ‘80’s and those born after is far more distinct and pronounced than any generational differences before this is the first step. Dealing with generational trends is only going to get more difficult as generations “compress” and the differences between each become more profound. What can you do about this? Most importantly, get Millennials on board. Too often, the important perspectives of younger generations are not represented in leadership (and almost completely absent from boards in any industry). Given that they now represent the two largest generations, it’s important to invite them to participate in the conversation — give them a platform to share their Millennial mindset and truly consider their input in your decisions.

Artificial Intelligence

This term has a lot of meanings, but AI technologies are powering today’s breakthroughs and advancements. We’re continuously handing our decision making over to machines and it’s not unimaginable that in the not-too-distant future we could see the majority of operational decisions made by an AI or team of AI’s, so much so that the functioning COO may ultimately no longer be a human even if a human remains with the title for a few years after.

How does this impact SCM? There’s a reason I put AI second only to generational trends on this list. It’s the driving force behind many of the recent and astounding advancements in a wide variety of industries, and given the massive attention and investment being given to AI research currently, it’s difficult to imagine that it's slowing down anytime soon.

A key benefit of applied AI in supply chain management is its ability to understand the incredible amounts of data generated by Internet of Things devices and sensors (IoT is a very expected trend in SCM) and create actionable recommendations, or to just act directly based on the interpretation of that data. The amount of data collected in most operations today is already well past the ability of even a large team of MBA’s to analyze and understand, and as IoT systems get increasingly integrated, that data collection will increase exponentially making it completely impossible for humans to derive any meaningful insights from with AI. The challenge will be finding and using the best AI available for your needs and then staying on top of what’s available. Also, as humans get further and further removed from the decision making, what happens if something goes wrong? Will there be anyone that can even understand the problem, let alone can come up with a solution?    

Software automation

While hardware automation and robotics will certainly have — are already having — a major impact, the rapid move to automated software systems will change the workforce and workplace faster than any robot could. A factory robot arm might replace two or three people on the line at a GM factory, but software like TurboTax or LegalZoom can disrupt entire sectors of industries. As AI is increasingly applied to software, and as these systems are integrated, that disruption will likely only increase.

How does this impact SCM? Automation in hardware reduced the percentage of Americans employed in manufacturing from its peak during World War II at 39% to 8.1% in 2014. And we haven’t seen anything yet — advancements in software will increasingly automate entire processes and make many other processes redundant. Productivity per employee will continue to increase, it already went up by 40% from 2003 to 2016, and the overall number of employees needed in virtually any industry will likely decline as new systems vastly increase efficiency. Unfortunately for human workers, efficiency often equals unemployment because the more efficient a system or process is, the fewer people you need to do it (without corresponding increases in demand.) We can expect to need far fewer people to complete the same amount of work. Likely, as Boomers retire, many won’t be replaced with new human workers, but rather automated software systems will collectively replace them. And, as these systems get better at working together, the demand for human labor will drop sharply and this will impact our companies, communities, and families.     

Self-Driving Vehicles

As Elon Musk famously said a few months ago they’re arriving a hell of a lot sooner than people expect. Ford issued a statement saying that it will have fleets of autonomous vehicles on the road in five years! Commercially available self-driving vehicles went from science fiction just a few years ago to a reality today.

How does this impact SCM? With car ownership dropping due to people using “self-driving Ubers” instead, fewer cars will be produced. Auto manufacturing and maintenance are a huge part of our economy and in some way touch most companies and supply chain professionals. Fewer accidents mean fewer replacement parts as well. Even a 10% drop will have a large impact, and I expect the reduction in ownership over the next decade to far exceed that.

If so many people are using self-driving car services, cities will change drastically as real estate once dedicated to parking and driving gets freed up for better uses. Employees may potentially be willing to live further from work since they can reclaim their commute time as the vehicle drives itself. Is your company in any way connected to the transportation industry? I’m guessing it is, at least indirectly, and if so, it’s time to begin planning for a self-driving future.

Delivery

Many of these trends from AI to self-driving to software automation mean big changes are in store for how products and parts are delivered. Autonomous delivery drones and robot delivery carts are already years into testing, and creative solutions to the “last mile” problem are evolving quickly. For example, Mercedes-Benz is among companies working on delivery vans that act as base stations for delivery drones that swoop back and forth picking up packages from the van and dropping them off as the van moves through delivery areas.

How does this impact SCM? Consider what could be possible if deliveries could be made autonomously, quickly, and inexpensively for most products and parts. In many cases, there would be no need to stock numerous backup parts if a replacement is only 30 minutes away via a delivery drone. Autonomous delivery would reset the expectations of end-users, and companies like Amazon could greatly benefit from the ability to get almost anything under five pounds to your front door in minutes.

Of course, these aren’t the only trends to pay attention to, that list would be hundreds of pages long and changing constantly. However, as these few trends and technologies illustrate, the number one trend to be aware of is that the world is changing faster than ever now, and the pace of advancement is itself increasing. This has profound implications for any industry, but especially in supply chain management as it touches so many of the technologies most impacted by this rapid advancement. For you, as a supply chain management professional, it’s critically important to remember that business-as-usual is no longer possible in a world full of exponential change. It’s time to pay attention to how fast the world is changing, anticipate what possibilities these changes could create and take action to change those possibilities into opportunities — before they become challenges!

Simon Anderson is a leading futurist, keynote speaker, and award-winning author. He speaks frequently on using foresight to create future-resilient organizations and how to recognize opportunities created by emerging technologies before they become challenges.

 

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