5 technological shifts that will change supply chains

The World Economic Forum’s recently published report, Technological Tipping Points and Societal Impact, looks into the timing and impact of 21 “tipping points” or moments when a specific technological shift hits mainstream society. Taken together, it paints a fascinating picture of the world to come, even providing a schedule for when we can expect to see wearable internet, robotics, smart cities, artificial intelligence, Bitcoin and other transformative technologies tip into the mainstream:

The technological shifts over the next 10 years and beyond will reverberate through all aspects of business, government and society overall. While contemplating the idea of being able to surf the web with thought alone via brain implants can make for great discussion, we’d like to highlight five shifts that we think are poised to impact for supply chains.

1. Sharing economy

Starting with the sharing economy makes sense because of the disruption it is unleashing and the non-stop news coverage. Many executives are asking themselves if their industries are next to be “uberized” an homage to Uber, the car­sharing service and poster child of the model. For a direct application of the sharing economy to supply chains, look no further than Uber’s sights on becoming a real­time logistics network; they have recently launched parcel services in Hong Kong (Uber Cargo) and New York City (Uber Rush).

You can also find the principles of the sharing economy in redistribution markets and in industries where on demand, pay as you go makes sense, such as high­tech service and support. For example, many high­tech equipment manufacturers no longer sell their wares to customers, but rather lease the output of the equipment as service. For example, Rolls Royce’s “Power by the Hour” provides the operator with a fixed engine maintenance cost over an extended period of time. Once an innovation, the model has since been replicated by many.

The uberization of the supply chain is just getting started and expect to see new and smarter ways of maximizing the utilization of capital and assets in areas such as reverse logistics and sourcing.

2. Internet of and for Things

According to the World Economic Forum, by 2022, 1 trillion sensors will be connected to the Internet. The torrent of data will require astronomical figures to describe. The Internet of things (IoT) will give supply chain professionals greater visibility, accuracy and pinpoint identification of potential issues throughout supply chain processes.

Analysts warn that supply chain leaders will have to look far and wide for talent that understands sales and operations planning and analytics in the context of all aspects of IoT, including smart machines and automation. They’ll have entirely new ways to improve processes, track KPIs and automatically set benchmarks.

3. 3D printing and manufacturing

3D­printed machine parts are cool, but nothing like what’s in store for the future. In just seven years we can expect a fully functional 3D­printed car to be in production. No longer confined to research labs, 3D printing, or additive manufacturing, is in the hands of manufacturers and hobbyists alike. A typical consumer grade 3D printer costs $1,500. Someday, you may be able to create your own simple spare parts or objects like a smartphone case by downloading a 3D printing file.

The implications of on­demand production for the supply chain are huge, with positive environmental consequences in terms of reduction in transport, pollution and production waste. 3D printing can also reduce dependence on large factory employment, particularly in developing countries where resources may be scarce.

For manufacturers, it can be a double­edged sword. A piece on The Guardian states that 3D printing, “will eventually relegate traditional manufacturers to only producing highly technical and specialist products.” Job losses in disrupted industries are certain. On the plus side, manufacturers can build new business models that help accelerate product development, reduce cycle times, and find new ways to reduce costs.

4. Big data for decisions

In the next five years, we are expected to go from 4 billion to 30 billion Internet­connected physical devices. This will significantly impact how supply chains operate. The data generated from legions of internal and external sources (such as the industrial IoT described above) will enable better and faster decision­making in a wide range of industries and applications.

We can surmise that advanced supply chain technologies of the future will simply automate decision­making to ensure end­to­end supply chain health and performance. Experts foresee supply analytics tools armed with cognitive computing capabilities to help make decisions and seize opportunities. Moving upstream big data will also transform how business decisions are made across the procure­to­pay cycle. Data­driven organizations will be routinely accessing real­time analytics depicting valuable metrics that were once invisible. The result will give us entire new ways to improve processes, track KPIs and automatically set benchmarks.

5. Robotics and services

It’s hard to believe, but the world now includes 1.1 million working robots. Machines now account for 80% of the work in manufacturing a car. They’re on factory floors everywhere working alongside humans looking more and more like collaborative partners. According to the Robotic Industries Association (RIA), the industry’s trade group, the North American robotics market is off to its fastest start ever. In the first half of 2015, a record 14,232 robots, valued at $840 million were ordered from North American robotics companies. By 2018, 5% of companies with complex picking operations will pilot mobile self­navigating and smart warehouse robots, according to Gartner.

As it’s written in the Deep Shift report, these armies of robots are streamlining supply chains to deliver more efficient and predictable business results. Evidence is everywhere. Consider how for years Japanese factories have been running “lights out” for weeks at a time with little or no human presence. Soon, companies will start “re­shoring” by replacing overseas workers with robots.

How far these technologies have advanced in the last few decades boils down to two words: exponential innovation. We put a man on the moon with less computing power than is now in the basic iPhone. It stretches the imagination to think what the next generation will accomplish.

Technological Tipping Points and Societal Impact is available here.

The Annual Meeting of the New Champions 2015 is taking place in Dalian, China, from 9-11 September.

Author: Christian Lanng, Co-Founder, Chairman and Chief Executive Officer, Tradeshift.com; Member of the World Economic Forum’s Global Agenda Council on the Future of Software and Society

Image: The Team KAIST DRC-Hubo robot completes the cutting task before winning the finals of the Defense Advanced Research Projects Agency (DARPA) Robotic Challenge in Pomona, California June 6, 2015. REUTERS/Patrick T. Fallon