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.”
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.
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.