Disruptive Innovations and their applications in Supply Chain Management – by Abhilasha Satpathy, DCMME Center Graduate Student Assistant

Procurement and supply chain are at the cusp of a disruption with AI, IoT and blockchain technology. A digital transformation is ensuing with the promise of greater efficiency in business processes, operations, transparency and security.

Spend analysis

Spend analysis used in strategic sourcing, needs a shift from the traditional descriptive analytics model to more predictive and prescriptive analytics. Organizations can develop tools to enhance their spend analysis with public domain data — from social media, weather data, demographics, suppliers, competition and logistics to name a few — to help uncover insights that can save money and improve supply chain.

 

Supplier lifecycle management

The traditional supplier lifecycle management platform, when augmented by big data from the public domain, can offer meaningful information on suppliers and supply chain risks. An IoT solution can be employed to track the quality of the product at various stages of the supply chain thus improving the efficiency in the process and providing the metrics for supplier evaluation.

 

Strategic sourcing

Supplier bids are collected using online sourcing events, but a large part of the sourcing evaluation and award process is manual in nature. Using blockchain for through all steps of the process — proposals, quotes and bids — or auction, can offer greater efficiency and transparency.

 

Contract management

A blockchain platform and its smart contract framework coupled with IoT and AI, can help facilitate greater efficiency in compliance and obligation management. AI can help develop smart wizards to build contracts based on responses to specific questions and can further be enabled for pattern recognition to identify changes to standard clauses or introduction of non-standard clauses.

Order management

The traditional order management system is internal to any organization and facilitates the fulfillment process. Blockchain platform powered with AI and IoT can drive greater efficiency in orchestrating and streamlining purchase orders, shipment details, trade documents, goods receipts, quality assurance documents, returns and accounting.

Logistics

The logistics industry is an early adopter of AI, IoT and Blockchain, and is already reaping great business benefits. IoT in the logistics ecosystem can provide great insights on inventory management, shelf life, storage temperature, delivery routes, real-time tracking of freight and more

 

Reference:

https://www.ibm.com/blogs/blockchain/2018/04/digital-transformation-next-gen-procurement-and-supply-chain/

 

Questions:

  1. How are AI, IOT and blockchain transforming the logistics industry?
  2. How is blockchain helping in order management?
  3. How can AI help in contract management ?

How Increased Global Volatility in 2019 Will Change your Supply Chain

As we move into 2019 it is easy to see that this is going to be a challenging year as there is more volatility than normal because of the geopolitical climate we are in. From the trade war with China, tariff increases, and a less stable US economy on top of the standard sources of risks – natural disasters, labor disputes, etc. – 2019 is going looking to bring new challenges to supply chains and procurement teams. According to the article “Global Volatility & AI: How It Will Affect Your Supply Chain” by Rajesh Kalidindi, these additional risks are going to lead to several changes in how a procurement department and supply chain are run.

Firstly, you are going to see a shift towards scenario planning from procurement, or in other words “What If” analyses are going to be in higher demand for helping make procurement decisions that mitigate the impact of these growing risks. Next, you are going to see a shift in procurement priorities from straightforward, consistent cost reduction to ensuring continuous supply and limiting price increases – especially as tariffs, wages, and interest rates continue to rise. In order to help achieve these changes, organizations will begin to rely on predictive and AI-enabled technologies to fill the gaps in their current capabilities and what is being asked of them. This is the first step I moving towards AI-led business. Those who already have this technology in place with begin using it in conjunction with product design to provide new insights into New Product Introduction (NPI) that will enable companies to optimize the life cycle of their products by addressing supply risks from the get-go. All of these changes will lead to a need for new procurement and supply chain employees with greater digital literacy. All of this will lead to changes in the way supply chains and procurement departments look, and it all starts with the increased market volatility being seen in 2019.

