In the second of a series of thought leadership interviews from Leidos UK – the science and technology logistics operator – editor Kirsty Adams discusses supply chain resilience and technology with Richard Wilding, Professor of Supply Chain Strategy at Cranfield School of Management, and non-executive director for Leidos UK’s logistics division.
KA: How has the pandemic changed how operators think about and how they use technology?
RW: Before the pandemic, changes caused by supply chain 4.0, were starting to be applied across nine technology areas. These areas are systems integration, big data and analytics, simulation and virtualisation, the internet of things, the cloud, cybersecurity, autonomous systems, augmented reality and additive manufacturing. We found that elements of these were being combined. Additive manufacturing for example, was enabling people to do small footprint, localised manufacturing.
We were starting to see organisations like Nike reshoring and nearshoring their production. We also found an increase in autonomous systems within warehouse systems, and that the internet of things was being embedded within those processes. These changes were already gaining momentum. What has now happened with the pandemic, is that it has created a burning platform for all these technologies.
We’re already hearing how back offices at logistics companies are seeing 25% improvement in overall productivity because they’ve started to automate processes.
Existing technologies which have been moving forward over the last couple of years, have received incredible focus during lockdown, catalysing organisations to do
things differently, and invest heavily.
KA: How could this disrupt supply chain models?
RW: So, the offices we wanted in 2019 are probably very different to the offices we need in 2020. Do we actually want them in London for example, or can they be remotely dispersed? From a supply chain perspective what we’re finding is we can start implementing distributed manufacturing, and other small footprint manufacturing, in lots of locations. That raises some big questions about distributed warehousing as well.
We have discovered that having one big warehouse and one big manufacturing facility might be less resilient in some cases than if we actually have lots of smaller warehouses and manufacturing facilities - because when we have a situation like we do now - we’re able to mothball some elements of the network without shutting down the whole supply chain.
This distributed network of smaller warehousing facilities with new technologies embedded in them, offers greater resilience, flexibility and brings operations closer to the customer.
KA: Is it critical to invest in new technology right now?
RW: If we start investing in various new technologies, we might be able to operate in ‘the new normal’ but maintain a low cost level. If you try to push a new way of working through old processes/systems, you end up with hugely increased costs, because you’ve pushed the system in the wrong way. But, if you change the system you’re able to create a new minimal cost, minimal inventory, minimal lead time point, which then enables businesses to compete in a more effective way.
KA: How is artificial intelligence transforming back end operations?
RW: Artificial intelligence (AI) can be used very effectively in planning. If you’re able to turn to your warehouse management system and instruct in very simple terms, ‘here’s the game we’re playing, and what we want you to do to win, is increase throughput…’ that will enable the AI system to manipulate some of the key variables, to enable the winning of that game.
If the game is - for example - to reduce costs to a minimum, what the artificial intelligence system is able to do, is focus on the minimal cost side of things.
We as humans have to decide, what it is we are trying to win, at this particular point.
KA: Can blockchain improve supply chain operations?
RW: With blockchain we’re able to take information from a variety of different sources and put them into a block. Even photographs. If we’re moving goods across Europe for example, it could be a photo of the case with the seal on the lorry. What you end up with is lots of blocks of information. What you can then do if you want to is assign people different keys for ‘opening the doors’ as it were. So, they can look at some of the data within that blockchain.
You might provide customs with a key which will open everything up. For a particular supplier within the supply chain, you might have a key which can only open up two or three of the blocks. The customer might have another key to open up other blocks of information.
So blockchain is quite an interesting technology, because it enables you to have very good levels of transparency. However, they’re finding blockchain technologies use an incredible amount of energy.
KA: What will warehouses look like in 2030?
RW: In 2030, we’re probably going to need smaller warehouses with very strong foundations. Well connected, probably going to involve rail. That will create some interesting challenges. If we’re going to be running electric vehicle fleets and everything else, just think about the amount of power which might be required to go into those facilities.
Rolls Royce are talking about very small footprint nuclear power stations. Who knows in the future, maybe we’ll have these very small power stations in warehouses. If you’ve got all this automated/autonomous equipment within the warehouse, running on battery, we’re going to need to charge those elements too. I think it will be utilities feeding into an operation that could mean make or break for some facilities. We need to start planning for that now.
KA: What disruptive technology should we be thinking about in 2020?
RW: If I suddenly insert an additive manufacturing facility into a warehouse, I no longer need to have much racking because I can make the items I need in a short lead time. That will disrupt the way the supply chain works. Disruption might be something that’s out there already, that is simply plugged into a supply
chain in a slightly different way, creating a big change in what people are actually doing.
To some degree, the pandemic created a disruption. In the new normal, remote working and an increase in automation is going to change the way we work as individuals, as a society, as well as within physical facilities.
KA: What could the jobs of the future be then?
RW: There’s going to be a whole raft of different jobs required. Some in data analytics and robotics. Specialists in battery technology, for example. You’re going to find your maintenance engineers are software engineers. We do have those in place already, but we’re going to need more and more of those skillsets operating within these environments. With high levels of integration, people are going to start managing these areas as a network rather than as individual entities.
Read the rest of the article in the July/August issue of SHD Logistics here. Read the first interview of the series with Damian Alexander, vice president and managing director of Leidos UK's logistics division, here.