Wednesday, October 23, 2019

Can we manage the manufacturing supply chain better?

Today’s supply chains are vast and wide-ranging. But that scale also makes them fertile ground for risk: concerns over fraud, contamination, insecure production sites and unknown product sources trouble both customers and clients.

These are all factors that make transparency both more vital and more complex. To see why having a full understanding of the complexity of detailed stock tracking for regulatory and safety purposes in the process manufacturing industry, let’s take a look at one of those most scrutinised industries of all, pharma.

In the intensely regulated life sciences industry, pharmaceutical companies must be able to identify at any given time where any individual medicine item is. It’s deemed that in the event of a safety issue, it is imperative that items can be quickly removed from the market to minimise the risk to consumers and the cost of redress. In the fightback against counterfeit goods, regulators also require that individual medicine products are clearly verifiable as authentic. As of February this year, for example, the EU’s Falsified Medicines Directive specifies that any medicinal products must carry a unique product identifier code and that manufacturers and distributors must demonstrate detailed record-keeping, while all products must be logged in a central database of drugs sold in EU countries.

The technical challenge of meeting these compliance targets can be onerous. With thousands of product lines produced across multiple sites which are sold into hundreds of markets, keeping track of every stock unit exceeds the scope of the standard way businesses have to organise data, specifically relational database systems (think Oracle or Microsoft SQL Server). The numbers of unique serial codes alone can run into billions, and CIOs need a highly scalable way to manage the vast volumes of serial numbers.

Many organisations still store this information in data silos, making it only available in partial views, though. Even if the data is stored in one database, if it is run on SQL-based database technology, a simple and fast navigation through all the data in order to recognise how a production line or particular pallets and their contents are connected will be next to impossible. With increasing connectivity and a move to things like an Internet of Things, this complexity is unlikely to decrease.

The reason for this is that relational databases, which store information (product, pallet, production site, serial number etc.) in rows and columns, are poorly-equipped for identifying relationships within datasets. And these connections are essential for identifying a specific product’s whereabouts or to monitor, analyse and search the supply chain, and to share significant data about production sites and products.

Making traditional databases work in real time is also problematic, with performance suffering as the total dataset size grows. Increasingly, however, a software called graph database technology is a solution, because of its ability to record complex data interdependencies. The idea is that when you track something, you create a hierarchy or ‘tree’ of data: if you scan the code of a particular pallet, it will automatically recall its contents. Graphs offer a tremendous advantage over traditional relational databases, maintaining high performance even with vast volumes of data.

And instead of using relational tables, graph databases use structures better at analysing interconnections in data, and they also adopt a notational formalism closely aligned with the way humans think about information. Once the data model is coded, a graph database is practically impossible to beat at analysing the relationships between a large number of data points.

Such a relationship-centric approach enables the manufacturer to better manage, read and visualise their data, giving them a truly trackable and in-depth picture of all products, suppliers and facilities and the relationships between them. Using a graph database, manufacturers can typically demonstrate 100 times faster query response speeds than that enabled by SQL RDBMS software. That sort of response time is critical when you need to provide second or sub-second responses, when required to identify a specific product’s whereabouts. And critical in order to comply with the latest global regulations of traceability and to manage that time-critical and reputation-critical product recall effectively.

Graph database technology is a great enabler and effective solution for organisations that need to work with complex supply chains and provide the level of highly granular governance and sourcing capability our global economy demands.

By Emil Eifrem, CEO and Co-Founder of Neo4j, the world’s leading graph database company

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Tuesday, October 22, 2019

Understanding Supply Chain Management Practices for Small and Medium-Sized Enterprises

Small and medium enterprises (SMEs) are a major source of dynamism, innovation and flexibility for emerging and developing countries, as well as for the economies of the most industrialised nations. However, the survival and growth of SMEs can be difficult in the current competitive business environment and global marketplace.

It can be a real challenge to deliver the right product and service at the most opportune time and at the lowest possible cost to the right customer. The challenge stresses the importance of managing cross-boundary relationships between business partners.

For gaining a competitive advantage, supply chain management (SCM) is an effective tool to SMEs. Therefore, this paper aims to review the tenet of SCM, its benefits and practices to SMEs.

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Putting the Spotlight on SME Supply Chain Challenges

Oct 4, 2018 | Business, Supply Chain Management

As a consulting company specialising in helping small businesses improve their supply chains, we like to think we’re well aware of the specific challenges SMEs face in managing the balance of supply and demand.

Many of those challenges are similar to the ones faced by larger enterprises, but are there any supply chain challenges unique to smaller businesses?

In this article, we’ll explore that very question. Let’s begin with some of the challenges SMEs share with larger enterprises, and take a look at how and why they might be tougher for small businesses to overcome.

