Now Playing: Technology You Need
These technologies will play a starring role in supply chain management.
The team at Burlap & Barrel, which imports sustainable, single-origin spices, has been implementing “technology to help with speed and accuracy at the warehouse,” says Ori Zohar, co-founder and co-chief executive officer.
Among its initiatives, Burlap & Barrel wanted to create a system to allocate orders between its two warehouses. However, two separate companies run those warehouses; they rely on different software to determine how to handle orders, making it difficult for the locations to communicate with each other.
To create a bridge across the two warehouse management systems, Burlap & Barrel’s technology developer used APIs, or application programming interfaces. APIs contain rules that allow different applications to communicate with each other.
As connectivity has become a key focus within supply chain organizations, given the many systems they’re leveraging and from which they’re trying to collect data, APIs have become an increasingly popular way to connect systems. The global market for APIs management is expected to jump from $4.1 billion in 2021 to $8.41 billion in 2027, predicts Market Data Forecast.
When Burlap & Barrel received a wave of holiday orders in December 2022 that was almost double the volume in November, the company was “able to immediately modify the logic of how we assign orders to let the overwhelmed warehouse catch up while filling the capacity of the second warehouse,” Zohar says. “It saved the holidays for us and many of our customers.”
A growing number of companies are leveraging technology to improve their supply chain and logistics operations. About 59% of supply chain and logistics professionals surveyed by Descartes Systems Group accelerated the pace of innovation investment and deployment over the past two years. Nearly two-thirds (65%) plan to increase technology spending over the next two years, Descartes reports.
These investments tend to pay off. Respondents who say that innovation is important to senior management are 20% more likely to be better financial performers, the study finds.
Meeting Multiple Goals
Over the past five years, many supply chain organizations have been asked to drive multiple capabilities, says Sameer Anand, principal and Americas supply chain practice leader with EY-Parthenon. These capabilities include:
- Productivity and shifting the cost curve.
- Resiliency, including end-to-end supply chain visibility.
- Agility and flexibility to respond to changing consumer expectations.
- Developing “green” or sustainable supply chains.
In addition, as supply chains work with an increasing volume of data, speedier processing capabilities have also become critical.
The following technologies can help supply chain organizations meet these multiple goals.
Tools that Streamline Supply Chain Operations
By utilizing automated technologies, companies can maximize efficiencies while increasing productivity, says Melissa Twiningdavis, supply chain services lead with Accenture Operations. Such companies saw up to 2.8 times a growth in profitability, among other benefits, finds a recent Accenture study.
3D Printing. Additive or 3D printing can help companies do more with less by limiting the need for emergency shipments of repair, replacement, or other parts. If a manufacturer needs a specific part to continue operating, rather than hold one in inventory or place an order and then wait for the shipment, the company can print the part on-site.
That has become particularly important as more supply chains shift back to a just-in-time or near just-in-time approach, says Jonathan Wright, chief technology evangelist with Keysight Technologies, which helps engineers quickly deploy solutions.
Virtual reality. This refers to a simulated 3D environment that enables users to “explore and interact with a virtual surrounding in a way that approximates reality,” TechTarget explains.
In the logistics function, virtual reality can come into play in multiple ways. In a distribution center, for instance, pickers may wear virtual reality glasses that can scan multiple barcodes. When combined with voice commands, these tools can help workers locate items without having to maneuver a scanner or other device, boosting picking accuracy and efficiency.
Another application is in spare parts logistics. Should a machine on a ship or in a factory need repair, individuals with the appropriate expertise can guide the repair using virtual reality from remote locations.
“You save a lot of money because you don’t have to move people to the repair site,” says Herbert Kotzab, Ph.D., director of Crowley Center for Transportation and Logistics and the CSX Transportation Eminent Scholar in Transportation and Logistics at the University of North Florida.
Resiliency and Visibility Technologies
Visibility boosts resiliency by enabling supply chain organizations to identify and more effectively manage through disruptions and market shifts. Yet a primary challenge for many supply chain leaders during the pandemic was gaining visibility to their extended supply chains, says Abe Eshkenazi, chief executive officer with the Association for Supply Chain Management.
Several technologies can boost supply chain visibility, including these:
Artificial intelligence (AI). “Most companies have an enterprise resource planning (ERP) system that directly interfaces with their supply chain,” says Alice Globus, chief financial officer with Nanotronics, an advanced machines and intelligence company. While this provides some information, it typically offers “an island view,” she adds.
In contrast, “AI can be holistically infused into demand prediction, inventory management, and supply chain optimization to better understand a full picture of the business,” says Twiningdavis.
Artificial intelligence can process multiple sources of data to determine, for instance, if a weather event will delay shipment of a needed component.
“Companies can use AI to predict things that will impact their suppliers,” says Jim Fleming, supply chain manager-product development and innovation and faculty member with the Institute for Supply Management.
