Supply Chain Technology: The Age of Acceleration
Fast, faster, fastest describes the pace of technology innovations hitting the market today as compared to past decades. These innovations focus on safety, visibility, flexibility, efficiency, and sustainability to help supply chain professionals compete in a changed world.
Most companies have long tried to keep their employees safe. In 2020, that meant ensuring those still on the job could remain socially distant from their coworkers. Enter the Reflex, a wearable device from Kinetic that was initially designed to provide feedback when workers use unsafe postures. Employees attach the device to their belt or waistband, where it measures hip motion, says co-founder and CEO Haytham Elhawary. The software in the device knows that if a person's hip moves one way, the rest of their body must have moved that way. It uses this information to identify high-risk movements, such as twisting or over-extending the spine.
In August 2020, Kinetic added automated proximity alerts to the device's capabilities. Now, the Reflex lightly vibrates when workers come into close contact with each other.
At Warwick Ice Cream in Rhode Island, a producer of scratch-made ice cream, close employee contacts dropped by more than three-quarters in the first month it implemented the Reflex. On top of that, the duration of closer encounters dropped from seven minutes to less than 60 seconds.
Social distancing alerts are just one way in which technology is changing to help supply chain professionals access the qualities that can help them compete in a changed world: safety, visibility, flexibility, efficiency, and sustainability. The goal is an "intelligent supply chain" that can predict and quickly accommodate changes, says Inna Kuznetsova, CEO with 1010data, a provider of analytical intelligence.
Supply chain systems that capture and show transaction data as it flows from raw materials to production to distribution are able to then identify and analyze patterns, shortages, and surpluses, and act to resolve any problems, says Tom Martucci, chief technology officer with Consolidated Chassis Management (CCM), a chassis pool manager.
One key to end-to-end visibility is data interoperability. Supply chain organizations need to be able to integrate data from carriers, terminals, and drivers, among other sources, and capture it in one place.
"If you don't have data interoperability at the outset, you lose an opportunity to make processes as efficient as possible," Martucci says.
Application programming interfaces (APIs), which act as communication links between software programs, are replacing older methods of sharing information, Martucci adds. And, they're booming in popularity; between 2019 and early 2021, usage of one API platform, the Postman, more than tripled (see chart).
project44, a provider of digital supply chain visibility solutions, uses API-first development to trigger exception notifications when, for instance, an ocean liner has to turn back, potentially delaying the arrival of shipments. With this information, companies can decide whether to re-order inventory and ship it via air to still meet delivery deadlines, says Vernon O'Donnell, chief product and services officer with project44.
Multi-modal, network-wide visibility allows supply chain professionals to identify and mitigate exceptions more quickly, he adds.
Telematics, another visibility tool, is an emerging option for asset management and tracking. In its broadest sense, telematics joins telecommunications and informatics, and commonly refers to wireless telematics devices that collect and transmit data on, for instance, vehicle use, maintenance requirements, and servicing.
In shipping, telematics can measure container location, temperature, humidity, air flow, and other attributes, says Greg Tuthill, chief commercial officer with SeaCube, a purchaser and lessor of refrigerated containers whose service offerings include telematics.
For instance, a telematics tag placed in a refrigeration unit can provide information on its location and show when the machine is operating outside its ideal range. It also could warn of potential component failures.
"It can pick up early warning diagnostic indicators," Tuthill says. What's more, a tag can provide this detail to the pallet level.
To date, less than 20% of global fleets use telematics, Tuthill estimates. While the adoption rate had been accelerating, the pandemic set it back. Another challenge has been accessing containers in circulation to install the technology.
One lesson the pandemic wrought is the importance of flexibility. Adam Kline, senior director, product management with Manhattan Associates, a provider of supply chain management software, provides an example. Say a company has a distribution center (DC) that supplies its retail stores in one state. In another state, its distribution center fills e-commerce orders.
Because of the pandemic, the retail DC is locked down and stores in the area are closed. To transact business in the region, the company's systems need to figure out how to ship individual products from the retail DC or send the customers' orders to the e-commerce DC located in a different state.
Either way, the system needs to react "seamlessly and gracefully," Kline says. The same challenge could arise if locations are shut down due to weather events or computer outages.
Similarly, a warehouse management system (WMS) today needs to be able to manage the picking of both units and pieces, and handle multiple shipping methods, as well as shipping to both stores and consumers, all while dealing with unpredictable demand.
A WMS that allows supply chains to virtually segregate items can boost efficiency and savings. Kline offers an example: a supply chain organization could build a 1-million-square- foot distribution center for retail fulfillment, along with a 500,000-square-foot center for e-commerce fulfillment. Or, the company might be able to build a 1.1-million-square-foot facility that handles both types of orders.
"Rather than physically segregate products across multiple sites, you can virtually segregate them in one location through the WMS," Kline says.
For instance, Sysco Corporation chose Manhattan Associate's inventory optimization and replenishment system in part because it allows the food service company to move products from suppliers' manufacturing plants or distribution centers to Sysco's distribution centers, as well as into the warehouse networks of its operating companies.
APIs have a role to play in WMS solutions, as well. The solutions that incorporate APIs allow supply chain professionals to add capabilities, such as real-time location tracking within a distribution center, or to integrate a third-party track-and-trace solution.
Artificial intelligence also enhances flexibility. Symphony RetailAI uses artificial intelligence in numerous areas, including forecasting and determining the optimal way to fill orders, says Patrick Buellet, chief strategy officer.
Say a retailer runs out of a product. The Symphony solution can use rules set by the business to either substitute another product, or fill the order with the requested product, but from a warehouse that's located farther from the customer.
