Automation brings many benefits but human expertise remains crucial for supply chain success
For many people, the past 18 months have consisted of working remotely, watching Netflix and a lot of online shopping. Each activity is made possible through technology, which shapes the wider theme of the year: digital transformation.
Quite fittingly, Coyote Logistics published a report, Supply Chain Automation in a Post-Covid World: how to balance people & technology in logistics operations. Unsurprisingly, it found that Covid-19 sped up the adoption of digital technologies.
However, it also found that both shippers and carriers relied more on human expertise in 2020 than in 2019. In 2019, shippers said the ideal balance between technology and people was 39% and 61% respectively, while carriers said it was 41% and 59%.
In 2020, that balance had shifted to 42% and 58% for shippers and 44% and 56% for carriers.
Although the shift may not seem big, it speaks volumes during a time when digital technologies have been propelled forward. Clearly, the supply chain industry still needs people.
The report also found that while shippers are turning to technology, not every aspect of supply chain operations can be automated and there are areas where people excel, or a combination of both works best. Results showed that the top people or technology and people tasks for shippers are communicating with customers and logistics partners, and building a long-term strategy. For carriers it is dealing with delivery problems, load scheduling, and communicating with partners and brokers.
Overall, the report shows that the distribution across people, technology or both, across 16 supply chain tasks is roughly even. Such results indicate that logistics and supply chain leaders want both automation and people, and if supply chains are to succeed, the right balance must be achieved.
People make technology work
The main issue of an over-reliance on technology is that when something goes wrong, people are needed to resolve it. “Manual labour can have its advantages when compared with a complete reliance on technology – for example, if a machine breaks down, a whole system could go down, resulting in a bigger disruption,” points out Honeywell president for Central and Eastern Europe, Ronald Binkofski.
Full automation doesn’t equal success and, more times than not, a successful supply chain operation combines people and technology to best effect. Although technology has brought huge benefits to supply chains, particularly in managing disruptive events, it is the people involved who play the critical role.
“Technology gives essential visibility, but it is the highly skilled professionals understanding the information and making changes that is so valuable for building resilience,” says DHL supply chain chief customer officer and strategy director Philip Roe. “Data is nothing if it can’t be understood and applied by people.”
In an interview with management consultant Oliver Wyman, associate professor of operations, information and decisions at the University of Pennsylvania Lynn Wu pointed out that where deep learning and machine learning are largely predictive technologies, they have less ability to make causal inferences. Such technologies reference historical patterns and consequently cannot always distinguish causation from correlation.
For example, Google Trends was good at predicting flu outbreaks to start with but over time its search results included words like ‘basketball’, which has nothing to do with the flu but also occurs in autumn. “You see lots of that in decision-making as well. Something seems plausible, but it’s a spurious correlation,” she says.
“In a state of uncertainty, you need to make sure that A is really causing B, not just that A is correlated with B,” says Wu. “Human judgement will always be involved when you use data to make important decisions.”
Technology helps people work
At a time when there is a seemingly never-ending list of demands that supply chains need to adhere to, technology is imperative in supporting workers to achieve this.
“Software or applications are really built to support employees, making it easier to access data, glean insights, make decisions and observe outcomes,” says senior director of product and market strategy at Infor, Christine Barnhart.
“Decision-makers don’t have time to mine their own data or do detailed analysis, but they need their employees to have this access and ensure trust in the results and the insights or recommendations provided.”
Therefore, it is critical that supply chains have the right tools and technology. Reducing the amount of time required to carry out tedious manual jobs, such as data entry or sifting large data sets, frees up people to focus on more pressing tasks such as disruptions or customer service.
“The focus isn’t on replacing people with machines but on moving non-value added or cumbersome activities so that employees and leaders can use their time on complex and intricate decision-making,” adds Barnhart.
Changing times, changing skills
Previously the industry focus was on agility, efficiency and achieving maximum value at minimum cost. However, today’s volatile world has shown that adaptability and quick thinking are what drive supply chains. This new way of operating signals the need for supply chain leaders to adapt and demonstrate new skills.
“To make rapid changes to an organisation to manage disruption, collaboration and communication, it is essential to bring people along with you,” says Roe. “You have to be able to plan in a collaborative manner with your partners, customers, authorities and maybe even competitors to get the outcome that you want.”
Likewise, in the increasingly data-rich world of supply chain, exception management and a deep understanding of data are key, says Roe.
As much as technology can do for us, it is not what is behind decision-making during times of disruption – supply chain resilience requires human adaptability and foresight. “Imagination is an incredibly powerful tool, as not only does it allow you to plan for disruptive events, but it’s also more likely to equip you with the ability to work at speed and be adaptable,” says Roe.
To create resilient supply chains, “Leaders need to embrace the right technologies for their business needs and ensure these technologies are seamlessly integrated across operations alongside human employees. A holistic strategy will ensure their business is as resilient as possible to meet demands in 2021 and beyond,” says Binkofski.