Top Supply Chain Challenges for All Businesses

If you’re running a small to medium-sized enterprise, or are engaged in supply chain management for such a business, you can probably relate to all of the following challenges:

Meeting increasingly high customer-service expectations
Keeping control of costs, especially those related to transportation
Risk identification and mitigation
Achieving supply chain visibility
Building and maintaining supplier and partner relationships
Keeping up-to-date with technology developments

All of these challenges exist for large enterprises too, but the last three on the list above can be particularly tricky for smaller businesses to get to grips with.

This is largely because of a lack of investment power, along with the limited accessibility of supply chain talent, which at a time of apparent scarcity, tends to gravitate toward larger corporations with the means to compensate at the highest rates.

Let’s look at each of those last three challenges in turn though, before exploring briefly why money and manpower present challenges of their own, and make it harder to overcome the other challenges mentioned above.

Supplier and Partner Relationships
Smaller companies often find themselves at a disadvantage when it comes to supplier relationships, since unless suppliers or partners are also small businesses, the buyer does not have the scale to create leverage.

If yours is a company with a $50 million annual turnover for example,it’s not going to be easy to create a balanced relationship with a supplier turning over $500 million.

You’re always going to be a small fish with little in the way of clout. One way to avoid this issue is to choose suppliers and partners that operate on a similar scale to your own company, but in reality, this is often not possible, especially as global consolidation continues to cultivate markets with fewer and larger participants.

Supply Chain Visibility
Without the information technology budgets to match large corporations, it can be a huge challenge to achieve the levels of visibility required for your supply chain to be competitive.

Let’s face it, even the majority of large enterprises struggle to achieve full transparency, despite heavy investment in increasingly sophisticated solutions.

While many supply chain technologies are subject to falling prices, supply chain visibility (SCV) is not one of them, and vendors, in the main, are focused on solving the visibility problem for multinational corporations, leaving SMEs with a limited range of SCV options.

Keeping Pace in the Technology Race

It seems that ever since spreadsheets gave way to powerful enterprise computing platforms, such as ERP, WMS, TMS, and SCM, the pace of technology development has left even the largest corporations struggling to keep up.

Many large supply chain organisations are struggling with the transition from legacy solutions to the latest cloud platforms, and it’s not at all unusual for a company to have a “patchwork quilt” of systems and applications in place.

Small and medium-sized enterprises typically have modest IT budgets, making it even tougher to apply technology to gain efficiencies and supply chain cost savings. They are less able to upgrade capabilities frequently or invest in expensive warehouse automation, even though to do so could save significant sums of money over the longer term.

Cash is a Key Challenge for SMEs
If there is one supply chain challenge that besets SMEs more emphatically than larger enterprises, it’s cash and finance, as you might have surmised from the commentary in this article thus far.

However, this issue extends far beyond the ability to invest in digital systems and negotiate favourable prices with suppliers.

Cash-flow in particular, can be a constant source of worry, with little resilience to issues like late payments from customers or overestimation of inventory requirements. The need to minimise working capital requirements is ever-present, but it’s never easily met, given constant pressure to ensure inventory availability is not compromised.

Why is cash flow such a big challenge? A number of factors play into the answer, including:

Reluctance among suppliers to offer favourable credit terms (as the SME’s buying power is limited)
SMEs sometimes have little or no formal history of credit or borrowing from financial institutions
There may be few assets available to serve as collateral for borrowing
These issues can be more serious for the SME operating in a B2B market, since customers may insist upon credit terms for their own payments, creating extended cash-to-cash cycle times and delaying the availability of funds to pay suppliers.

The SME Human Resources Challenge
Aside from access to cash, human resource availability is one of the most important challenges affecting SMEs, and one that is typically less of an issue for their larger counterparts. More specifically, from the supply chain perspective, SMEs may be less able to afford a team of supply chain managers and specialists.

This places many smaller businesses in position where managers wear multiple hats, each perhaps taking responsibility along with their teams, for specific elements of supply chain operations.

The problem with this plate-spinning approach (which is often more of a necessity than a preferred strategy) is twofold. Firstly, supply chain management usually takes a back seat to other areas of business functionality, especially during busy times. Secondly, there is seldom any room or time for managers and teams to align and collaborate to manage the supply chain holistically.

As a result, synergies and efficiencies are overlooked, and when problems arise, it can be hard to isolate the root causes and hence, apply robust, permanent solutions.

Not only is the lack of logistics expertise a challenge in itself, it also makes the other challenges, such as those already discussed, more difficult to overcome. Without a dedicated supply chain or logistics team, SMEs can find it tough to meet all the challenges presented in the list at the start of this article.

Where There are Challenges, There are Opportunities…

Early in the life of a small or medium enterprise, supply chain challenges can be a major cause of concern, but they don’t have to threaten performance or growth. Indeed, there are opportunities hiding within every challenge and in some respects, SMEs have the edge over larger companies when it comes to unlocking them (greater agility and shorter reaction times, for instance).

