How far will automation go?

The more sup­ply chain process­es that can hap­pen with­out the involve­ment of a human being the bet­ter. Peo­ple are slow, emo­tion­al and prone to error; they are also expen­sive, take hol­i­days, sleep and so – com­pared to well-oiled machines – are laugh­ably inef­fi­cient.

Con­sid­er this exam­ple: the val­ue of glob­al trade will be about $36 tril­lion this year. Man­ag­ing only the finan­cial trans­ac­tions involved in mov­ing all that mon­ey around the world would take even the clever­est peo­ple for­ev­er with­out the help of soft­ware.

“Add to that the phys­i­cal and vir­tu­al activ­i­ty involved in mov­ing the raw mate­ri­als, part-fin­ished and fin­ished goods, and you quick­ly start to appre­ci­ate that, with­out automa­tion in the sup­ply chain, con­sumers the world over would not receive their goods on time,” says Boris Fel­gen­dreher, direc­tor at GT Nexus.

Worse, if it were sud­den­ly down to us alone, the whole sys­tem would col­lapse. With­out machines and soft­ware, glob­al trade would shrink to a frac­tion of its size, con­tain­ers would get lost, orders missed and jobs for­got­ten; the result­ing reces­sion would make the cred­it crunch feel like los­ing small change down the back of a sofa.

Soft­ware tells the mon­ey mar­kets when to buy and sell, and can even exe­cute trades in mil­lisec­onds to earn busi­ness mil­lions of pounds. In retail, Ama­zon is invest­ing in drone deliv­er­ies and in robot­ics to speed up the pick-and-pack process. Apple uses automa­tion to exe­cute sourc­ing, man­u­fac­tur­ing and dis­tri­b­u­tion to its net­work, as well as finan­cial, sales and ware­hous­ing com­po­nents of its busi­ness.

RISE OF MACHINES

In fact, ever since Britain’s indus­tri­al rev­o­lu­tion, fac­to­ry own­ers, logis­tics oper­a­tions and the sup­pli­ers of raw mate­ri­als have looked for ways to make pro­ce­dures more effi­cient, usu­al­ly by cut­ting out human inter­ven­tion wher­ev­er pos­si­ble.

Fast-for­ward a few hun­dred years and that process seems to have been large­ly suc­cess­ful, with the robot-to-per­son ratio in some firms stacked heav­i­ly in favour of the for­mer. Where will it all end? At this rate, peo­ple will dis­ap­pear com­plete­ly from the sup­ply chain in a few decades.

Well not quite, says Dr Sir Peter Cochrane, co-founder of Cochrane Asso­ciates, busi­ness angel and con­sul­tant. Automa­tion is good for mak­ing repet­i­tive tasks hap­pen quick­ly, he says, but throw up an uncer­tain­ty or a deci­sion and the whole thing falls apart.

He adds: “Sup­ply chains are bor­ing and high­ly repet­i­tive, requir­ing focus and resilience to tedi­um. With­out robot­ics and the automa­tion of these chains, human pop­u­la­tions would be small­er, and lives would be dimin­ished by low­er-qual­i­ty food, cloth­ing, prod­ucts, and with the grind­ing work­ing expe­ri­ences of the 1950s.

“But there are still a lot of things robots can­not do. Peo­ple are much bet­ter at deal­ing with the unex­pect­ed, the high­ly vari­able, cre­ativ­i­ty and prob­lem-solv­ing. How­ev­er, the well-defined, repet­i­tive, pre­cise and the bor­ing are increas­ing­ly the domain of machines, and we are gen­er­al­ly hap­py to hand over that respon­si­bil­i­ty.”

HUMAN FACTOR

Mean­while, Ian Fod­der­ing, chief tech­nol­o­gy offi­cer for Cis­co UK and Ire­land, points out that automa­tion is use­less with­out human influ­ence to make sense of it.

“While tech­nol­o­gy holds obvi­ous advan­tages for data col­lec­tion and process automa­tion, crit­i­cal­ly it is humans who will analyse the data and pro­vide unique insight that will dri­ve inno­va­tion,” he says. “The inter­net of every­thing is described as the con­nec­tion of peo­ple, process­es, data and things; it is sim­ply not enough to just con­nect process­es or things togeth­er.”

Peo­ple are much bet­ter at deal­ing with the unex­pect­ed, the high­ly vari­able, cre­ativ­i­ty and prob­lem-solv­ing

Automa­tion is more rel­e­vant in some indus­tries than oth­ers, admit­ted­ly. A large-scale man­u­fac­tur­er can load it in at every stage, strip­ping out peo­ple willy-nil­ly; where­as a media agency must take a fresh approach to each new client, com­ing up with ideas and deliv­er­ing some­thing dif­fer­ent each time.

