In an accelerating supply chain, effective management of costs, people and data is becoming more crucial.
As the Amazonization of the world accelerates, the only governor on this high-speed pipeline is the ability to manufacture products fast enough to keep pace with consumer expectations and supply chain demands.
Consumers have gone from being surprised by the speed and low cost of home delivery to expecting it, to insisting on it. In turn, manufacturers and distributors face the challenge of meeting those expectations in a time of fewer workers and emerging technology.
Whether it’s a pair of sneakers or a pair of speakers, the pressure is on to deliver a customized product to the end user. “Many of today’s consumers are demanding more from businesses in terms of shorter service cycles, lower costs, greater transparency, and increased corporate responsibility,” MHI officials stated in the organization’s 2019 report, Elevating Digital Supply Chain Consciousness, which was delivered at the ProMat Show in Chicago in April. “Over time, consumers have come to expect unprecedented levels of service, ranging from same-day delivery and free shipping to real-time alerts on the status and location of items they have purchased.”
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The impact now is felt at every stage of the manufacturing process—from design to production to delivery, the report notes. “These expectations are rippling across the entire supply chain ecosystem. Consumer-facing organizations themselves are increasingly demanding speed, visibility, and transparency from their own upstream supply chain partners to meet the end-customer’s rising expectations,” the report states.
The need for speed cannot sacrifice quality, safety, or profitability—issues not lost on the supply chain, logistics, and material handling product manufacturers looking for better, faster ways to serve the market. “Our customers are extraordinarily demanding of us to drive cost reduction,” said Jeff Rufener, President of Toyota Material Handling. “Can we do something to take the costs out? The technology is there; we’re showing a lot of automation at ProMat. It’s not driven by labor cost reduction; it’s driven by velocity.”
The velocity of change
Supply chain executives on both the production and distribution side feel the velocity of change. What is different in 2019, according to the MHI report, is that now they are ready to do what is needed to change.
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After three straight years of spending decline on supply chain solutions, the MHI study found that spending on supply chain technology will increase by 95% in 2019, and is expected to be a high priority in the next five years. “Progress and interest in… supply chain innovations has never been higher, nor more promising,” the study report states. “In particular, artificial intelligence, which depends on many of the survey technologies as a foundation, saw a huge leap in potential impact.”
Survey respondents believe artificial intelligence (AI) is one of the key components in an effective supply chain, and its adoption is going to supercharge the supply chain’s speed. AI will be a core competency within three years, according to 79% of respondents, and 88% believe AI will allow an organization to manage risk and improve predictability.
“Adopting these important innovations and elevating supply chain digital consciousness is essential for competing effectively in an increasingly digital economy,” the report states. “However, the challenge is highly complex and may require significant organizational change, along with increased investment.”
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And therein lies the rub for not just supply chain, but all of manufacturing. In a world where AI’s use already is becoming commonplace and where its application in all areas of business grows rapidly, competition for workers who can understand and apply the technology are in short supply. The MHI study finds the top challenge for a digital supply chain is hiring qualified workers, which was cited by 65% of respondents. Customer demand for lower costs and for faster response time came next; customer demand always has been a consideration. The worker shortage is the most immediate concern among supply chain professionals.
But it is not the only industry concerns, according to the study. “Overcoming barriers to technology adoption is fundamental to success and must be effectively addressed in order to achieve the expected benefits of digital supply chains,” the study reports. “These include not only workforce and business case/ROI considerations but also cultural barriers, drawn-out timelines, and competing business priorities. Additionally, technical barriers such as incompatible systems that require new interfaces and time-consuming data consolidation/cleansing, which can slow the implementation to a crawl.”
Yet the study finds these issues are speed bumps, not brick walls. “Digital innovation presents both challenges and solutions. On one side, it is driving change at a neck-snapping pace and disrupting entire industries, with competitors emerging from nowhere to challenge long-established market leaders and business models,” the report notes. “On the other side, digital solutions are enabling new capabilities, new market opportunities, new ways of working, and new levels of performance.
“Businesses that make smart use of supply chain innovation can give themselves a competitive advantage in the marketplace and position themselves to be the disrupters, rather than the disrupted,” it adds. “They can also reach new customers and achieve levels of efficiency and effectiveness that were previously unimaginable.”
