One post tagged with "IoT"

The Two Forces Influencing Supply Chains: Technology and Politics​

There are two types of globalization: one is the vast dispersion brought about by the Industrial Revolution, and the other is the significant convergence resulting from the Information Revolution, where developed countries provide capital and high technology while deindustrializing, and developing countries offer cheap labor and industrialization. The latter form of globalization has created a golden age for supply chains, but its impact on the world has been more sudden and difficult to control.

Currently, we find ourselves at the end of this latter globalization, with slowing growth. The Economist has coined the term slowbalisation to describe this phenomenon, exemplified by events like Brexit and the U.S.-China trade war.

On the technological front, advancements in AI, robotics, 3D printing, autonomous vehicles, and 5G are leading to unprecedented transformations in supply chains, making globalization more manageable. However, these changes are hindered by a technological cold war.

Changes in Industry​

More than half of companies believe they should implement major changes in their supply chains, with one in ten businesses advocating for a complete overhaul. There are two primary considerations:

One is the risk associated with reducing supply chain costs — you are merely part of a node in the supply chain network, making it difficult to control adjacent nodes. The typhoon in Japan in 2011 caused a semiconductor giant to spend over a year with 100 executives trying to understand the specific companies involved in the network created by their supply chain.

Another consideration is that global trade has not only brought more products but also more services. Services account for one-third of trade value, and their growth is 60% faster than that of products, with telecommunications and information industries seeing growth rates 2 to 3 times faster.

Examining three specific industries:

1. Apparel: Some production has shifted from China to Southeast Asia, Vietnam, Bangladesh, and Ethiopia. Despite rising costs, China's skilled labor remains highly competitive.

2. Automotive: Regionalization and hub formation are evident, with Mexico serving North America, Eastern Europe and Morocco serving Western Europe, and Southeast Asia and China serving Asia. A major reason for regionalization is differing consumer habits; for example, pickup trucks are only popular in the U.S. Other factors include trade wars and the electrification of vehicles (which require significantly fewer components).

3. Computing: Some companies are relocating from China to Vietnam, Cambodia, and Mexico, and even back to the U.S. Many companies find it challenging to move out of the U.S. Shenzhen remains a powerhouse due to its automation capabilities and high added value.

Amazon and Alibaba Remain Benchmarks for the Next Transformation​

Amazon uses data, algorithms, and robotics to achieve logistics that are one-third faster than most competitors.

Digitalization: How New Technologies Are Transforming Old Industries​

1. Predictability
   1. Companies traditionally use historical records to forecast sales and adjust manufacturing and inventory accordingly. AI can leverage social media data to more accurately fine-tune parameters at each node in the supply chain.
   2. Research shows that executives believe the most important technologies to adopt are cognitive analytics and AI, while blockchain and drones have seen a decline in priority.
   3. JDA's Blue Yonder deep learning algorithms have reduced stockouts by 30% and shortened excess inventory time by several days.
   4. ORSAY uses JDA's automated pricing system to reduce inventory.
   5. Intel saved $58 million using predictive models.
2. Transparency
   1. For multinational corporations, "Where are the goods?" remains a significant unresolved issue. Why? Because their control over products is not direct; they do not manufacture, transport, store, or sell the products.
      1. For example, in 2017, a strike in Germany's freight industry left IBM's expensive mainframes exposed to the elements on the tarmac for a month, while the company mistakenly believed the goods were safely stored in an airport warehouse.
   2. The Internet of Things (IoT) can address this issue. Sensors can report not only location but also direction, temperature, humidity, and other parameters.
   3. Singapore is automating port transport with autonomous vehicles.
   4. IBM and Maersk are using blockchain to make transportation paperless and transparent.
3. Speed
   1. In Silicon Valley, Tom Linton's Pulse command center resembles a Pentagon command center, allowing real-time visibility of 92 variables in the supply chain, sharing data and decisions with customers via mobile and computer, reducing inventory by 11 days and freeing up $580 million in cash flow.
   2. Li & Fung has reduced the time from product design to shelf from 40 weeks to half that.
   3. 3D printing unicorn Carbon is helping Ford and Adidas develop and produce products.
   4. Uber or Airbnb for warehousing.

Security Challenges​

Supply chain management is transitioning from intuition and experience-driven practices to data-driven approaches, facing three major security challenges:

1. Huawei. Replacing Huawei products will increase costs, and the adoption of incompatible technology standards for 5G will force different countries to take sides, while 5G technology is crucial for IoT.
2. Cyberattacks. New IoT devices are rushed to market without adequate security considerations; however, "no one wants to drive a tank to work" because it's just too slow. A better response strategy is to be reactive and quick.
3. Trade wars. Policies can change daily, but factories cannot be moved at will.