…And Increasingly, Solutions Too
Furthermore, as time goes on, SMEs should begin to gain access to new services and solutions, as the importance of the smaller enterprise becomes more apparent in global markets. After all, together, SMEs deliver over half of the GDP of many countries.

Cloud computing solutions, Uber-style freight, shipping, and warehousing platforms, and SME-focused 3PLs are all emerging as sources of supply chain support for the small to medium-sized enterprise. Even warehouse automation is becoming more affordable with the advent of “robotics as a service”.

Meanwhile, online virtual assistant services provide the opportunity for SMEs to outsource many back-office activities, enabling internal resources to be redirected to value-adding processes, including supply chain management. All of the aforementioned services, in fact, offer the possibility for SMEs to reduce labour costs, and the amount of human capital necessary to manage supply chain operations.

Get Some Help to Meet Supply Chain Challenges Head-on
As promising as they may be, none of the potential solutions mentioned above necessarily makes immediate supply chain challenges seem less troubling, which is why it can often be worth engaging some external help to address the issues directly.

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What Supply Chain Transparency Really Means

Alexis BatemanLeonardo Bonanni
AUGUST 20, 2019

The concept of supply chain transparency was virtually unknown 15 years ago, yet today it commands the attention of mid- and senior-level managers across a broad spectrum of companies and industries.

The reasons for this increased interest are clear: Companies are under pressure from governments, consumers, NGOs, and other stakeholders to divulge more information about their supply chains, and the reputational cost of failing to meet these demands can be high. For example, food companies are facing more demand for supply-chain-related information about ingredients, food fraud, animal welfare, and child labor. Less clear, however, is how to define transparency in a supply chain context and the extent to which companies should pursue it: an MIT study that mapped definitions of supply chain transparency related to labor practices in the apparel industry found vastly differing definitions across organizations.

In this article, we offer some clarity on the meaning of supply chain transparency and guidelines to map and extend progress. The recommendations derive from the experience shared by dozens of companies up and down the supply chain across industries of all sizes over the last decade with MIT Sustainable Supply Chains, an initiative based at the MIT Center for Transportation and Logistics; Sourcemap, a provider of supply-chain-transparency solutions; and ongoing research in this area.

Defining Transparency

Supply chain transparency requires companies to know what is happening upstream in the supply chain and to communicate this knowledge both internally and externally.

One reason the process has become increasingly important is that more consumers are demanding it. For instance, researchers at the MIT Sloan School of Management found that consumers may be willing to pay 2% to 10% more for products from companies that provide greater supply chain transparency. In this study, consumers valued information about the treatment of workers in a product supply chain and the seller’s efforts to improve working conditions. Across industries, this growing segment of discerning consumers seeks information on product ingredients and materials, where products come from, and the conditions in which they were produced.

As these demands have increased, so has the reputational risk for companies from media and NGO campaigns. Over the last decade, numerous scandals have inflicted considerable damage on the reputations of companies. Notable examples include the Rana Plaza factory collapse in the fast fashion industry, slave labor in the Thai seafood industry, and deforestation in Malaysia and Indonesia.

The fallout has resulted in a raft of new laws pertaining to transparency. These include the policing of conflict minerals (Dodd-Frank), forced labor (Australian and UK modern slavery acts, and California Transparency in Supply Chains Act), and food safety (U.S. Food Safety Modernization Act) with further regulation on the horizon in the Netherlands and Switzerland, among others.

A lack of supply chain transparency can now stop businesses cold. For example, shipments that are missing origin documents are being held up and turned away at ports, causing costly disruptions that ripple through supply chains. U.S. Customs and Border Protection has turned away shipments originating or related to North Korea, given recent federal regulation that stipulates all North Korean labor should be considered to be forced labor.

Why Isn’t Everyone Doing It?

If transparency is a growing business imperative, why aren’t more companies doing it and why is the transition to transparent supply chains so slow?

One reason is supply chains were not designed to be transparent. Companies and suppliers have feared that divulging too much information would undermine their competitive advantage or expose them to criticism. Another reason is relevant information, such as details of upstream supply chain practices, may not be collected or if it does exist, may be erroneous. Finally, the ROI for investing in transparency does not always satisfy near-term requirements.

Despite these issues, there are ways to evaluate the worth of transparency and get a sense of how your enterprise is performing.

Transparency can be measured along two dimensions: supply chain scope (the depth of interaction in the supply chain) and milestones on the path to complete transparency (see the exhibit “How Transparent Is Your Supply Chain?”). Based on our learnings over the last decade, we have applied part of the innovation diffusion theory, a concept originally posed by Everett Rogers that outlines how an innovation spreads and is adopted, to map the progress of firms moving towards supply chain transparency.

