On the Journey to Automating Supply Chain Decisions

By Kristi Montgomery, VP, Kenco Innovation Labs

Kristi Montgomery, VP, Kenco Innovation Labs

There is a supply chain revolution underway.The most radical change is still years to come, but you need to know about it—and begin getting ready for it—now.

First, let’s talk about what has brought us to this point.

“Find savvy partners who can help you harness the potentially overwhelming torrent of data,and you will achieve unfathomable supply chain benefits”

If you design and manage supply chains, you are probably engaged with multiple partners—third parties, software suppliers, consultants, etc.—who help you continuously improve your process. Along the way, you and your partners have likely stepped up the use of automation and technology to handle such tasks as picking, shipping, tracking, and billing.

You know that supply chain visibility is critical, because the better it is, the more you can see what is happening and predict what will probably happen. This knowledge allows you to exactly meet customer expectations and quickly develop solutions when problems arise. It enables data-driven decision-making.

Improving that visibility is why you are always seeking best-in-class Warehouse Management Systems, Transportation Management Systems, and Yard Management Systems; engaging 3PL partners and technology partners; and improving internal management processes.

But, guess what? The existence of so many different systems and partners has created a significant impediment to supply chain visibility. This ironic situation—that the adoption of best-in-class systems has resulted in less-than-optimal supply chain solutions—is due to a lack of standard interfaces between all these systems and providers.

The current challenge for our industry is all about interoperability.

To achieve real, working supply chain visibility, you will need systems that can clearly exchange information without restrictions. With interoperability, you can see across all those systems for a transparent picture of what is happening in real time. Without it, you can encounter a crippling loss of ability to manage a myriad of systems and data sources seamlessly.

The big question is: How do you integrate this data and not only enable visibility but also automate your decision-making?

The need for achieving true interoperability is becoming more urgent. With the advent of the Internet of Things (IoT), the sheer number of devices that will be plugged into your supply chain is exploding. Gartner Research reports that by 2020 more than 25 billion devices will be connected to the Internet. In the supply chain, devices that can now be added as sources of information include: vehicles; robots; augmented reality glasses; scanners; and individual products in your customers’ inventories. And, more is coming.

What you need is a platform for your data. It might sound simple, but it isn’t because there is such a wide variety of inputs and outputs. If your company doesn’t count supply chain management among its core capabilities, it will be difficult and inefficient to develop your own platform. Because there are 3PLs and other external resources that have focused on solving this problem, it usually makes sense to engage such a partner for platform development. Just be sure that you select from 3PLs that have demonstrated experience and success in managing this evolving supply chain environment.

With the right platform, you can source the data needed to feed powerful Business Intelligence (BI) tools. With BI in place, you can develop advanced supply chain analytics—an area that is set to revolutionize supply chain management in the coming years.

We already have BI capabilities that support analytics to predict trends and events in your supply chain. One of our customers was able to better optimize transportation between DCs based on information developed with predictive analytics. This gave them the ability to make reliable volume and flow predictions one week out. The team could then brainstorm on how to react to this information and better prepare for the coming volume and flow changes.

Building on predictive analytics, we are beginning to see the emergence of prescriptive analytics, which takes the predictive information and prescribes what supply chain management should do. Prescriptive analytics is not yet in wide use in supply chains, but is emerging. The next step along the analytics continuum is the addition of cognitive computing. This is applying machine learning to analytics to provide faster and better information. It will be used to make real-time predictions based not only on historical data, but also on real-time situations to determine what is about to happen and then prescribe immediate action. This still requires a human to take action on the recommendation.

It all sets the stage for an even more powerful tool—anticipatory analytics. In this stage, your system will automatically learn to make correlations to reason out how your supply chain should be configured in the future. The cognitive computing addition to analytics will take on anticipation of what the customer needs and how supply chains should be proactive to achieve this need. It will then take the action necessary to meet the need, eliminating the human element from the decision making process. This is still in the conceptual stage, but anticipatory analytics will become a reality.

We live in an exciting era of supply chain evolution. The future promises ever-increasing complexity, and you risk the most if you don’t prepare for it. Start to educate yourself now, and begin the move away from manual to platform-driven management.

Supply chain managers today are tasked with gathering the best available information so they can make solid business decisions. But, what if you didn’t have to make these decisions? What if the machines did that? It might sound like science fiction—and maybe even a bit threatening—but that’s where the current advances in supply chain technology are leading us. Find savvy partners who can help you harness the potentially overwhelming torrent of data,and you will achieve unfathomable supply chain benefits.