What is The Matrix?

In 1999, our obsession over the future simmered within a stew of life-changing technologies then widely known as “dot com”. Our imaginations were running wild when at the perfect moment Warner Brothers released its science fiction classic, The Matrix. Humans in this story were sustained by an all-encompassing system of machines and tubes that met their physical needs while an even more all-encompassing virtual reality game provided for their emotional needs.

Horror or paradise? That was the question.

For those who see the trajectory of our modern global supply chain and the separate but intertwined vector coming clear in the world of pure information, this dystopic future is starting to look possible. A 2015 book called Rise of the Robots chronicles in very credible detail the job-eliminating march of technology not only in the familiar mechanical realm of manual labour displacement, but also intellectual work. The threat comes from artificial intelligence, meaning machines that learn.

Digitisation in supply chain runs deep

Information technology is rapidly merging with operational technology (OT) as software originally intended to ease reporting and decision making for supply chain managers starts to connect directly to property, plant and equipment. Cool ideas about the industrial internet of things promise new profit streams from capital equipment and better environmental performance for existing infrastructure.

Good news for the likes of General Electric, John Deere and Siemens, but maybe a baby step towards the tubes and pods of The Matrix.

Faster still is the consumer-driven marriage of IT and OT that is happening on Apple, Microsoft and Android devices all around the world. Integration is easy – usually just a download away – and the heaviest users who are all young have initiated an explosion of demand data that consumer goods makers and retailers crave.

Again, exciting times for companies like Amazon, Starbucks and Mattel, but how long until people are effectively lost in a never-ending game of Fallout?

Whether the focus is demand or supply, and in terms of better sensing, decision making or responding, digitisation is changing the supply chain management discipline. In the near term, most executives are facing technology investment decisions ranging from advanced robotics in plants and DCs to big data projects bolted on to forecasting systems. In the longer term, however, the cumulative impact and value of such investments absolutely depends on having a compelling vision of what the digitised supply chain is.

Learning is the key

The grim end game of The Matrix embodies everything we dread most about artificial intelligence. Humans, sated physically and lazy enough intellectually to accept the rules of our collective virtual world, cease to create. Stripped of the need to meet a challenge we abdicate our duty to learn. The game becomes static and we lose, perpetually.

Until that is, Neo arrives, breathing new life into the human will to learn. He rewrites the rules of game and in so doing frees mankind to create anew. Heady allegory to be sure, but a valid idea for supply chain strategists in 2016 considering where and how to build digital into operations.

Our path to the technology-enabled end-to-end digital supply chain must avoid over reliance on automation, and in particular, selectively make bets on artificial intelligence. However effectively algorithms might handle order commitments or production planning, human judgment cannot be left out of the process. Executives and practitioners who understand the optimisation algorithms they use can learn by doing and rise with the tide of a faster, smarter supply chain. Everyone else will be out of a job.

S&OP is the crucible of change

Automation will permeate all corners of demand sense and respond as well as supply visibility and execution. Its limit however, can and should be the humble but vital decision-making realm of S&OP.

Digitisation will inevitably deliver more precise and timely information to S&OP. Winners will be those who can use it to make more money for the business. Leaders will be those who know what additional information is worth investing in to make even better decisions the next time.

We are building the matrix right now. It is essential that we stay on top of what it can do for us.