Most companies are either at the Majority stage, where they have proper oversight over their facilities, or occupy the Early Majority stage, where they audit and monitor direct suppliers for compliance. Fewer companies can be considered Early Adopters that engage with indirect suppliers (suppliers beyond their direct suppliers) and trace individual transactions. Only Innovators are ready to share information about raw materials suppliers.

A well-known Innovator is the apparel company Patagonia. Its Footprint Chronicles map a subset of raw materials, mills, and factories that make Patagonia products and drills down into details about vendors’ operations and staff. VF Corporation (a client of Sourcemap, the company that one of us — Leonardo — founded and heads) and some of its brands also disclose supply chain information down to suppliers of raw materials. Food companies are also emerging as leading-edge Innovators. For example, One Degree Organic Foods cereal products are fully traceable from farm to spoon, and Red’s Best seafood products are traceable to the fishing vessel through QR codes on the company’s packaging.

Early adopters such as Nike maps their manufacturing plants and offer insights into individual factories, while UK retail chain Marks & Spencer provides an interactive mapping of its food and apparel manufacturers.

Steps to Take

Having ascertained where your organization falls on the transparency continuum, a next step is to decide whether you need to invest in efforts to move the organization up the scale.

If the answer is yes, the strategy you lay out for improving transparency will depend, to a large extent, on your risk profile and what questions you want to answer with the information you seek. For instance, do you want to ensure no child labor at your contract manufacturers or identify the source of origin of your materials? However, there are five general steps that companies can take to initiate the journey.

1. Gauge risks and set goals. 
There are multiple tools available to complete this first step. A company might first take a look at impending risks from regulation, past disruptions, and supplier-related issues. Often, this first step includes a plot of internal and external stakeholder interests called a materiality assessment. Here you can see a materiality assessment disclosed by Danone that charts transparent product labeling and sustainable sourcing of raw materials as high interest goals that fall at the intersection of important stakeholder interests and factors that have an impact on the company’s business success. Once the risks are better understood, a company can identify its goals.

2. Visualize the supply chain. 
Having identified and prioritized the primary risks, companies can visualize the target supply chain. It will gain a deeper understanding of goods flows, map suppliers and processes, and expose existing information gaps. A basic example is VF’s map of the supply chain of the Vans Checkerboard Slip-on shoe to understand the flows, the suppliers involved, and embedded processes. The cadence of this data collection should align with stipulated goals.

3. Collect actionable information. 
Having mapped the supply chain, collect information on practices and performance that provides insights about potential risks, opportunities for improvement, and information gaps. A company may need to track and profile units, batches, or lots of finished goods moving through the supply chain to ensure source of origin and chain of custody.

As the chain of custody is identified, practices need to be verified. Almost every company has a code of conduct in place — this includes requirements about supplier practices ranging from the labor practices they have in place to respect for the environment. An example is IKEA’s IWAY code of conduct that every IKEA supplier must comply with. Companies generally ask for this information from their direct suppliers, but as transparency becomes more important, companies are increasingly requiring suppliers deeper in their supply chain to comply with codes of conduct and are vetting the information in some cases.

4. Engage. 
Armed with actionable information, the company can now choose how to engage in the supply chain. This typically involves a program designed with critical KPI’s in mind. The aim is to address specific issues such as labor-related risks, environmental impacts at supplier sites, or unclear sources of origin. The engagement includes supplier contact and collaboration, monitoring, and support. It may also necessitate third-party partnerships to gain expertise that is not available internally. For instance, Starbucks has long partnered with Conservation International to build its ethical-sourcing program for its coffee that covers a wide spectrum of social and environmental issues. The program began with a code of conduct entitled C.A.F.E. to ensure adoption of the code down to the farmer level.

5. Disclose. 
Finally, companies set the level of disclosure they want to establish. This involves deciding how they will meet relevant regulatory requirements and stakeholder demands, and how they will verify the information disclosed. The level of disclosure can range from sharing a code of conduct to disclosing traceability from the raw materials stage of the supply chain as seen with Patagonia’s Footprint Chronicles.

These steps are continuous:  supply chains are dynamic, and progress should be ongoing to ensure a better functioning and more sustainable and transparent supply chain.

While blockchain and other technologies have been hailed as the solution to supply chain transparency, any viable solution must include the right mix of people, information, and technology to support outlined objectives — a technology cannot solve this issue in isolation. For instance, internal and external stakeholders should be involved, and the technology deployed should include solutions that capture, translate, and disseminate useful data, as well as support appropriate decision making.

The Benefits

The return on efforts to improve supply chain transparency varies with each business model and industry, but there are benefits that most companies can capture.

