By Joseph Moss, International Banker
Among the most severe and persistent problems facing the global economy since the outbreak of the COVID-19 pandemic is the immense strain that has been put on global supply chains. Worldwide lockdowns and restrictions have meant that the probability of consumers in one country receiving goods in a timely fashion remains far from guaranteed due to the pertinent threats to the complex supply-chain processes of manufacturing, storage, transport, logistics and distribution arising across other countries.
Ultimately, the sheer weight of demand for products around the world has resulted in significant challenges faced by global supply chains, such as insufficient labour availability, questionable equipment supplies and the emergence of massive global bottlenecks that have resulted in consistent delays. But as the economy recovers from the pandemic and business activity and retail sales grow again, more goods are set to move through supply chains. Can the long-running supply-chain fragility be sufficiently addressed to cope with this rejuvenated demand? And can technology and innovation play crucial roles in fixing many of these long-term issues faced by global supply chains?
As the pandemic has ushered in a major shift towards the digital realm for many of our daily needs, so, too, are global supply chains feeling the benefits of digitalisation, with systems becoming increasingly automated, flexible, efficient, self-reliant and intelligent. According to a Gartner survey of 211 supply-chain professionals in December 2021, 34 percent of respondents said that adapting to new technology is the most important strategic change that supply-chain organisations will face five years from now. As such, supply-chain leaders “must take multidisciplined approaches for identifying innovative technologies and orchestrate the right technology investments at the right place and the right time,” according to Dwight Klappich, vice president analyst with the Gartner Supply Chain practice.
3D printing, also known as additive manufacturing, represents just one exciting innovation that is helping to alleviate the pressure being placed on supply chains, particularly when it comes to quickly solving shortages. It is also a scalable solution that can prove critical in easing shortages and swiftly plugging gaps within complex supply chains. “3D printing technology is incredible,” US President Joe Biden recently declared. “It can reduce part lead times by as much as 90 percent, slash material costs by 90 percent, and cut energy use in half. That all lowers the cost of making goods here in America.”
Indeed, by competently replicating replacement parts, 3D printing can rapidly deliver parts and thus drastically lower the reliance on maintaining warehouse inventory. “Lead times for the products you are sourcing could be up to 60 weeks,” Charles Lu, product marketing manager at industrial 3D printing firm Markforged, recently explained to specialist supply-chain news publication EPS News. “I think, from the perspective of someone sourcing those parts, having the ability to make slight changes or modifications to a device that is holding up assembly is highly valuable. Many companies have to adapt to parts that are most available.”
Automation is another key component of global supply chains, with particularly the development of robots helping to augment and even replace traditionally labour-intensive tasks, especially within warehouses and distribution centres. Such tasks can benefit from automated intelligence such that they might even be able to operate without the need for any human input, including goods delivery and transporting pallets. Logistics operations have developed “a growing thirst” for flexible automation, according to Gartner, which predicts that 75 percent of large enterprises will have adopted some form of intralogistics smart robots in their warehouse operations by 2026.
The rising adoption of automation, particularly robotics, within retailers’ distribution centres speaks to the growing influence of technology in supply-chain operations, according to a recent report from retail specialists Total Retail and Radial. “Robots are helping retailers to speed up order fulfillment times by picking and packing orders. They’re doing so rapidly, accurately and cost efficiently, complementing existing human workforces,” the report noted. “Furthermore, robots are helping to fill the gap for retailers challenged by labor shortages within their distribution centers. Automated solutions such as robots are proving valuable tools to help retailers keep pace with growing consumer demand for speedy delivery.”
Meanwhile, a November 2021 study by business-process and IT (information-technology) services firm NelsonHall for Capgemini based on interviews with 50 supply-chain leaders in major enterprises across North America, the United Kingdom and Europe found that 98 percent of respondents said that supply-chain automation was highly important. “Intelligent automation reduces exception levels, which not only lowers costs, but also reduces the need to engage customers in issue resolution,” Capgemini noted. “The result: more things happen without intervention or hassle, so more customers can more often simply make a decision, click, and move on, secure in the knowledge their order is safely in hand.”
Similarly, distribution centres are becoming more autonomous, with the likes of robots, vehicles and drones now able to perform tasks previously assigned to humans with often much greater efficiency and scope. And with the likes of cutting-edge technologies such as artificial intelligence (AI), machine learning (ML), 5G connectivity and the internet of things (IoT) now becoming increasingly applicable, the prospect of end-to-end automation of the supply chain is fast becoming a reality. As such, supply chains will soon be able to operate autonomously, thus rendering human involvement redundant. Indeed, Capgemini has identified a number of key benefits to the implementation of a fully autonomous supply chain, such as being a major time-saver and lowering overheads as a frictionless flow of information will lead to improved inventory and logistics, thus enabling reductions in working capital; boosting agility as supply chains can more readily identify exceptions from having more free-flowing information; and improving customer service.
And perhaps among the most exciting technologies now being applied to supply chains is the digital twin, which can provide a virtual replica of the entire physical supply chain. This can be done using complementary technologies such as 5G, IoT and GPS (Global Positioning System) that transmit data from various sources across the end-to-end, multi-enterprise supply-chain network. Providing this data can be transmitted continuously, businesses can then use the virtual replica to make data-driven decisions in real-time, improving flexibility and the ability to respond to problems as soon as they are detected.
As such, digital twins are inducing a dramatic improvement in situational awareness pertaining to supply chains, with informed decisions that can be taken with greater speed and accuracy. “More companies need to be leveraging strategic digital twin technologies to solve the ongoing issues of bottlenecks and shortages in the supply chain,” Nicola Morini Bianzino of EY (Ernst & Young) told Forbes Technology Council in April. “Companies utilizing the digital twins approach with business insights and industry best practices spot supply chain anomalies and disruptions proactively, improving planning and management across the end-to-end supply chain.”
Truth be told, firms can employ a multitude of technologies within the context of supply chains to improve the end-to-end process. Indeed, a December 2020 research by the Chartered Institute of Procurement & Supply (CIPS) identified 16 such technologies, including cloud computing, big-data analytics, smart sensors, cyber-physical systems, virtual reality, manufacturing execution systems and blockchains. And it would seem that firms are becoming more receptive to the changing environment in which supply chains must operate; indeed, given the severity of the problems faced by global supply chains over the last few years, it has arguably become an existential imperative for businesses to evolve. CIPS also found that, of the organisations surveyed, a variety of reasons were cited for why they are investing in supply-chain technology.
“The future of supply chains is being transformed globally by the development of a more digitalised environment, where value chains are connected, and distribution systems are increasingly intelligent, autonomous and automated,” according to CIPS. Indeed, with such advancements helping to improve the resilience of supply chains worldwide, businesses can now manage their complexities more easily, which should ultimately go a long way towards boosting customer satisfaction and sales.