The company can then decide whether to shift to a different production operation until the shipment arrives.
Artificial intelligence can also help supply chain organizations automate operational processes, such as auditing the numerous logistics bills flowing through their operations.
One example is Alliance Rubber Company, which provides rubber products for multiple sectors, including the military and retail and pharmaceutical companies.
As the company has grown, it has also been looking to improve its freight spending, says Jason Risner, vice president of sales and marketing with the Hot Springs, Arkansas-based firm.
Many freight invoices contain errors, he notes, particularly in rates and accessorial charges. Challenging errors means taking time away from other valuable activities.
“If you can eliminate friction and automate, you can get resolutions more easily,” Risner says.
Alliance partnered with Loop, a logistics payments platform that extracts information from documents, electronic data interchange, and other formats using artificial intelligence to automate downstream workflows such as invoice validation, payment, and exception management.
This technology, called “contextual AI,” creates a uniform source of truth for all parties in the transaction, as well as enriched and unified data formatting. It then can determine, for example, that 123 Baker Street in Billings, Montana, is the same as 123 Baker Str., also in Billings.
Absent this technology, trying to reconcile bills would be akin to placing a call from, say, the United States to France, where one person speaks English and the other speaks French. The two can connect, but neither will understand the other.
To connect with Alliance’s internal billing and other systems, and obtain the information needed, Loop uses APIs. “Automation will happen only if systems are connected and can speak to one another,” says Matt McKinney, co-founder and CEO of Loop.
Agility and Flexibility Tools
Many consumer goods companies see spikes in demand during the holiday season. Others may see sales of a particular product take off when a social media campaign goes viral. Agile, flexible supply chains enable companies to manage through the volatility.
Digital twins. Improving the accuracy of demand and supply planning can help companies more intelligently allocate resources, boosting productivity and agility. Digital twin technology—in which a virtual model is designed to accurately reflect a physical object—can be used to run simulations, study performance issues, and generate possible improvements to the original physical object(s), according to IBM.
How might this apply to supply chains? Leaders of efficient supply chains need to answer several questions, says Igor Rikalo, president and COO with o9 Solutions, a planning platform. These questions are:
- What is happening within the company and why? Dashboards and business intelligence have typically been used to answer this.
- What is going to happen? Often, formulating predictions has required the use of algorithms to “chew through different data sets,” Rikalo says.
- What should we do? That is, how should the company connect planning to execution?
Instead of addressing these questions with multiple disconnected technologies, the holistic view possible with digital twin solutions lets supply chain leaders more quickly understand how their competitive environment is changing and adjust operations.
Digital twins can also boost efficiency at a more tactical level. For example, a company can digitally adjust its warehouse layout and then review the impact on operations.
As supply chains become increasingly digital and collect massive volumes of data, speedy computing becomes critical.
Quantum computing. Quantum computers can handle problems that require calculating a large number of possible combinations. Organizations can use quantum computing to optimize supply chain network design, including determining the optimal number and location of DCs, and retail outlets.
“This involves solving large-scale mixed-integer linear programming problems, which can be computationally intensive,” Wright says. Quantum computing speeds the process and enables more accurate and efficient network designs.
Edge computing. Edge computing allows Internet of Things (IoT) devices to act on data in near real time by processing it at the “edge” of a company’s network. Processing data through edge computing is faster than using the cloud.
As more enterprises use IoT endpoint devices within many supply chain functions, they can use edge machine learning to process large “exhaust data”—the data left by users during online activity, both unstructured and structured. This can support near real-time supply chain optimization.
Operating more sustainably often improves a supply chain’s financial performance, as well as its impact on the environment.
Shared truckload technology. A large cost for most supply chain organizations is transportation. Boosting transportation efficiency often cuts costs and emissions.
Yet given increasing pressure to ship goods on-time and damage-free, businesses often reserve entire trucks, regardless of whether they have enough pallets to fill them, explains Lu Saenz, chief technology officer with Flock Freight.
The company’s shared truckload technology uses artificial intelligence and probabilistic pricing engines to keep trucks full by connecting shippers whose goods are heading in the same direction with carriers who are already driving that way, cutting both costs and the environmental impact of the shipments.
Distributed ledger technology. Blockchain, or distributed ledger technology, is often associated with cryptocurrency, yet its applications can extend to the supply chain and logistics functions, as it offers increased traceability and tracking.
Because of the way blockchain technology collects and stores information, it creates permanent, immutable records of transactions. This can improve product security and tracking, ensure contract compliance, and promote ethical, sustainable sourcing.
Despite predictions of growth in these technologies and credible claims that they can offer more streamlined, intelligent, and flexible supply chains, some supply chain leaders are skeptical, often for good reason.
“We have been promised automation and technology for a long time,” McKinney says. Yet many solutions have failed to meet their promises.