Perhaps the most obvious benefit is compliance with increasingly stringent regulation. Transparent supply chains also reduce reputational risk and enhance the company’s standing as a trustworthy enterprise. A third benefit is attracting and retaining employees who are keen to work for responsible companies. Patagonia and Nike have very high rates of applications for their jobs as well as very low employee turnover, partly a result of their reputation as responsible companies. Patagonia cites its employee turnover of less than 4% annually. A fourth benefit is increased consumer trust and satisfaction — a topic explored by Ryan Buell in his  recent HBR article on operational transparency.

Finally, there are important operational benefits too. Gathering more detailed information on supply chain performance helps companies identify opportunities for improvement such as unnecessary middlemen and to plan more effectively over the long term.

The Future

Supply chain transparency relies on creating a culture of continuous improvement within the organization and across value chains. The demand for transparency is unlikely to abate. Today, it may not fall under anyone’s job description, but it soon will.

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The Supply Chain Economy and the Future of Good Jobs in America

Mercedes DelgadoKaren Mills
MARCH 09, 2018

The U.S. supply chain is generally recognized as an integral part of the American economy. From Intel’s semiconductors to Microsoft’s enterprise software, the supply chain builds the goods and services that businesses need. But for all of its importance, no one has identified what industries comprise the U.S. supply chain economy, quantified the number and quality of jobs it contains, or assessed how much it matters for innovation. We attempted to answer these questions by creating a novel categorization of the U.S. economy that reveals new ways to drive American growth and innovation.

The U.S. supply chain economy is large and distinct. It represents the industries that sell to businesses and the government, as opposed to business-to-consumer (B2C) industries that sell for personal consumption. The U.S. supply chain contains 37% of all jobs, employing 44 million people. These jobs have significantly higher than average wages, and account for much of the innovative activity in the economy. The intensity of Science, Technology, Engineering and Math (STEM) jobs, a proxy for innovation potential, is almost five times higher in the supply chain economy than in the B2C economy. Patenting is also highly concentrated in supply chain industries.

Why are supply chain industries the source of so many high-paying jobs and so much innovation? One reason is that supply chain industries have downstream linkages to multiple industries, which allows the innovations they create to cascade and diffuse across the economy, potentially increasing the value of those innovations.

Think, for example, about the semiconductor, a general purpose technology, which went from an invention developed in the supply chain by Intel to being in almost every consumer technology imaginable. In the late 1980s and early 1990s, a government and industry partnership called SEMATECH identified technical barriers and developed a roadmap for diffusing semiconductor technology, in what is considered one of the most successful industrial policy interventions in recent years. In fact, our analysis shows that semiconductors are sold to over 60% of U.S. industries.

Modern equivalents of semiconductors reside not just in goods but increasingly in services like cloud computing and enterprise software that have been transforming many industries. Cloud computing services, for example, are sold to more than 90% of U.S. industries. These services are critical to the economy, as they allow businesses to store, process, and access important data.

The Importance of Supply Chain Services
Given the contribution of the supply chain economy to innovation and well-paying jobs, it is important to understand exactly what industries comprise this segment. Traditional examples of suppliers are metal stampers or plastic injection molders — businesses that manufacture parts to be used in a final good. As we are all aware, manufacturing employment has declined significantly, both overall and in the supply chain, to the distress of many in America. This has led to a pessimistic view of the economy. The policy response has focused on “bringing manufacturing back.”

However, this traditional categorization which emphasizes manufacturing over services falls short. Only 10% of employment in the economy is in manufacturing, and 90% is in services. It is commonly thought that most of those service jobs are low-wage occupations at restaurants or retail stores, while the manufacturing jobs have higher wages. But not all services are the same. With our new categorization, we can separate supply chain service jobs — which are higher-paying — from the Main Street service jobs that tend to be lower paying. These supply chain service jobs include many different labor occupations, from operation managers, to computer programmers, to truck drivers. They comprise about 80% of supply chain employment, with an average annual wage of $63,000, and are growing rapidly.

Taking the work one step further, within the supply chain services category, we have identified the subcategory of supply chain traded services — i.e., those that are sold across regions like engineering, design, software publishing, cloud computing, and logistics services, among many others. This subcategory has the highest wages and STEM intensity in the economy ($80,800 and 19%), with average wages 3 times higher and STEM intensity 18 times higher than Main Street services, and these jobs are growing fast. This growth may reflect the evolution of many large companies from manufacturing to services over the past decades, including IBM, Intel, Dell, and GE, among others.

Our supply chain economy framework leads to a more optimistic view of the economy. If we were to focus on supporting supply chain services, particularly those in traded industries, the result might be more innovation and more well-paying jobs in the United States.

What does this new categorization mean for economic policy? Here are three ideas focused on improving suppliers’ access to skilled labor, buyers, and capital.

First, we need to invest in skilled labor. The supply chain has the majority of STEM workers, of which America has a shortage. And while many companies are having difficulty finding skilled workers, service suppliers are most at-risk since their innovations are highly dependent on access to and retention of talent. Immigration policies that give greater access to this labor pool are helpful.