 

Source: https://www.industryweek.com/technology-and-iiot/global-volatility-ai-how-it-will-affect-your-supply-chain

 

Questions:

  1. How long until we see the majority of supply chains using AI-enabled technology?
  2. With the onset of AI-led business, how will the role of a procurement officer change in a company?

What will happen to those companies that are behind the trend of predictive and AI-enabled technologies? Will they become insignificant or still have a role to play in the market?

Blockchain digitally transforming B2B processes

by Maria Hartas, DCMME Graduate Assistant

A blockchain pilot program has successfully been completed between Elemica, the leading Digital Supply Network for Process Manufacturer, and crossinx, a network for financial business collaboration solutions. The pilot program aims to redefine B2B processes and support multiple industry digital transformation.

The program consists of the two companies existing as nodes on a public blockchain connecting structures data with unstructured data. Additionally, two global chemical companies partook in transferring invoice, purchase order, delivery tender, and proof-of-delivery documents and data.

Further testing blockchain capabilities could enable a many-to-many connection of companies. Connecting to a digital network, supply chain data can be shared with all trading partners regardless of the network each is connected to. As expressed by crossinx CEO and founder Marcus Laube, the goal is “To use the blockchain to automate document exchange along the supply chain and make it more transparent. This is the basis for our Supply Chain Finance solution”.

A many-to-many connection with blockchain could lead to the:

  1. Ability to decentralize and free-up from intermediaries the exchange information between different stakeholders
  2. Simplification and enhancement of existing business processes
  3. Development of auto-ordering based on IoT information
  4. Automation of PO confirmations
  5. Creation of auto-invoice based on Pickup or PoD
  6. Auto-matching of invoices
  7. Ability of auto-payments
  8. Extension of technology to other complementary decentralized networks and from IoT devices

The pilot program will continue to push blockchain applications before full adoption of the technology.

  1. Can you think of alternative ways to solve potential Supply Chain Finance bottlenecks (manual order creation, invoice matching, payment generation/confirmation, and so on)?
  2. How can multiple shareholders avoid intermediaries in sharing documents and data?
  3. What are the benefits of blockchain technology in creating a shared network?

Source: https://www.supplychain247.com/article/automating_multi_tier_processes_elemica_crossinx_deliver_blockchain_pilot/news

 

DRONES IN GLOBAL SUPPLY CHAINS by Abhilasha Satpathy, DCMME Center Graduate Student Assistant

Two years ago, in an article in SCMR author Nick Vyas outlined real-life applications for drones in the healthcare industry, and predicted other use cases such as pipeline inspections or deliveries of parts and supplies in hard to access areas.

He also noted that “PINC, a provider of yard management systems, has deployed a solution that utilizes drones to identify the location of trailers, shipping containers, and other assets in hard to reach areas. Equipped to carry GPS, RFID, OCR, and barcode readers, the drones can fly overhead to quickly locate and identify assets that have been tagged in a yard or port.”

So, what is the state of drones in the supply chain today?

Companies are focused on improving inventory accuracy to achieve higher supply chain velocity. Tasks like taking inventory and cycle counting are still carried out by humans which can be done more than 300 times faster by drones.

What is the state of the technology? Today, the drone, or robot, flies autonomously in a gps-denied environment using advanced sensors. The company’s warehouse management system (WMS) feeds existing inventory information to the PINC application via integration. When the robot receives a task to count inventory – say the number of cartons on pallets in a storage bay – the software first creates the optimal path for the drone to travel based on mapping done previously.

The drone doesn’t need markers or lasers for guidance to navigate through warehouses. The robot is equipped with an optical system combined with computer vision and deep learning technologies. When it passes through an assigned location, which it knows by the X, Y and Z coordinates, it visually inspects inventory labels and takes photos of the inventory to be counted.

The digital images are processed in real time to generate a count, which is compared against the known count in the WMS system. Since the system manages by exception, after taking inventory, the application provides an exception report to the operator who can click on the exceptions, look at a photo to confirm a count and then, if needed, update the WMS.

