I was recently invited to give a presentation on Supply Chain innovations at a conference in Sydney. I will show you what I saw, learned and presented.
(10 Supply Chain Trends in 2020 Video – Please activate the automatics subtitles in English)
Supply Chain Trends & Innovations 2019 :
What I would like to share with you now is what I learned from these three days of conferences, not only during the presentations but also and above all what I learned from all the discussions I had with all these Supply Chain professionals.
Trend 1: Lots of Buzzwords…
The first point I wanted to share is that we obviously heard a lot of “Buzzwords”, trendy words like machine learning, artificial intelligence, blockchain, drones deliveries, autonomous trucks… these are really trendy words that I sometimes find a little too marketed.
Trend 2: …with no concrete applications
In the end, in reality, we hear many concepts but we have few concrete applications, i.e. on a large scale. We will often present a case that has been made by a company, it will be a test, a pilot, but I still see very few large-scale applications today, i.e. that will affect 95% of a company’s products. So there is still a bit of a gap between what we are going to hear, and reality. For example, the 3D printing that was much talked about 3-4 years ago was to revolutionize the Supply Chain. Finally, today, we hardly hear any more about this concept. However, during the conference, we saw projects, particularly around the blockchain. The Beefledger, for example, which is a project to actually monitor the quality of beef in Asia, especially between Australia and China.
So we have this kind of project but it is not yet fully implemented. We have had more concrete cases with a company called Origintrail. I will have the opportunity to talk about it again because we will surely have to work together. I will probably make a presentation video with them. They designed very interesting projects around halal meat or the fashion industry to be able to trace these products. (I will make a video about the blockchain, because more and more blockchain applications are emerging, especially in Supply Chain but not yet on a large scale, on very large companies again.)
Trend 3: Operational pressure
When I talk to Supply Chain managers or directors of large groups, the first thing that always comes up is: “I don’t have the time, I have a lot of operational pressure to deliver results”. What does that mean? Innovation is good, but “you always have to deliver +5% service rate, or -5% of inventory next year.”
Trend 4: Out of date IT & systems
This 3rd trend brings us to the 4th. The problem here is that companies are not yet investing enough in new systems. We still have a lot of companies working on very old systems because of lack of time, operational pressure and also because they are afraid of losing control or no longer controlling their current processes. It’s really a problem I felt, not in the presentations but in the speeches of the people around me. We feel that all companies are trapped in their old systems, especially for old companies and that they are afraid to migrate to these new, more innovative concepts.
Trend 5: Not enough automation
I think that there is still very little automation. We’re really starting to talk about it a lot in the warehouse-logistics section. On the other hand, we still have a management that is extremely manual in the demand-planning, forecasting, replenishment and everything related to the management of schedules and deliveries.
It’s a shame because that’s really where you’ll see your main gains, especially on the forecasting and procurement part. You don’t need to have artificial intelligence or machine learning for that, algorithms with fairly simple parameters can allow you to automate a large part of your tasks to 95%. Automation is a point that is still really underestimated today and yet we have seen some very interesting concepts that would allow us to automate bin more than before.
Trend 6: Logistical convergence
We have talked a lot about what is called logistical convergence. Previously, we tried to optimize our costs as much as possible and therefore open our warehouse in a low-cost area far from city centers. But now, with the Amazon effect and the Alibaba effect, which are the two main leaders in e-commerce and which gradually promise faster deliveries, the opposite is developing. Less than two hours for Amazon and less than one hour for Alibaba. I advise you to watch our video on Alibaba where I make two test orders to study the delivery time.
Because of this pressure from customers who want everything and right away, we are forced to bring logistics centers closer together in the cities. So we have new concepts. We were introduced to several concepts of what are called micro-fulfillment centers. We are going to put small distribution centers in the cities. Supermarkets have big profitability problems almost everywhere in the world and so these supermarkets are reducing their commercial surfaces to put in micro-fulfillment centers to be able to deliver all their express orders in less than two hours in the city center.