Second, we should support regional industry clusters. Suppliers produce inputs for businesses, and therefore, they particularly benefit from being co-located with their buyers in industry clusters. Catalyzing and strengthening organizations that support regional clusters is one way to promote buyer-supplier collaboration.

And finally, we must ensure that suppliers have access to capital. STEM-intensive service suppliers often produce innovations that cannot be patented, making it difficult to raise outside funding. Having pro-active government policy — through loan guarantees or credit support for suppliers — can help ensure stable and efficient access to capital for these suppliers to start and grow.

Our new categorization of U.S. industries has revealed a large and dynamic supply chain economy. In particular, service suppliers have a crucial role in driving innovation and creating well-paying jobs. Rather than an approach that relies solely on “bringing manufacturing back,” we must shift our policy solutions to focus on cultivating the supply chain service jobs that will drive America’s economy forward.

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New Supply Chain Jobs Are Emerging as AI Takes Hold

Gary HanifanKris Timmermans
AUGUST 10, 2018

Companies are cutting supply chain complexity and accelerating responsiveness using the tools of artificial intelligence. Through AI, machine learning, robotics, and advanced analytics, firms are augmenting knowledge-intensive areas such as supply chain planning, customer order management, and inventory tracking.

What does that mean for the supply chain workforce?

It does not mean human workers will become obsolete. In fact, a new book by Paul Daugherty and H. James Wilson debunks the widespread misconception that AI systems will replace humans in one industry after another. While AI will be deployed to manage certain tasks, including higher-level decision making, the technology’s true power is in augmenting human capabilities — and that holds true in the supply chain.

In this new environment, both machines and humans are essential: By collaborating in roles such as supply chain planning and inventory management, the combined power of humans and machines will create new sources of value for businesses. We’ve explored the nature of the new value-enhancing roles that will emerge and identified three new categories of AI-driven jobs:

Trainers who help AI systems learn how to perform, which includes everything from helping natural language processors and language translators make fewer errors, to teaching AI algorithms how to mimic human behaviors.

Explainers who interpret the results of algorithms to improve transparency and accountability for AI decision making and processes.

Sustainers who ensure intelligent systems stay true to their original goals without crossing ethical lines or reinforcing bias.

AI, combined with advanced analytics, will enable supply chain planners to make more forward-looking, strategic decisions and spend less time on reactive problem solving. These planners will lead the charge in moving away from a traditional supply chain operating model, which is inflexible and slow, to a new dynamic model with true end-to-end segmentation.

That means planning multiple supply chains that meet the needs of specific customer micro-segments as well as managing business relationships and exceptions. Concurrently, a new digital engineer role will emerge: a highly analytical, digitally savvy data scientist who manages, models, and tweaks the algorithms, alert protocols, and parameters guiding the automated decision-making planning systems. The importance of strong analytical skills will grow with the demand for human workers with a digital engineer’s skill set.

Leading companies recognize this change is coming and are starting to evolve their supply chain workforces. According to Accenture Strategy research, 90% of executives believe this workforce will become adept at digital technologies such as augmented reality, 3D printing, and automation. And 92% of executives surveyed said supply chain workforces will be upskilled and enabled to interact and work with machines seamlessly.

In other words, supply chain workers are already beginning to adjust to work effectively with a range of intelligent technologies — from cobots to robots to virtual agents — to get tomorrow’s jobs done. For example, these technologies can help reinforce correct procedures on the shop floor, monitoring how employees execute tasks and coaching them to do it the best way. Thyssenkrupp is overcoming skill mismatches through AI. The industrial services giant equips its elevator technicians to consult subject-matter experts through Microsoft HoloLens, an augmented reality headset.

Supply chain leaders need to ready their people for this inevitable shift that is already under way. That means making the commitment to reskill and move people to other areas of the business where they can add value. A major consumer goods company applied machine learning to complement more-traditional techniques for forecasting, which increased accuracy for forecasts and inventory management and made unnecessary the manual reviews and calculations that previously took almost 80% of the time. As a result, the company refocused human workers to provide valuable market intelligence.

Here are other ways supply chain leaders can continue this momentum and enable human workers to work together with AI in the most effective way:

Attract the future workforce. 
Now is the time to identify exceptional talent by looking outside of the supply chain. Data scientists, risk managers, and business development leads are among the types of employees that can bring significant value to the supply chain. Companies should also ensure their workplaces reflect the ethos of the new supply chain by integrating mobility, technology, and collaboration tools and by reinforcing new behaviors and mindsets throughout the talent development life cycle. Recruitment, performance metrics, and career advancement all need to be viewed through a lens of technology-driven innovation.