One reason is that the individuals working on the technology often had limited experience in the supply chain field, McKinney says. The current generation of technology builders, in contrast, also brings experience in supply chain.
“They can create business value and software that actually works,” McKinney adds.
As deployments of these technologies expand, companies and supply chain organizations will want to adapt.
“If companies are afraid of technology and automation and say, ‘We’ll do okay without going after it,’ they are not going to stay around,” Fleming says.
Pedaling Fast With WMS
Canyon Bikes, which manufactures world-class road, mountain, and other bikes, has its headquarters and design, sales, operations and engineering teams located in Koblenz, Germany. As the company looked to become a global firm and scale rapidly across the United States, it partnered with third-party logistics provider SEKO Logistics.
SEKO worked with Canyon to transform their warehouse into a facility that could support supply chain fulfillment, quality control, and team integration. Through the partnership, the companies integrated the SEKO 360 WMS platform with Canyon’s enterprise resource planning and customer relationship management solutions.
Through its proprietary integration hub, the iHub, SEKO can quickly and easily integrate clients’ ecommerce marketplaces, like Shopify, and their final-mile carriers with SEKO’s internal systems.
“Our standard integrations are easily configured and do not require IT resources,” says Jamie Andrade, vice president, product management with SEKO. SEKO 360 optimizes Canyon’s inventory management, warehouse pick flows, and final-mile shipping, capturing the product’s serial number on outbound shipment for warranty and tracking information.
Supply Chain Tech on the silver screen
These technologies will see their name in lights in supply chain management during the next five years, say industry insiders.
Using tech tools to analyze and derive actionable insights from supply chain data will become industry-standard best practices, allowing logistics managers to monitor performance and optimize for quality and financial success.
–Elizabeth Goulding, Director, CTM Operations, Coyote Logistics
In the next five years, we will see a massive influx of automation into all aspects of the supply chain, as well as a greater understanding and use of data by supply chain and logistics companies.
Automation will be realized in areas such as picking and placing, loading or unloading a pallet, and more. In addition, logistics and supply chain organizations will be able to use the wealth of data they have to better track industry trends and be able to predict supply and demand, limiting future disruptions. The combination of automation and data-based decision-making will transform the industry.
–Matt Somerville, Director of Sales, North America, Realtime Robotics
Retailers must be better prepared to pivot when abrupt changes in demand and consumption occur. Implementing AI-based technology that drives efficiency and agility—overcoming just-in-time fulfillment limitations—allows retailers to build resilience across the supply chain and all channels while presenting the opportunity to improve sustainability footprints.
-Troy Prothero, SVP, Product Management – Supply Chain Solutions, SymphonyAI Retail CPG
We’re moving toward a world run by platforms. Data and visibility are now table stakes. Automated decision making is what’s next.
–Daniel Sokolovsky, CEO and Co-Founder, WARP
We’ll see more automation, not just in terms of robotic process automation, but deeper use of machine learning and artificial intelligence to automate the decision-making that we currently rely on humans to perform. The technology has rapidly advanced over the past few years and the organizational acceptance is just starting to catch up.
–Lachelle Buchanan, Vice President, Logility
Decision intelligence will completely transform supply chain management, delivering a new competitive advantage by improving performance, making logistics more efficient and sustainable, and elevating customer service.
This revolution has already started. Supply chains are using AI and machine learning technologies to automate decision-making, retaining a digital memory of decisions to build institutional knowledge and guide future decisions.
–Fred Laluyaux, CEO, Aera Technology
We’ll witness a tsunami of trusted data into the supply chain, enabling a level of visibility never before possible thanks to the incorporation of IoT, cloud, and blockchain. IoT will provide visibility into key parameters such as location, temperature, humidity, vibration, and more. Added to a trusted blockchain, this data will help automate chain-of-custody tracing. The adoption of cloud technologies stitches entire solutions together.
–Karthik Ranjan, LoRa Cloud Solutions and Partnerships Leader, Semtech
Artificial intelligence will completely transform supply chain management in the next five years. From faster, smarter quoting and routing to better accuracy and productivity in the warehouse, AI has the potential to optimize every link in the supply chain.
–Gabriel Ruz, Chief Innovation Officer, Magaya
Supply chain management will move through significant waves of digitization and AI-based automation. Operating closer to the edge and more in real-time, companies will continually assess their inventory and velocity automating replenishment and purchasing.
Negotiations based on projected volume and available offers will stream across systems with less and less human intervention required to connect supply and demand. Customer expectations will continue to grow in terms of product availability driving complex service level agreements to be monitored using IoT.
The last mile will remain a major challenge as despite the best efforts and technologies the number of uncontrolled variables represents a daunting challenge even five years into the future.
–Jonah Ellin, Chief Product Officer, 1010data