1.6 Technology Game Changers—What’s Next in IT?

Now that we have looked at some strategic issues related to IT implementation, let’s take a quick look at some of the emerging IT technologies that will not just impact supply chain design and operations but also how companies use their ERP systems. As we discuss these game-changing technologies, consider two ERP-related questions.

1. How will this game changer contribute data to an ERP system’s relational database?

2. How will this game changer use ERP data and a functional module to create value?

Additive Manufacturing

Also known as 3D printing, additive manufacturing brings science fiction to real life. If you’ve seen Star Trek, you know the replicator—a device that responds to voice command to make something on the spot. Instead of voice command, a 3D printer uses a digital design to make specialized parts—from precise electronic parts, such as RFID antennae, sensors, batteries, and circuitry that are thin, bendable, and lightweight, to four-foot titanium domes (and even concrete houses).1

Where can you expect to see additive manufacturing? In new product development, 3D printing is reducing both the time and cost needed. In maintenance, it can make spare parts almost instantly available without big inventories. In customer fulfillment, 3D printing can help you customize products. Imagine printing your own custom Nike shoes—the truth is, you can! In the medical world, companies are beginning to print artificial organs, including human skin!2 Additive manufacturing literally allows you to exchange information (digital designs) for inventory. Simply download and print! Additive manufacturing will change logistics network design. The question is, how?

Artificial Intelligence

Ever since 2001: A Space Odyssey appeared on screen in 1968, decision makers have pondered the potential of artificial intelligence (AI), always asking, “What’s next?” In the past few years, computing power has progressed enough to promote Space Odyssey’s man-versus-machine storyline. Consider two milestone events:

• May 2017: Alphabet’s DeepMind AlphaGo beat the world’s number one player in the ancient board game Go.

• December 2017: Alphabet’s DeepMind AlphaZero taught itself to play chess in four hours before beating the world champion chess program in a 100-game challenge.3

AI’s power stems from its ability to enable machines to go beyond preset algorithms programmed by software engineers and become self-learning entities.4 Simply put, AI increasingly lets machines mimic human intelligence, including complex reasoning and decision-making. Does this sound a little scary? Elon Musk, founder of Tesla and SpaceX, and physicist Stephen Hawking think so. They have warned that AI is humanity’s biggest threat.5

Yet, AI is already pervasive. From Google’s search algorithms to computerized personal assistants (e.g., Amazon’s Alexa, Apple’s Siri, Microsoft’s Cortana) to Netflix and Spotify’s purchase recommendation apps, AI is helping companies help their customers manage everyday life.6 As AI’s functionality increases, the man-versus-machine question will continue to arise. You may begin to wonder: “Is AI a complement or a competitor to humanity?”

Autonomy Across the Supply Chain

Autonomous Vehicles

The “Rise of the Machines” is moving faster than many experts expected. On October 20, 2017, Uber’s Otto autonomous tractor-trailer hauled 51,744 cans of Budweiser beer 120 miles across Colorado while navigating the dense traffic of downtown Denver. It was the first-ever shipment by a self-driving truck, and only the beginning.

Indeed, the drive to bring autonomous vehicles into day-to-day use is gaining momentum. Gatik AI is using autonomous vehicles (with a human safety driver—just in case) to deliver customer online orders from Walmart’s main DC to nearby homes.7 Both Ford and Volkswagen have equity interests in Argo AI, and General Motors and Volvo have announced plans to launch self-driving taxi fleets. GM expects its self-driving taxis to help it transform into a mobility company, enabling GM to achieve a 20 percent profit margin—up from 7.5 percent for its manufacturing operations.8

Driverless commercial vehicles, including big rigs, may, however, offer the greatest potential for bringing autonomy to the market in the near term. Commercial vehicles represent 25 percent of road miles today, spend more time on less-congested roadways, and provide a better payback than ridesharing investments. Rivian has a contract with Amazon to deliver 100,000 electric delivery vans.9 Autonomous vehicles offer two core benefits.

1. Cost Reduction: Fully autonomous vehicles are programmed to always obey traffic laws and safety guidelines, promising to reduce the frequency and cost of accidents. Safety is a big selling point. Also, importantly, driverless trucks would eliminate driver shortages (up to 15 percent) and driver turnover (100 percent or more per year)—two of the most pressing challenges in the trucking industry. By replacing or reducing dependence on drivers, autonomous vehicles reduce labor costs, including wages, benefits, and driver recruitment.10

2. Service Enhancement: Last-mile delivery defines a firm’s lasting impression on customers. When a customer places an order, the sooner the product arrives at the customer’s doorstep, the greater the sense of gratification. Jeff Bezos formulated his entire company’s strategy based on shifting customer expectations. Amazon's next step is to use air drones and ground vehicles to reduce delivery times to as short as 30 minutes. If Amazon gets to this milestone, trips to the store might become obsolete.