Remove the robot from the human. 
Prioritize and define both immediate and longer-term opportunities for AI, based on specific roles and tasks. AI systems will only continue to evolve and get smarter in their decision-making abilities. Consequently, it’s imperative to redirect and reskill human workers to focus on high-value initiatives such as customer experience and innovation.

Place your innovation bets. 
Think big but start small by mapping opportunities to integrate AI with existing technology solutions. Until now, robots, big data, analytics, and other technologies have been used in parallel with people, but in isolation. Their role: improve process efficiencies. Now, with AI systems that can sense, communicate, interpret, and learn, all that changes. AI can help businesses move beyond automation to elevate human capabilities that unlock new value.

The supply chain is and always has been a people business. We’re moving toward a world where humans and machines are collaborating, not just coexisting. The result will be an efficient, sustainable supply chain that delivers better business outcomes.

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The Death of Supply Chain Management

Allan LyallPierre MercierStefan Gstettner
JUNE 15, 2018

The supply chain is the heart of a company’s operations. To make the best decisions, managers need access to real-time data about their supply chain, but the limitations of legacy technologies can thwart the goal of end-to-end transparency. However, those days may soon be behind us.

New digital technologies that have the potential to take over supply chain management entirely are disrupting traditional ways of working. Within 5-10 years, the supply chain function may be obsolete, replaced by a smoothly running, self-regulating utility that optimally manages end-to-end work flows and requires very little human intervention.

With a digital foundation in place, companies can capture, analyze, integrate, easily access, and interpret high quality, real-time data — data that fuels process automation, predictive analytics, artificial intelligence, and robotics, the technologies that will soon take over supply chain management.

Leading companies are already exploring the possibilities. Many have used robotics or artificial intelligence to digitize and automate labor-intensive, repetitive tasks and processes such as purchasing, invoicing, accounts payable, and parts of customer service. Predictive analytics are helping companies improve demand forecasting, so they can reduce or better manage volatility, increase asset utilization, and provide customer convenience at optimized cost.

Sensor data on machine use and maintenance are helping some manufacturers to better estimate when machines will break down, so downtime is minimized. Blockchains are beginning to revolutionize how parties collaborate in flexible supply networks. Robots are improving productivity and margins in retail warehouses and fulfillment centers.

Delivery drones and self-driving vehicles aren’t far off. Rio Tinto, the global mining-and-metals company, is exploring how digital technologies can automate mine-to-port operations. Using driverless trains, robotic operators, cameras, lasers, and tracking sensors, the company will be able to manage the whole supply chain remotely — while improving safety and reducing the need for workers in remote locations.

A key concept that many of these companies are exploring is the “digital control tower” — a virtual decision center that provides real-time, end-to-end visibility into global supply chains. For a small number of leading retail companies’ control towers have become the nerve center of their operations. A typical “tower” is actually a physical room staffed with a team of data analysts that works full-time, 24/7, monitoring a wall of high definition screens.

The screens provide real-time information and 3D graphics on every step of the supply chain, from order to delivery. Visual alerts warn of inventory shortfalls or process bottlenecks before they happen, so that teams on the front line can course correct quickly before potential problems become actual ones. Real-time data, unquestioned accuracy, relentless customer focus, process excellence, and analytical leadership underlie the control tower operations of these retail operations.

Industrial companies are also embracing the concept. One manufacturer’s complex network moves more than a million parts and components per day. The control tower flags potential supply issues as they arise, calculates the effects of the problem, and either automatically corrects the issue using pre-determined actions or flags it for the escalation team.

Similarly, a steel company built a customized scenario-planning tool into its control tower platform that increases supply chain responsiveness and resilience. The tool simulates how major, unexpected equipment breakdowns — so called “big hits” — will affect the business and points to the best risk mitigation actions.

Reskilling implications
The trend is clear: Technology is replacing people in supply chain management — and doing a better job. It’s not hard to imagine a future in which automated processes, data governance, advanced analytics, sensors, robotics, artificial intelligence, and a continual learning loop will minimize the need for humans. But when planning, purchasing, manufacturing, order fulfillment, and logistics are largely automated, what’s left for supply chain professionals?

In the short term, supply chain executives will need to shift their focus from managing people doing mostly repetitive and transactional tasks, to designing and managing information and material flows with a limited set of highly specialized workers. In the near term, supply chain analysts who can analyze data, structure and validate data sets, use digital tools and algorithms, and forecast effectively will be in high demand.

Looking further out, a handful of specialists will be needed to design a technology-driven supply chain engine that seamlessly supports the ever-changing strategy, requirements, and priorities of the business. To keep that engine running, a small number of people must be recruited or trained in new skills at the intersection of operations and technology. Since the skills needed for these new roles are not readily available today, the biggest challenge for companies will be to create a supply chain vision for the future  — and a strategy for filling those critical roles.

Clearly, the death of supply chain management as we know it is on the horizon. The managers and companies working to update their skills and processes today are the ones who will come out on top.