The solution also can prioritize either e-commerce or retail orders, based on business rules, improving overall product availability, he adds.
Intermarché and Netto, manufacturers and retailers under Groupement Les Mousquetaires in France, partnered with Symphony in late 2020. They're leveraging the company's AI-based technologies to unify purchasing, logistics, replenishment, and other processes across a common platform and optimize inventory management and replenishment.
Given social distancing requirements on top of a tight labor market, supply chain professionals often struggle to ensure their employees can work safely and efficiently. Robotics can help.
However, some solutions crafted for manufacturing operations falter in warehousing environments, which often encompass a greater variety of products, packaging, and volume levels, says Brian Nachtigall, logistics product manager with Boston Dynamics, a producer of mobile robots.
This difference helps explains why the global industrial robotics market topped $21 billion in 2019 and was projected to hit $66.48 billion by 2027, while the warehouse robotics market, while growing quickly, should end up at about $9.5 billion in 2027.
Boston Dynamics' Stretch mobile robot is designed for distribution settings. A mobile case-handling robot with a small footprint, its advanced perception and manipulation capabilities allow it to move pallets, handle cases, and pick cases, as well as load and unload trucks and palletize and depalletize products, including multi-SKU pallets. "It hits the need for variation," Nachtigall says.
Amazon alone generated 465 million pounds of plastic packaging waste in 2019, including air pillows, bubble wrap, and other plastic packaging items added to the approximately 7 billion packages the company delivered, according to a report by Oceana, an international advocacy organization focused on the world's oceans. One way to reduce plastic fill is to use boxes that closely wrap around their content.
Along with environmental concerns over packaging, "unboxing has become a big deal," says Sean Webb, director of automated packaging solutions North America with Quadient, a packaging solutions provider.
Ensuring items arrive intact no longer suffices. Instead, the package in which an order arrives at a customer's home now is part of a company's branding and messaging. So, as an example, an outdoorsy company will probably look for recycled material and packages, while a jewelry company may choose premium packaging. Both will want packages that take up no more space than necessary.
Quadient's automated packaging system builds fit-to-size parcels for variable dimension single- or multi-item orders, reducing waste. Employees don't need to know the product's dimensions before the machine can go to work. "Most companies see volume savings of 20 to 50%, and shipping cost savings averaging 32%," Webb says.
Another solution, atma.io from Avery Dennison, marries the physical and digital supply chains by providing every physical item with a unique digital identification. In doing so, it facilitates product returns and reuse, allows consumers to check the provenance of the goods they're purchasing, and provides real-time temperature monitoring for products like vaccines.
To tap into atma.io's capabilities, two things are needed, says Max Winograd, vice president of connected product. One is the digital trigger on the physical item. This can be RFID, Bluetooth, or almost any data carrier. The other is the digital ID that's stored in the atma.io cloud platform. Companies can create the ID in-house.
Bringing It All Together
The need for visibility, efficiency, and flexibility continues once products are on their way. Last-mile delivery costs alone can account for more than half of total shipping costs. Route optimization and last-mile delivery solutions can help.
Until recently, however, the prices of these capabilities put them outside many companies' budgets, says Shaun Richardson, CEO of CXT Software, a last-mile delivery and courier software provider. "Computational power was expensive before Azure and Amazon AWS came around and pushed the price down to the point any company could rent a supercomputer," he says.
Because of the toolsets and cloud computing resources now available, the barriers to entry dropped enough that startups could offer what used to be available only to enterprises with large data centers. CXT's newest route optimization engine will leverage the power of artificial intelligence, so it can continuously analyze data and improve operations.
And when it comes to residential delivery services, a few large companies had mostly cornered the market, says Jeff Boutwell, a consultant with Leverage Teck, a consultancy that helps companies navigate final-mile solutions.
"It has been hard for other companies to get the same service and visibility," he says. If they wanted to connect with, say, 15 couriers, they might need 15 different connections.
That's changing. Solutions like eTrac's Final Mile Gateway allow companies to exchange data from their ERP, WMS, or other system with final-mile carriers, such as local couriers, in real time. eTrac uses APIs and EDI to pass order and shipment tracking data between shippers and clients, says Boutwell, who was formerly with eTrac. As a result, a shipper can use one connection, even when connecting with multiple systems.
A few steps can help supply chain professionals leverage new technologies and gain the attributes they need from their supply chains.
- Opt for smaller, short-term projects—say, 6 to 12 months—with clear returns on investment, as opposed to longer-term IT initiatives with payback time frames of several years. Early wins can generate momentum on which to build future projects. Linking success with payback can create a highly accountable model of innovation.
- Keep expectations realistic. Few technology projects are truly turnkey. Most require some trial and error and disciplined project management.
- Keep an open mind. O'Donnell recalls working with a company that preferred to continue its relationship with a carrier with whom they'd grown comfortable, rather than establishing key performance metrics and looking for a carrier that met them. Of course, this hindered the company's ability to improve its performance.
The changes over the past year have been mind-numbing and they're not over. Research firm Gartner predicts hyper-automation will emerge in supply chains. Hyper-automation refers to the use of multiple technologies, including robotic process automation, machine learning, and artificial intelligence to quickly identify, vet, and automate business processes.
Between 2025 and 2030, hyper-automation technologies are expected to mature and enter mainstream adoption. "They will help automate supply chain decision-making by augmenting human judgment," Gartner says. "Hyper-automation technologies will be available to increase the accuracy and speed of decision making."
These changes in supply chain technology are only beginning.