Com­pa­nies that ben­e­fit from automa­tion are those with high vol­umes of sales activ­i­ty, includ­ing retail, dis­tri­b­u­tion, tech­nol­o­gy and man­u­fac­tur­ing, to name a few. These have few­er peo­ple pound for pound than large law firms, for exam­ple.

But even the lat­ter exam­ple ben­e­fits from sup­ply chain effi­cien­cy. While not part of its core offer­ing, a law firm couldn’t func­tion with­out its cater­ing, clean­ing, IT infra­struc­ture, trans­port, util­i­ties and a whole lot more. That’s why, even in a case like this, human employ­ees will con­tin­ue to lose out to their sil­i­con ser­vants.

Accord­ing to Pro­fes­sor Mar­tin Spring at Lan­cast­er Uni­ver­si­ty Man­age­ment School, it is this trend, com­bined with increas­ing­ly pow­er­ful con­sumer tech­nol­o­gy, that will cre­ate oppor­tu­ni­ties for fur­ther sup­ply chain inno­va­tion, poten­tial­ly at the expense of peo­ple.

CHIPS ON EVERYTHING

“The increas­ing ubiq­ui­ty of small­er, low­er-cost com­pu­ta­tion devices makes it ever­more fea­si­ble to have ‘chips on every­thing’ and hence be able to track items, get them to com­mu­ni­cate with each oth­er, and have much more data-inten­sive process­es through­out the sup­ply chain,” he says.

But, although the “human face” of the sup­ply chain is chang­ing, employ­ees do not nec­es­sar­i­ly lose out every time. It isn’t nec­es­sar­i­ly true, for exam­ple, that process automa­tion takes jobs away from blue-col­lar work­ers and hands them to statos, geeks and quants.

“Humans will increas­ing­ly do what humans are good at,” Pro­fes­sor Spring says. “That means rela­tion­ships, activ­i­ties that involve co-ordi­na­tion with oth­er humans, nego­ti­a­tions between firms, inno­va­tion and ser­vice devel­op­ment.”

For the fore­see­able future at least, qual­i­fied peo­ple will need to be on-hand in ware­hous­es because occa­sion­al­ly even rou­tine tasks, such as pick­ing dis­parate items in ware­house oper­a­tions, can be too much for befud­dled robots, he adds.

Vasu Rajagopalan, head of sup­ply chain at Xchang­ing, agrees. “Over-automat­ing or try­ing to replace intrin­si­cal­ly human activ­i­ties, such as cre­ativ­i­ty, lat­er­al thought and in-the-moment prob­lem-solv­ing, with machines can have the oppo­site effect to that intend­ed – as we’re remind­ed by the clas­sic com­e­dy sketch ‘com­put­er says no’ – and is a poten­tial draw­back,” he says.

So what does the future look like? It’s true that some human jobs are at risk. Michael Minall, direc­tor at sup­ply chain spe­cial­ist Vendig­i­tal, points out that some of Australia’s long-dis­tance freight trains are becom­ing auto­mat­ed, because of a dearth of will­ing dri­vers. He says safe careers are those based upon human inter­ac­tion.

“Although the roles humans play will change dra­mat­i­cal­ly, it’s unlike­ly they will ever be com­plete­ly removed. Instead they will be focused on cre­at­ing rel­e­vant soft­ware and tech­nol­o­gy to ensure these future sup­ply chains run as effi­cient­ly as pos­si­ble. We will also see more spe­cial­i­sa­tion and seg­men­ta­tion of jobs as automa­tion in the sup­ply chain increas­es,” says Mr Minall.

JOB OPPORTUNITIES

Bet­ter still, Sandeep Kumar, head the busi­ness con­sult­ing group at IT solu­tions com­pa­ny ITC Infotech, says the chang­ing envi­ron­ment is like­ly to throw up a host of employ­ment oppor­tu­ni­ties.

“We are liv­ing in inter­est­ing times,” he says. “The inno­va­tions and tech­no­log­i­cal shifts in use of mobil­i­ty, and the rise of dig­i­tal com­merce will push the bound­aries of sup­ply chain even more in the com­ing decade.

“Emerg­ing areas of inter­est will be sup­ply chain risk man­age­ment, sus­tain­able sup­ply chains, glob­al inte­grat­ed plan­ning capa­bil­i­ties, and use of instru­ment­ed intel­li­gence that will help dri­ve bet­ter vis­i­bil­i­ty and enable quick­er turn-around on key process­es.”

The rise of the machines is on hold, at least for now. But stu­dents plan­ning a career in sup­ply chain pro­fes­sions should take note of the skills that will stay in demand long term. In this indus­try, like oth­ers, many of the jobs they plan to apply for won’t even exist in just a few years’ time.