Trend 7: Trade War
This point was discussed extensively (especially at the after-work) during the conference. This Trade War is the tariff war between the United States and China. It has an impact at the moment that is considerable for Supply Chains since Supply Chain managers need to have long-term visibility. We have several industries that are being really disrupted, especially agriculture or raw materials, but also telephony and even textiles. It is important to know that a lot of components go through Asian Supply Chains. All the Supply Chain Managers of all these companies were really very concerned about this lack of visibility on customs policies between the United States and China. This will probably continue if President Trump is re-elected in the coming years.
Trend 8: Difficulties in recruiting talent…
Recruit Supply Chain talent. Today you still have many companies that have a very pyramidal structure with directors, managers and then the operational team. Today these companies are automating so you will have more and more processes that will be automated and managed by machines and for that, you need Supply Chain “superheroes” who are both able to manage projects and who are able to analyze much more work data and different departments. They must also be able to understand business and technology. But these profiles are extremely difficult to find on the market today. I personally had a lot of trouble finding this kind of profile and so I also try to motivate and train as many people as possible on these new skills through this site.
Trend 9:…And to keep them
This brings us to the ninth point: it is also very difficult to keep these famous supply chain talents. Especially since the new generations do not have the same expectations as the old generations. If you don’t meet their needs and expectations, they will take their experiences, update their resume or LinkedIn and change companies or maybe go on a short trip. I caricature of course but it’s really a challenge for every company so it’s a question you really need to ask yourself: how to identify and keep your talents in the long term to be able to transform your Supply Chain and implement all these innovations.
Trend 10: Not enough women
The latest trend, which may be surprising for some, but there has been a lot of discussion about the fact that there are not enough women in supply chain. In my case, it is true that I had difficulty finding women in Supply Chain, especially from a certain level of responsibility. It’s a pity because we lack talent and I think a large part of the answer will come from women because we don’t yet have enough women in these fields, on the one hand for educational reasons, we still go through engineering schools and also for image reasons I think, where we still associate too much Supply Chain with transport and storage in warehouses, which is still very masculine.
However, these professions are really evolving with much more analytics and project management. For this reason I think that these jobs are perhaps more interesting and more attractive for women, knowing that in the Supply Chain we also have the opportunity to meet a lot of people, to travel around the world and salaries that are more and more appealing if you are part of this generation that has been able to train and update itself on new technologies. This is a topic I will try to address in a full video because it is really very interesting to try to see how to attract more talent and more women in the Supply Chain.
Supply Chain Conference
This conference which was over 3 days to start with a hackathon supply chain day where we had to develop a new supply and forecasting system for a solar panel company. It was very interesting with people we don’t know from the supply chain world to see what we can produce in just ten hours.
The next two days were conferences with experts mainly from Asia Pacific who presented us with the latest innovations and Supply Chain trends. I myself had the opportunity to speak on different subjects about demand planning and inventory distribution.
This presentation focused on three pillars to improve its performance, especially in the area of inventory management and demand planning.
Reliable Supply Chain Data
The first pillar was around data quality (Reliable Data). The importance of data quality is often underestimated before starting innovative Supply Chain projects. It is really very important to have reliable, structured data, with enough history and accessible everywhere.
Supply Chain Automation
For the second pillar, I presented the importance of automating processes, especially in the forecasting, procurement and replenishment part. Whether in the warehouse-store part, between warehouses and factories or in the sourcing part, it is now possible to automate much more than before and thus to focus one’s time on much more strategic decisions.
Keep it simple
The last pillar was around simplicity where I talked about the importance of having processes and also algorithms that remain simple and understandable, because the more complexity you add, the more risk you add that these algorithms and processes do not work or are misunderstood by your teams. That is all for the three pillars that I shared at the hearing at this conference with, of course, many more details of concrete cases.
Conclusion about Supply Chain trends
I will be ending this 10 Supply Chain Trends on a Bill Gates quote: « We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. »
I think this is a good example of what can be said about Machine Learning artificial intelligence or Blockchain. We overestimate it over the next two years when the potential is huge but over the next ten years.
For example, we were hearing a lot about the cloud 10-15 years ago, maybe we overestimated it then but today it is really obvious because if you want to innovate and automate, you have no choice and must absolutely put all your data accessible in the cloud.
To conclude if you are also organizing a conference or workshop on the field of Supply Chain, particularly on trends and innovations in demand-planning, inventory management, machine learning, software & ERP or new careers and how to accelerate your career in Supply Chain, do not hesitate to contact us.