Down the road, Yearling expects conversations about using drones in transportation to continue, if for no other reason than the amount of spend on transportation.

References:

https://www.logisticsmgmt.com/article/the_emerging_role_for_drones

 

Questions:

  1. How are drones being used in supply chain today?
  2. How do drones aid Warehouse Management Systems?
  3. How do drones improve inventory accuracy?

How Analytic is transforming Supply Chain

The article (Forbes, Bernard Marr, April 22, 2016, http://www.forbes.com/sites/bernardmarr/2016/04/22/how-big-data-and-analytics-are-transforming-supply-chain-management/#11afda964c2d) talks about how analytic is transforming supply chain management.

There are many applications can be developed for supply chain utilizing analytic. To manage inventory effectively unstructured data can be analyzed with technology such as digital camera analytic to monitor stock level. Forecasting can be benefited by machine learning algorithm with predictive modeling. Distribution center and warehouse can be operated with minimum human intervention.

How visual analytic will change supply chain across manufacturing? How analytic will change supply chain in the transportation industry? How analytic will change supply chain in the retail industry?

Big Data Analytics Can Create a Better Supply Chain

In the article Big Data Analytics and the Evolution of the Supply Chain, the author gives an overview of how big data analytics can be beneficial to a supply chain.  He delves into supply chain challenges and how big data analytics can help solve these challenges as well as the use of how big data analytics can revolutionize the supply chain.  Big data is widely recognized as a way to better business operations, but its applications are just starting to make the impact everyone believes big data should have.

The use of big data can increase efficiencies in a supply chain by 10% or greater while also decreasing risk.  This decrease in risk is due to the predictive power of looking at older big data and applying it to potential future problems.  Big data analytics can increase traceability in the supply chain by reducing time need to access and manage product databases.  Finally, big data analytics can make companies operations safer in volatile markets by making them five times more likely to report shortened order-to-delivery cycle times.

In overall operations, Big Data Analytics can optimize delivery networks using geoanalytics.  It can allow companies to deepen their relationships with suppliers with more detailed vendor profiles.  Finally, Big Data can have predictive powers.  Using historical data on suppliers can lead to predictive lead times which eliminates guesswork.  In summary, Big Data used correctly can lead to large efficiency gains in a supply chain.

 

How confident do you feel about the predictive power of Big Data?

Will there come a point when there is too much Data collected and the analyzation of such data could potentially hurt processes?

How close are we as an industrialized society to having to use Big Data in our supply chains to be competitive?

 

http://tech.co/big-data-analytics-evolution-supply-chain-2016-05

Malaysia risks losing out if it rejects TPP, warns minister

An article published January 15th, 2016 in The Malaysian Insider, http://www.themalaysianinsider.com/malaysia/article/malaysia-risks-losing-out-if-it-rejects-tpp-warns-minister, states that Malaysian International Trade and Industry Minister Datuk Seri Mustapa Mohamed believes that Malaysia risks losing its attraction as an investment destination of manufacturers and service providers for the TPP market if they decline to be a part of the trade deal. According to Mustapa, “Malaysia will face more intense competition from Vietnam and Singapore in wooing foreign investments if we do not join TPP,” and “We will also lose the first-mover opportunity, while local and foreign companies operating in Malaysia might scale down their operations.” Over the past 5 years of difficult negotiations over the TPP, Malaysia has been granted several exemptions and flexibilities to help defend its own national interests. Mustapa is also quoted as stating that the “government feels that there are more advantages than disadvantages in joining the TPP.” He was cited stating that wider market access, a comprehensive integration in the supply chain at global and regional levels for small and medium enterprises, and an upsurge in investments as examples of positives of the TPP for Malaysia. It is apparent that Mustapa and the Malaysian government believe that the TPP is imperative for the continued success of the Malaysia economy.

Will Malaysia approve the TPP? Do you the TPP will benefit Malaysia as much as Mustapa believes?