Eight disruptive technologies impacting supply chain

We just launched our fifth annual Chief Supply Chain Officer Survey which, among other questions, asks which new technologies are disruptive to supply chain strategy. My view is that we’re on the cusp of a breakthrough that will soon eclipse and ultimately reverse what Henry Ford gave us with the Model T assembly line.

The endgame offers consumers exactly what they want while simultaneously harnessing the power of mass production. The common thread is digitisation, but the applications are all over the map. Here is my take on the top eight:

1. Sharing economy. In London right now this means Uber, the rideshare app that is upending the taxi industry. Protests by cabbies here this week reportedly sparked an 850% increase in sign-ups, showing just how hot the idea is among consumers. An $18 billion valuation shows how hot it is with investors.A less visible but potentially more important example is Instacart, which offers home grocery delivery on the Uber model without adding any incremental logistics infrastructure or competing with incumbent grocers. Operations junkies have to love the bump in resource use that sharing enables.
2. 3D printing. I’ve written about this before as an enhancement to service supply chains, product innovation processes and production engineering. Aerospace uses it to make spares and oddball parts. Consumer goods companies use it for prototyping. Industrial firms use it to complement tooling and machining. As 3D printing evolves, it could allow extreme micro-manufacturing distribution to retail and even homes.
3. Big data. Exploding information sources offer those who are able to separate signal from noise a chance to target tiny niches of demand, spot nascent supply chain threats and anticipate megatrends ahead of others. It’s all about knowing which questions to ask and how the answer manifests in each instance. This is the exact opposite of what you learned in microeconomics about “market clearing prices” balancing supply and demand. Equilibrium is dead.
4. Advanced robotics. Our data shows a 30:1 ratio in favour of increasing rather than reducing investment in robotics and automation. We also see more intensive investment in supposedly low-cost countries like China, Brazil and Mexico than in the US. One implication for supply chain is an end to labour arbitrage. Equally important is the ability to reprogramme rapidly to allow fast changeovers on manufacturing lines.
5. Internet of things. Cisco predicts 60 billion internet-connected things by 2020. The number matters less than the fact that most demand data will soon come from inanimate objects dispensing orders for everything from replacement oil filters to more air conditioning. Whether the thing is a smart shelf, a thermostat or an RFID tag, the absence of human fickleness promises extraordinary predictability for those with the analytical muscle to digest the data.
6. Cloud. This is really an IT thing, but since supply chain can’t operate without massive amounts of IT, cloud promises new ways of bringing computing to bear on decision-making, condition monitoring and transaction processing. The most important fact about cloud for supply chain strategy is its easy-on, easy-off nature. For more on this, see our report on Supply Chain and the Future of Applications.
7. Drones. The Amazon drone programme announced last Christmas was more distraction than magic, but the principle of self-guided vehicles is definitely not crazy. BP, for instance, just got approval to use drones to monitor its Alaskan pipelines, while Google’s experimentation with driverless cars is well known. Taken to scale, it could alleviate problems with trucking that arise from time limits on driving hours and on ocean shipping where piracy poses threats.
8. Digital supply chain. This may be the mother of all disruptive technologies in that it dematerialises what we do. Plan, source, make and deliver still happen in a digital supply chain, but without the need to physically move anything. This means that the innovation that separates pure information added value from its physical vessel offers killer margins.

Apple has shown how this can work by limiting SKUs at retail but enabling massive variety after purchase with apps. There is no reason this can’t happen with cars, medical devices or home appliances.

The industrial revolution was built on power. Supply chain strategy for the digital revolution is being built on logic.