The progress of the industrial era can often be tracked against improvements to supply chain management. To use one prominent example, early weavers had no scale and no distribution channels beyond their local storefronts. Scaling up the weaving supply chain and its distribution channels, moving from single-location artisan weavers to factories and shipping routes, helped create the modern industrial era. This scaling-up also produced the first notable anti-technology backlash: the Luddite movement.
But the Luddites’ protests against their lost jobs seem quaint today. The world is enjoying the best economic period in recorded history. More people are working and escaping poverty today than ever before. The future looks to be stronger and more streamlined than ever, thanks to new technologies that have just begun to conquer the modern supply chain.
Oracle CEO Mark Hurd speaks in many venues about the long-term economic and societal benefits of a more technologized supply chain. Specifically, he often highlights three key technologies set to propel the connected supply chain into the future: the Internet of Things, artificial intelligence, and blockchain.
Hurd was an early proponent of the Internet of Things (IoT). In early 2014, he wrote a LinkedIn Influencer article highlighting the IoT as one of three elements in the “perfect storm” that he saw changing the framework of CEOs’ jobs. He took — and continues to take — a humanistic approach to utilizing IoT devices, saying, “I’m convinced that we’ll need dramatically different organizational structures, decision-making models, risk-management profiles and reward systems” to address the vast quantities of data the IoT-connected supply chain will generate. Later that year, Hurd clarified his approach to IoT in a follow-up article; the Internet of Things, he said, is really the “Internet of People.”
In 2016, global marketing intelligence firm IDC projected that 60 percent of global manufacturers would analyze the data created by IoT devices in the connected supply chain to find new ways to optimize processes and streamline operations. The application of analytics to IoT-generated data, according to the report, would produce a 15 percent improvement in supply chain performance.
Hurd’s people-first approach to IoT use reflects his belief that connected supply chains will need talented personnel to find the value in torrents of data. “Home appliances, food, industrial equipment, pets, pharmaceutical products, pallets, cars, luggage, packaged goods, athletic equipment, even clothing will be streaming data,” he said. “Some data will provide important information about how to run our businesses and lead healthier lives. Much of it will be extraneous.”
Last October, Oracle’s DataScience business published an article on the ways IoT will reinvent supply chain management. If you’d like to learn more about specific IoT applications in the supply chain, click here to read the article.
As Hurd said of IoT data, “much of it will be extraneous.” However, that doesn’t mean it’ll be easy for humans to sift through the volume to find value. At Oracle OpenWorld 2018, Hurd expounded on the need for AI to provide the first step from data to actionable insight: “The amount of data that companies have is beyond the ability for even the most sophisticated data scientist to take advantage of. Not true of machine learning. The opportunity to turn all of that data into knowledge, the ability to turn that into information that helps you sell more and save more — AI will affect both.”
In 2017, consulting firm McKinsey found the logistics side of supply chains was divided into haves and have-nots. That is to say, the logistics companies that have adopted AI enjoyed profit margins of 5 percent or more, while those companies that have not yet adopted AI are now losing money every year.
One prominent example of AI-driven cost savings comes from UPS, which estimates its AI-powered GPS tool can shave 100 million miles off the total distance its drivers travel on routes each year. In the future, UPS may use AI-powered self-driving trucks to complete the last mile of the supply chain. This would close the loop, so to speak, as many manufacturers turned to AI, and AI-powered industrial robots, to optimize and control their production lines years ago.
Oracle already integrates AI throughout its supply chain products. Hurd often emphasizes this approach, stating at OpenWorld 2018, “We see AI as a core feature that will get embedded into virtually every solution, every application. It'll have two major impacts... Productivity on one side, innovation on the other.”
AI isn’t the only technology Hurd expects to see integrated into supply chain management systems. At OpenWorld 2018, he predicted, “by 2025, all cloud apps will include AI, [and] the same will be true of blockchain.”
Blockchain, according to Hurd, is another way to reduce the repetitive manual tasks common throughout supply chain systems. His OpenWorld 2018 keynote covered a number of inefficiencies set to be eliminated by greater automation and superior tracking through blockchains. “65 percent of [supply chain] managers,” he said, “spend their time manually tracking the shipment of goods... I think Blockchain is a feature of virtually all applications that will make sense for it to be applied [to] for the exchange of secure information.”
Blockchain’s ability to bring transparency and traceability to the supply chain is recognized by business professionals and government entities around the world. For example, the Nigerian Customs Service is now using blockchain technology to pair sourcing data with their products, building consumer trust. “We found the entire business environment can be migrated to blockchain to automate processes and create transparency and predictability,” said Aber T. Benjamin, Assistant Comptroller General Modernization, Nigeria Customs Service. Combining blockchain with IoT devices can create supply chains in which every input, output, package, and container are tracked along every step of the way from the factory floor to a consumer’s door, across countries and borders.
Not only could supply chain managers gain real-time visibility into the movement of products through their systems, but consumers would also be able to verify the provenance of their purchases, eliminating uncertainty over product origins and making it easier to manage product recalls and track spoiled products back to their source. Walmart, for example, uses blockchain systems to track every chicken in the more than 300 poultry farms it operates, which are spread across 25 countries. If a problem is found with a batch of chicken, Walmart could use its blockchain to quickly identify the batch’s origins and prevent widespread contamination.
Mark Hurd believes these three technologies will bring major change, and real improvements, to supply chains worldwide. Do you agree? What other technologies could you see transforming tomorrow’s supply chain?