Suppliers feel the pressure
Lift truck manufacturers have evolved their businesses into full warehouse solutions—from pick-and-place technologies to automated guided vehicles (AGVs) to full telematic systems. All of this is designed to keep pace with customer demands in an on-demand world.
The tall task of rapidly delivering finished goods is one of manufacturing’s biggest challenges – and opportunities – in the digital plant. Courtesy: The Raymond Corporation
“Today’s supply chain is affected by a changing workforce, high e-commerce demand, and ongoing warehouse safety maintenance,” said John Rosenberger, Director, iWAREHOUSE GATEWAY and global telematics, The Raymond Corporation. “These challenges create the need for supply chain organizations to find better ways to manage the increasing workload as the number of people available to work in warehouses and supply chain organizations decreases.”
It’s daunting enough when the supply chain issues are simply moving cardboard boxes; they get more challenging when perishables are involved. “Many of our customers throughout the food supply chain are asking how they can utilize the Internet of Things and connected technology strategies to help improve food quality and safety,” said John Rhodes, Cold Chain Group President at Emerson. “Ensuring the safe handling and correct temperatures of perishable foods from farm to fork is a cumulative process for operators.”
But there is little question that the product journey is increasingly driven by data, and that data is being filtered through the human operator. “While warehouse systems are helpful in utilizing data to maximize operational efficiency, it’s important to ensure data from each system is being used together, not independently, to avoid potentially working against each other,” said Jack Kaumo, Director of Sales, iWAREHOUSE Technology Solutions, The Raymond Corporation. “For example, in addition to a warehouse management system, many warehouses use a labor management system, a warehouse execution system and/or a warehouse controller system. To avoid data from working independently, warehouses can implement operator-assist programs to further understand what’s happening in the warehouse. Operator-assist programs allow warehouses to be smart with their systems.”
The volume and complexity of the supply chain will put pressure on the plant’s physical assets as well as their digital ones. This will require more powerful lift trucks that can manage height and load safely and effectively. Courtesy: The Raymond Corporation
Safety, always a consideration, is another area of benefit for the supply chain in a digital age. “These connected systems also offer daily functions and real-time alerts. Rather than paper checklists for OSHA-mandated safety inspections at the beginning of every shift, telematic systems offer an electronic alternative,” said Kevin Paramore, Manager of Motive Power and Telematics, Yale Materials Handling Corporation. “If a truck fails inspection, an automatic alert is triggered. Data from lift trucks can also enable automated maintenance calls. For example, if the system picks up a fault code, it can automatically trigger a service call to the maintenance provider to take care of minor issues before they become major headaches.”
Barriers and opportunities
Getting the data to the operator is one issue; keeping the data from overwhelming the operator is an even more important matter, particularly as organizations evolve to a data-driven supply chain. Another challenge is disrupting a system that may not be fast, but is not necessarily inefficient.
“As it relates to all tech, not just IIoT, they are intrigued by the possibilities, but are worried about the cost and implementation,” said Walt Swietlik, Director of Customer Relations and Sales Support for Rite-Hite.
Telemetry systems on life trucks can provide a level of safety for both operators and product. The system can also give managers an understanding of where trucks are deployed within the plant. Courtesy: Rite-Hite
“The sheer volume of data and the impulse to use all of it makes planning and goal setting more important than ever,” Rosenberger said. “Warehouses should gather all the data they can—but use only the data they need. Setting yearly goals will help achieve this.”
“As supply chains become increasingly automated and connected, some operations may struggle with having more data than they know what to do with,” Paramore said. “It lies with the IoT/connected solutions provider to take the next step and show the end user how all the data they’re collecting can be put to productive use.”
“Those leading operators who are truly excelling in this environment are utilizing all available enterprise data—not simply to preserve food quality and take advantage of sales opportunities, but to form deeper relationships with their customers and achieve significant competitive advantages,” Rhodes said.
“The most unmistakable opportunity is in the area of predictive maintenance,” said Olutosin Sonuyi, Material Handling Systems, Inc.’s Engineering Manager for IoT Predictive Analytics. “The ability to accurately plan your repairs and squeeze the most life out of your equipment without unplanned downtime is a high value proposition that is generating a lot of buzz within the industry. Any type of probabilistic modeling of failure at the resolution of individual assets can also open the door for forecasting parts inventory and resource planning.
