Paper-driven supply chain management: a thing of the past? Pt 2

Blog Best practice November 14, 2018

What role do people play in the age of digitalised supply chain management? In part two, Luis Ortega describes how technology changes – but does not eradicate – the important role humans play in the age of digital business practices.

Our new role in supply chain management

The new industrial revolution has brought about two key aspects affecting both businesses and government globally: the value of data and the role of people when manual processes are replaced by technology.

Taking inspiration from “The Death of Supply Chain Management” by A. Lyall, P. Mercier and S. Gstettner for Harvard Business Review, part one of this article identified the critical role of high-quality, real-time data for businesses and governments to operate efficiently throughout the entire supply chain eco-system. Today, I would like to share my views on the role of people following machine replacement of manual processes.

The world as we know it

In their book ‘The AI Republic,’ Danny Goh, Mark Esposito, and Terence Tse conclude:

  • There is a lack of understanding around AI. Conversations about this should centre on empowering humans or generating human-centered technology.
  • Governments and the public sector need to step up. Otherwise, the private sector will dominate the use of technology and in turn, the direction of society as a whole.
  • The conversation should be around how technology has improved efficiency instead of eliminating jobs. AI is forcing us to rethink our standard of conception of the industry.1

These authors strongly believe that AI and digitalisation will create jobs and new opportunities we cannot yet even conceive of, and I have to agree. It’s happening as we speak as supply chain management moves from paper to tech-based.

Let’s take a more practical approach to this using an example of a multinational medical supplies business, referred to as GlobalMed.

GlobalMed is not particularly well-digitalised. They serve 45 countries, receiving on average 100,000 customer orders per month. The supply orders come from hospitals, clinics and both public and private health departments. Customers send PDF or handwritten documents by email to back office staff residing in a shared service center somewhere in the world. Typing the information into their sales ERP solution, the outsourced employees trigger the internal processes (delivery, manufacturing, and so on).

GlobalMed struggled during the recent pandemic; customer orders flooded their sales department due to an increase in health supplies needed to fight COVID-19. This surge was followed by a sudden, steep drop in orders related to non-critical surgeries and other stopped medical activities.

The lack of real-time, accurate data made it difficult for GlobalMed to modify the distribution and production planning instantly. Additionally, the people who scan and process customer orders work in a fully locked down country. Therefore, they could not access the necessary equipment to process these orders efficiently.

The end of the world as we know it?

Now let’s apply the principles of the fourth industrial revolution to the scenario above.

Firstly, the sales process of receiving and processing trading documents would be fully digital. Globally, hospitals and clinics would use intelligent mobile devices to place orders which would be automatically and digitally exchanged with their providers. An algorithm would place orders through a global digital network determined by: best projected delivery times and transport options, price, and quality, combined with real-time data on country-specific lockdowns.

Secondly, the real-time data would be analysed to reprogram the production lines and the supply chain would adapt based on the accurate information from the sales process. This would follow decisions based on machine learnings from similar scenarios, programmed and input by the risk analysis department who may have predicted this using publicly available data from the pandemic.

So, where do back office staff fit into this scenario? Where do people stand in the digitalisation of supply chain management? Sometimes we forget that AI-powered machines require human intelligence in design and operation. Despite having the ability to recognise complex patterns much faster and with greater accuracy than humans, it is humans that define, code and administer algorithms.

Whilst the role of manually typing or scanning is disrupted by automation and digitalisation, new opportunities surface to support the analysis of data, identification and integration of new sources, and design and development of new algorithms.

What’s next?

In my personal view, digitalisation will change jobs before it will eradicate them. The challenge to all of us as individuals, businesses and governments is: how will we adapt, reskill the workforce, change our education systems, and most importantly define new ethical principles to govern the digital and data-driven world? As once said by a university professor of mine: intelligent systems require more intelligent people to design, build and operate them.

I would be interested to hear your thoughts on the above. Do you think we’ve reached the end, or in the words of Lyall, Mercier and Gstettner, the “death of supply chain management”? Let’s carry on the conversation! I would be happy to answer any questions you may have. Please get in touch with me directly via the button below.

1Esposito, Mark, Goh, Danny and Tse, Terence. The AI Republic: Building the Nexus Between Humans and Intelligent Automation. Lioncrest Publishing, 2019. Print and ebook.

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