Robotics

Since the Industrial Revolution, futurists have envisioned the day when machines in human form would inhabit the worker’s world (e.g., think the Jetsons or the Terminator). Although industrial robots have been used for decades to perform repetitive tasks that require strength and precision beyond human capabilities, machines have never possessed human dexterity or mobility.

That limitation is diminishing. In 2017, Boston Dynamics successfully created a bipedal, humanoid robot that can not only jump from platform to platform in succession, but also perform backflips.11 From a purely practical standpoint, several companies are closing in on the holy grail of robotics: Developing robots that can imitate the human hand and are able to pick odd-sized items from a warehouse bin or shelf. As cobots, these bots work alongside people, but they don’t take breaks and they never get sick, making them cheaper to employ than their human coworkers. Simpler cobots like Amazon’s Kiva robot and Alibaba’s Quicktron robot are already widely used. The future of robotics is evolving in two directions.

1. Workforce Enhancement: Japan faces a serious shortage of productive workers. Sixty-year-olds possess neither the strength nor the stamina of younger workers. The solution: Employ exoskeletons to help retain aging but skilled employees who would otherwise need to retire or seek out a less strenuous job.12 Ford now employs EksoVest, an exoskeleton worn by workers to minimize fatigue and repetitive stress injuries in fifteen plants worldwide.13 Imagine a future where companies meld worker experience and cognitive skill with robotic strength and endurance.

2. Workforce Replacement: China has bought more robots than any other country. Why? you ask. Like Japan, China faces a labor shortage. China's goal is to replace human workers in areas with either exceptionally high labor costs or a very shallow labor pool.14 For instance, as essential fast-food workers called in sick during the COVID-19 pandemic, demand for Flippy, a robotic chef, skyrocketed.15

The bottom line: You can find more robots working in warehouses and in other logistics settings than ever before. But, the day of a completely robotized "dark warehouse" is still in the future. When it does arrive, millions of jobs will disappear. A universal basic income may be a part of your future.16

Big Data and Predictive Analysis

When you log in to your favorite shopping website, you expect the site to know who you are and what you like to buy. You may even expect the website to give you some suggestions. Big data in the form of customer profiles make this possible. Managers in just about every industry today systematically sift through and analyze data to figure out what you do and why. They are looking for connections among data to predict what you might buy, where you might move, and even if you are likely to become ill.

With all this predictive "insight," companies can be more responsive to your needs, providing better and more profitable products and services. They offer you a customized shopping experience, showing you different products and offering you different service levels. You probably view these capabilities positively. However, big data also enables companies to charge you more or less than another customer—something you might not consider to be so cool.17 For example, by pairing data from your customer profile (i.e., your shopping habits) with an external data source that contains information on the average household income for your neighborhood, an online retailer can decide to offer you a discount because you are a highly profitable customer. Or the retailer may show you a higher price because you live in a high-income neighborhood. Big data is changing how we view each other and the world around us.

Internet of Things (IoT)

Have you noticed that more and more things are connected to the internet—from refrigerators to cars? This phenomenon is called the Internet of Things (IoT). IoT is the “network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment.”18

You see IoT in logistics every time companies link their supply chain information with key customers (CRM), carriers (TMS), suppliers (SRM), and internal functions (ERP). The goal: To know where product is in the supply chain at any point in time. IoT allows companies to link with global positioning systems (GPS) and RFID devices, enabling different pieces of equipment to talk to each other. Robots and humans work together to intelligently pull orders at an Amazon Distribution center. Incoming pallets of goods are automatically sent to the right storage location at a P&G warehouse. IoT will create the smart loading docks where pollution sensors will reroute or delay inbound shipments if pollution levels exceed tolerable levels. IoT's amazing potential to improve coordination throughout the supply chain is expected to drive annual compound growth of 22 percent between 2021 and 2028.19

In tomorrow's smart cities, IoT will capture traffic information to dynamically reroute trucks and control their speed so orders are delivered on time—and with the best fuel efficiency and lowest environmental impact. IoT has arrived! The question is, “How will you apply it to existing and emerging technologies to improve tomorrow’s efficiency, effectiveness, and competitiveness?

Virtual Reality

Virtual reality (VR) is “an artificial environment which is experienced through sensory stimuli (such as sights and sounds) provided by a computer and in which one's actions partially determine what happens in the environment.”20 Although the term was coined in 1987, we are just beginning to see how VR might be used to enhance business productivity (see Table 1.3). By making virtual experiences/settings seem real, VR lets you ask and answer the following question: “What would it be like to . . .?”

In another application, Microsoft’s VR-based HoloLens enables you to interact with other people as if you were in the same room—even if you are a continent away. Digital twins play a critical role in both scenarios. What is a digital twin? A digital twin is a digital replica of a physical asset, connected to the asset through IoT. Changes in the physical world are immediately reflected in the virtual world so decision makers can respond proactively in real time.21