Getting employee buy-in is another significant challenge. “Warehouse managers and employees may feel resistant to implement these changes within their systems. With telematics, especially, employees may initially feel that Big Brother is watching them,” said Kaumo. “However, with transparent education and training, it should be evident that these systems allow employees to be better at their job—and even make their job easier.”
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“The new technology allows a shipment to be closely monitored from the time it leaves the factory, to when it is in the back of the semi-trailer, to its arrival at the warehouse, back to the semi and then finally to the final delivery point,” Swietlik added. “All parties are able to tell where physically the shipment is at any given moment, what the temperature in the trailer is, what is in it, its weight, etc.”
Overcoming worker shortage
As the MHI study noted, worker shortages are the top industry issue. A digital, automated supply chain is important not just to keep products moving apace, but also to supplant those places where humans are not as available. “In the food supply chain, automation is extremely important in replacing the manual, time-intensive tasks of documenting and reporting on temperature conditions throughout food’s journey,” said Rhodes. “While this doesn’t necessarily address the skilled workforce challenges per se, it does help remove the potential for human error and process inefficiencies.”
One such opportunity is the expanding use of virtual reality (VR). It’s a technology that younger workers are more familiar with from the video game experience, and one that may help interest them in the supply chain field. “Many automated systems are not used to replace the operator; rather, they’re implemented to assist operators and help them become better at their jobs. From a training perspective, operator-assisted technology can even act as a supplemental learning tool,” said Kaumo. “Additionally, warehouse managers can utilize virtual reality training to attract new talent to the industry and reach higher operator proficiency levels faster. VR instructional tools help ensure lift truck operators are coached more quickly and confidently—all before reaching the warehouse floor.”
“Operator-assisted technology such as LED lighting systems used on the forks of powered industrial equipment for picking not only accelerate order fulfillment but enable companies to more quickly train employees and improve order accuracy,” added Rosenberger. “These systems help new employees who are not very familiar with the task, as well as employees who are familiar but need to work more efficiently.”
The modern supply chain is a mix of traditional storage and retrieval and modern plant strategies to manage inventories. Courtesy: The Raymond Corporation
That thought process carries through to truck maintenance and service. “The skilled workforce challenge is particularly relevant to supply chain technicians. The promise of connected solutions is that they can allow operations to deploy this limited skilled workforce more efficiently,” said Paramore. “For example, connected solutions that monitor equipment status can send alerts when maintenance is required for that specific piece of equipment, rather than sending out technicians to inspect and perform service based on blanket, prescribed intervals.”
Investing in the future
Although Toyota Material Handling had not exhibited at ProMat in recent years, it had a significant presence this year as it rolled out its expanded vision for the supply chain of the future. “We want to move up and down the distribution chain,” said Rufener. “We’ve been bringing our manufacturing and distribution company together to focus on exactly what customers want. Customers are extraordinarily demanding to drive cost reduction. So can we do something to take cost out? How can we be more efficient?”
The biggest change in the supply chain is that the warehouse and the product manufacturing it feeds is a strategic investment rather than a tactical one. “The growth of telematics data collection and wireless transmission and Internet of things data aggregation will provide a much more granular view of warehouse operations and provide data to make better-informed decisions to improve efficiency and speed product movement through the supply chain,” said Rosenberger.
“As autonomous vehicles, cubed trailers, and unitized loads become more and more ubiquitous, and delivery times get even shorter, it will be more critical than ever for facilities to control the inbound and outbound flow of products with appropriate, forward-thinking loading dock designs,” said Swietlik. “Doing that will help ensure efficiency and safety—regardless of how the loading and unloading is being done.”
“As our industry quickly evolves to a more data-driven paradigm, we will undoubtedly discover improved methods of operation and new ways to provide value throughout the food supply chain,” said Rhodes. “That’s why Emerson has expanded our focus to offer robust capabilities throughout the food cold chain. Through investments, acquisitions, product development, restructuring and strategic partnerships, we’re creating the potential for our customers to access comprehensive, end-to-end food cold chain solutions.”
As the strategies evolve, so will the technology and the equipment. “Trucks will continue to evolve to amplify safety features. As in the auto industry, where new cars have a greater number of sensors and devices to assist drivers with their surroundings, new lift trucks can include features such as blind spot warnings, obstacle detection while backing up and obstacle detection in front,” Rosenberger said. “The material handling industry will adopt these sensors and devices to assist powered industrial equipment operators.”
Written by: Bob Vavra, Content Manager for Plant Engineering.