NextGen Supply Chain: The new look of supply chain automation

It's time to think of automation in the supply chain differently. Quite simply, the purpose of automation is expanding as new forms of automation evolve and transform how work gets done.

To begin, the purpose of automation is changing.

“The last twenty-five years was all about who could make things cheapest, and the next twenty-five years will be about who can make things smartest.”

So says Antoine van Agtmael in Thomas Friedman's book Thank You For Being Late. Agtmael is the investor credited with coining the term “emerging markets.”

As that paradigm shifts in both distribution and manufacturing, supply chain automation will change dramatically. Sorry. That's backwards. It's actually the other way around. Changes in automation will be fundamental to working smarter in the supply chain.

Cost still will be important, but new capabilities will allow automation to adapt to changes in the supply chain. In fact, technologies not previously considered part of the story are rapidly becoming central to its success. That's the second major shift in automation.

Historically, much of existing automation hardware was bolted in place and performed repetitive tasks. Similarly, most existing software (the other form of automation) runs in a loop, repeating what it did before without adapting to changes in the supply chain.

That has been the case for as long as there has been hardware and software automation. But emerging technologies adapt to changes in supply chain conditions. That's a completely different narrative for supply chain automation.

Historically, few of us would have included robots, artificial intelligence (AI) and the Internet of Things (IoT) in the supply chain automation lineup. But you should now. In fact, the metamorphosis is further along than you might realize.

Take robots.

• Electronics distributor Ingram Micro is investing $10 million in HDS Global. The warehouse automation startup is developing what it calls swarm software that enables 100 or more different types of robots to collaborate and fill orders.

• Target has its eye on what is being called autonomous industrial robots. Automation hardware supplier Symbotic developed the automated storage systems and already has the technology in place at its sister company C&S Wholesale Grocers.

• DHL is testing collaborative robots that work alongside people to fill e-commerce orders in Memphis. Locus Robotics, which supplies the robots, also uses them at its sister company, Quiet Logistics, for apparel order fulfillment.

• Over at Rochester Drug's DC in western New York, autonomous mobile robots are picking items directly from shelves using suction cups before placing them in a tote. IAM Robotics, which was recently awarded a patent for mobile piece-picking robots, designed the robots specifically for Rochester Drug – think of it as purpose-built design.

None of these advances physically look much like robots that have come before them. More importantly, they are highly adaptive to changes in the supply chain from scale to velocity. Such flexibility puts a whole new face on automation.

The third shift is just as important but may well be overlooked by many. At least at first.

Historically, automation has been a big bang event. Think enterprise software or massive automated handling systems for storage and transportation. Those will still happen, eliminating (or nearly so) people from a DC or manufacturing floor. But now this type of traditional automation will share the stage with automation of a far different ilk.

Look for AI, robots and the IoT to automate activities within jobs rather than eliminate entire jobs. That will make automation a stealth force in the supply chain.

Automation will change what people do, often collaborating with them and removing certain activities from their jobs. Except for the people directly involved, these shifts may well go unnoticed by most for some time.

In general, McKinsey estimates that only about 5% of all occupations are likely to be fully automated. But the consulting firm also expects that nearly half of worker activities can be performed by automation, especially robots and AI.

A current example of this shift is vehicle automation. We all jump quite quickly from driving vehicles ourselves to reading a book while AI does all the work. It's a lot more nuanced than that in reality.

SAE International, the professional association of automotive engineers, has established six levels of vehicle automation. It starts with no automation. Just you or your sister driving the car. In the middle four levels, artificial intelligence and humans collaborate to varying degrees. Only at the top level does AI do it all.

How quickly we get to that top level is anybody's guess. But until that happens, AI will simply be replacing people in certain activities that are part of driving.

Then there's the IoT. The story here goes far beyond the supply chain. However, don't think for a moment that the supply chain will be an exception to the rapid growth of the IoT and the data it collects and connects. Some call it the Industrial Internet of Things.

Last year, it was estimated that 17.6 billion devices were connected to the Internet. That is expected to climb to 80 billion by 2025. Many of these devices and connections will surely form the new information backbone of the supply chain.

One place this interconnected network is already at work is in predictive supply chain maintenance. Mundane, but more very important.

Using data over the IoT, maintenance departments are now able to anticipate difficulties with various types of equipment moving and handling individual items or full pallet loads. As a result, unscheduled (and costly) downtime due to unexpected equipment failure is replaced by conveniently scheduled downtime for preventative maintenance.

At the same time, some people have a vision for linking together all these automated data points and creating an unparalleled automated supply chain vision. Alessandro de Luca, chief information officer at pharmaceutical supplier Merck, is one of those. He, and others, call it the self-driving supply chain. AI is central here, resulting in a supply chain that will someday operate digitally with little if any human intervention.

That transformation is already underway at pharmaceutical supplier Cipla in South Africa.
It's worth noting that Cipla's supply chain professionals were originally quite skeptical. They simply didn't like the idea of moving from a human-based forecasting system to one that is now well along the way to the driverless supply chain. While they discovered how to make the transition, they were right to be careful. Automation isn't always the answer.

You may recall hearing earlier this year about the company Juicero, which sold a $700 Wi-Fi-enabled juicer to squeeze prepackaged juice from packs. Some big name venture capital firms as well as Campbell's Soups invested heavily, betting on the juicer's connection between the IoT and the juice culture. Then Bloomberg showed in a video how a reporter could manually squeeze the juice out the packs just as effectively as the $700 press. Game over.

In the Eighties, the supply chain went down a similar road when it seemed every industrial company CEO had to have a robot, whether it was appropriate or not. The trick this time around will be to apply automation to the supply chain where it makes sense and let reality overpower the hype. Because it will.

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