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Thursday, October 10, 2019

Asperindo: Segmen e-commerce di Pasar Logistik Cukup Dominan

Kamis, 10 Oktober 2019 / 21:50 WIB

KONTAN.CO.ID - JAKARTA. Wakil Ketua Asperindo (Asosiasi Perusahaan Jasa Pengiriman Indonesia), Budi Paryanto memandang saat ini segmen e-commerce dalam pasar logistik masih cukup dominan, yakni sebesar 60%-70%.

Budi menyatakan, berdasarkan survei Frost & Sullivan pertumbuhan bisnis logistik di Indonesia dalam lima tahun terakhir telah bertumbuh sebesar 13%-14% per tahunnya. Sementara mengacu pada data World Bank dan kajian dari Frost & Sullivan, pada 2017 lalu angka logistik Indonesia mencapai lebih dari Rp 200 triliun dari berbagai sektor terkait di industri logistik seperti transportasi, warehouse, dan e-commerce.

"Pasar logistik dalam negeri masih cukup dominan meski ini hanya dinikmati oleh mungkin tidak lebih dari 10% pelaku industri logistik. Segmen besar lain yang ada dalam pusaran bisnis logistik adalah segmen telekomunikasi, elektronik, dan UMKM. Transaksi bisnis juga meningkat, dan memang sebagian besar dari kontribusi e-commerce. Sedangkan yang reguler atau general cargo cenderung stuck," jelas Budi kepada Kontan, Kamis (10/10).

Budi melanjutkan, pemain bisnis logistik saat ini banyak melayani e-commerce dari luar negeri yang memiliki nilai kapital besar.

Sementara itu, ia melihat titik kelemahan yang ada pada bisnis logistik terletak pada belum adanya regulasi yang mengatur penggunaan dan pemanfaatan infrastruktur logistik yang lebih efektif dan efisien.

Pemain dalam industri logistik juga dibagi dalam dua kelompok, yakni pelaku yang dibawahi Asperindo dan Asosiasi Logistik dan Forwarder Indonesia (ALFI).

"Setahu saya Kemenkominfo itu menerbitkan ijin sekitar 470 an untuk pelaku bisnis logistik. Yang bergabung di Asperindo hanya 300 anggota, berarti masih ada yg di luar. Kalau ALFI anggotanya lebih banyak, lebih dari 3000 anggota di seluruh Indonesia," lanjutnya.

Budi melanjutkan, bentuk perizinan yang didapatkan pelaku bisnis logistik pun ada yang berjenis multimoda dan pergudangan.

"Saat ini pemain e-commerce juga ada kecenderungan untuk menangani sendiri pengirimannya, seperti Firstmile sampai Lastme, lalu Lazada. Bahkan armada pesawat juga ikut-ikutan, seperti Garuda dan Lion Air," pungkasnya.

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Monday, October 7, 2019

E-commerce Indonesia tumbuh 12 kali lipat dalam empat tahun

Senin, 07 Oktober 2019 / 14:10 WIB
Reporter: Andy Dwijayanto | Editor: Noverius Laoli

KONTAN.CO.ID - JAKARTA. Berdasarkan laporan e-Conomy SEA yang disusun Google, Temasek dan Bain & Company yang dirilis pekan lalu, valuasi sektor e-commerce di Indonesia diperkirakan mencapai US$ 21 miliar pada tahun ini, jumlah tersebut bertumbuh 12 kali lipat ketimbang tahun 2015.

Randy Jusuf, Managing Director Google Indonesia menyebut saat ini e-commerce juga sudah mulai merambah produk grosir dan produk harian. Bahkan pada tahun 2025 mendatang, e-commerce Indonesia diperkirakan bisa mencapai US$ 82 miliar.

"E-commerce tetap maju, opportunity-nya mulai besar dan pemain tidak hanya berpikir soal pertumbuhan tetapi juga monetisasi dan model bisnis baru," ujarnya di Jakarta, Senin (7/10).

Kehadiran e-commerce memang memberikan pengalaman berbelanja yang unik dengan menggabungkan promo dan unsur hiburan. Hal ini terkait dengan banyaknya pencarian voucher, kupon dan promosi yang diberikan oleh pelaku e-commerce selama festival belanja seperti Harbolnas.

"Menurut Google Trends, pencarian tersebut telah meningkat dua kali lipat dalam empat tahun terakhir," lanjutnya.

Ia melihat ke depan potensi market domestik bagi e-commerce masih cukup potensial. Namun kesempatan untuk ekspor produk juga lebih mudah. Tidak hanya di kota-kota metropolitan, tetapi kota non metropolitan juga memiliki potensi pertumbuhan yang baik.

"Kalau logistik e-commerce di kota non metro sudah bisa garap, saya kira e-commerce akan tumbuh lebih tinggi lagi," tutupnya

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