The Death of Supply Chain Management

The supply chain is crucial for a company’s operations. To take decisions, managers need access to real-time data about their supply chain but there are limitations to technology. These day’s new digital technologies that have the potential to replace supply chain management are disrupting traditional ways of working. In the next 5-10 years, the supply chain function will become obsolete, replaced by the self-regulating utility that efficiently manages end-to-end workflows and requires very less human assistance.

With rapid digitization, companies easily access, capture, integrate, analyze, and interpret real-time data. This data fuels process automation, artificial intelligence, predictive analytics, and robotics, technologies will replace supply chain management soon.

Leading companies are already investigating the possible solutions. Many have used AI (artificial intelligence) or robotics to automate human-intensive, repetitive tasks and processes such as invoicing, purchasing, accounts payable, and customer service. Predictive analytics is helping companies to improve demand forecasting, so they can decrease volatility, increase asset utilization, and provide customer convenience at optimized cost.

Some manufacturers are using machine sensor data to maintain machines and estimate machines breakdowns, so that downtime is minimized.  Robotics is helping to improve productivity and margins in retail warehouses. Rio Tinto, the global mining-and-metals company is investigating how digital technologies can automate mine-to-port operations. The invention of driver less trains, lasers, cameras, robotic operators, and tracking sensors, companies will be able to monitor the entire supply chain remotely while improving safety and reducing human resources.

An important concept that many companies are researching is the “digital control tower” which is a virtual decision center which provides real-time end-to-end visibility into global supply chains. For small retail companies, control towers have become the main nerve center of their operations. A “tower” is actually a physical room where a team of data analysts work 24/7, monitoring a wall of high definition screens. These screens provide real-time information and 3D graphics of every step of the supply chain, from order to delivery. Visual alerts warn in advance when there is a shortage of inventory or process bottlenecks, so that front end teams can rectify quickly before the potential problems become actual ones.

A manufacturing company network moves more than a million parts and components each day. Control tower flags essentially show issues as they arise; calculate the effects of the problem at hand. It automatically rectifies the issue using pre-determined actions or flags it for the escalation team. Similarly, a steel company developed a customized scenario-based planning tool into its control tower platform that improves supply chain responsiveness and flexibility.

The tool also simulates major and unexpected machine breakdowns known as “big hits” which will affect the business and highlight the points to mitigate the risk.

Reskilling implications

The trend is very clear as technology is replaced by people in supply chain management and it is doing a better job. In future automated processes, sensors, data governance, artificial intelligence, advanced analytics, and robotics will minimize dependency on humans. When the processes like planning, purchasing, manufacturing, order fulfillment and logistics are automated, then there is nothing left for supply chain professionals to do.

So, the supply chain executives, instead of doing most repetitive and transactional tasks, they need to shift their focus on designing, managing information and material flows with a few specialized workers. Future demand is for supply chain analysts who can analyze data, structure and validate data sets using digital tools and algorithms to forecast effectively.

Further, we need a handful of specialists to design technology-driven supply chain engines which support business requirements and strategy. To keep that engine going, a very few people must be recruited or trained in new skills at the intersection of operations and technology. The biggest challenge for companies would be to formulate a supply chain vision for the future and strategy to fill critical roles because skills required for these roles are not readily available in the job market today.

Clearly, focus only supply chain management will limit a person’s knowledge, experience, or interest. The managers and companies, who are updating their skills and processes today, are the ones who are flourishing on top.

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