From flying shuttles to rolling robots, automated supply chains are almost here

Emerging technologies prepare the ground for the autonomous world, including the unmanned supply chain with many benefits but also risks to be mitigated. The main challenge and responsibility for the leaders of today is to capture the benefits while finding meaningful activity for all of us.

ASCFrom Amazon’s delivery drones to self-driving cars, autonomous factory equipment to Elon Musk’s 760 mph vacuum tubes – automated vehicles are on the rise.

Even beyond the grounds of private companies, tests of automated transport have been successful. A truck platooning system, in which groups of two or three “smart trucks” travel closely behind one another communicating wirelessly, arrived in Rotterdam in April. The Ministry of Transport in Singapore seeks proposals to develop something similar.

Also in Singapore, Airbus is pursuing an autonomous air taxi project to deliver parcels to ships in the port. On the water, the cargo ships of the future are expected to be crewless and remote-controlled.

The so-called “last mile”, delivery to the doorsteps of businesses and consumers, is probably the most complex task in the supply chain – especially in busy urban environments full of cars, bicycles and children playing in the streets. Intelligent self-driving vehicles can transport up to 100 pounds. In Paris, two entrepreneurs are building a flying river shuttle that will bypass traffic by travelling above the Seine.

Raw materials can now be extracted in automated mines; they then reach the smart factory 4.0 and are transported from there by wireless truck or delivery drone to the automated distribution centres of retailers or the smart boxes of individual consumers.

The point? The autonomous end-to-end supply chain is almost complete.

Automatic benefit

Automation in the world of logistics will create enormous opportunities when it comes to making the flow of goods safer, more efficient and more environmentally friendly. Self-driving cars alone would reduce accidents by 70%, improve fuel efficiency by 20%, and save about 1.2 billion hours of driving time over a period of 10 years. Less congestion will make the flow of goods and people faster – and those countries with driver shortages, such as the United States, United Kingdom and Germany, will find relief.

The improvements do not come without challenges, however. One key concern is cyber risk. We need to ensure that autonomous units cannot be hacked. Also ethical questions need to be answered – how to decide whom a vehicle is supposed to save in case of an accident, for example. Policy-makers also need to consider the impact on jobs: where to start, where to slow down the autonomous economy to avoid unwanted consequences, starting with unemployment.

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The autonomous movement, which began in the early 1950s, is now in full swing. Of 1,433 consumers surveyed in the US, 70% think they will order the first drone-delivered package within the next five years. The majority of policy-makers (88%) expect autonomous vehicles to gradually become a reality within the next 10 years, based on a recent worldwide self-driving vehicle study by the World Economic Forum.

According to the same survey, 60% of policy-makers expect a ban on private cars in cities over the next 15 years. And this might not be limited to private vehicles: over time cities will further regulate goods deliveries, which are one of the main causes of daytime congestion. Therefore, not only transportation companies, but also shippers need to prepare for an autonomous future.

Capturing the full potential of the automated supply chain requires rethinking entire logistics systems. There will be an evolution from the fixed “collect in the evening and deliver during the morning” approach to a fluid system of continuous movement and supply. Platoons, drones, tunnels, tubes, rolling robots and automated warehouses make the constant flow possible.

But this requires flexibility and innovation on the operator level, as well as investments in technology and infrastructure. It requires close collaboration between not just manufacturers, retailers and developers, but policy-makers and the citizens themselves.

Image: REUTERS/Wolfgang Rattay

This blog was originally posted on the World Economic Forum Agenda.

How the cloud makes central planning a reality

Imagine the delivery of the hairdryer you ordered 18 hours ago was planned in a center 5,000 kilometres away – roughly the distance between Warsaw in Poland and Kashgar in China. Impossible? In fact, this is not a far-fetched fiction but soon to come reality.

Since the 1980s, the personal computer has helped businesses to plan and control many activities locally – from sending mass mailings to local customers to the managing of inventories and orders. The decentralized planning has helped to make products cheaper and more adapted to the local situation. For example the Spanish subsidiary of a global transportation company has replaced the 9am global service by a 10am local delivery option, as more people are expected to be in the office at that time. However, these local advantages pose major challenges to the international standards multinational customers expect from global brands. Therefore, global brands require central planning and control, which is back on the agenda – thanks to the internet and the cloud.

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How can the cloud bring the planning back to the center? While the personal computer helped create enormous efficiencies in almost each and every unit of a business, the cloud will surpass its abilities and ease the work of those charged with ensuring global standards and organisational efficiencies. The cloud is the place where all relevant data, information and applications can be stored available for all – locally and at the center – who have the necessary access rights. With easy to access storage capacity provided by providers like Amazon and IBM, the cloud offers an almost unlimited range of tools and databases – not only to the large but also to the small and mid-sized enterprises. This brings enormous advantages to the world of the so-called global supply chain.

It is the supply chain bringing the goods, ranging from food and medicines to the above mentioned hairdryers, to the supermarkets and stores, as well as everything that is needed to factories and other businesses and organizations. Thanks to the road and rail systems, water ways and air corridors, bilateral and multilateral trade agreements, this chain of continuous flows spans across borders and continents, cuts across international manufacturing networks and multiple distribution hubs and centres.

Today materials and parts are treated and transformed – in various stages and different locations on the globe – into an unprecedented variety of products. These goods are delivered globally, whether to consumers in the metropolitan areas like New York and Mumbai or to factories in the South African city of Uitenhage and in the province of Bac Ninh in Vietnam. This highly proliferated, and at the same time dense, global labyrinth of flow of goods is also exposed to many potential risks and disruptions.

The more precisely this supply chain is understood, i.e. described, analysed and planned, the higher the chance of smooth delivery and proper responses to market dynamics and unexpected shocks. Although the cloud allows the collection of data from stations, customers and situations all over the world, whether in the most distant corner of sub-Saharan Africa, the tip of South America or the tiniest island in the Philippines, only a central team closely collaborating with the country organisations might be capable of capturing the trends, threats and opportunities to determine quickly the most appropriate response.

How does the central way of supply chain planning and management work in practice? Each time when, for example, delivery plans are needed, the order requirements for customers are uploaded to the cloud. There, a powerful computing unit, utilising multiple parallel processors – called the optimisation engine – generates delivery plans satisfying the many constraints imposed by weather and climate, geographic and traffic situation, as well as the delivery location, which could be on the 45th floor in a high rise in Hong Kong or at a tiny farm on an island in Indonesia.

The optimisation engine evaluates alternative ways of transport and determines the best options for delivery. These optimized plans are then transferred to computers or tablets at decentralised warehouses where the orders are loaded to reach the buyers by road, boat or planes. In real-time and constantly the data about the moving of these goods can be collected and analysed to preserve the highest level of central control and chance of an on-time delivery. Furthermore, all data and analysis – including information about the status of production in the factories of possibly thousands of suppliers, as well as the actuals versus the sales plans of the many employed or serviced third-party sales teams – can represent valuable input for upcoming planning cycles.

The benefits of central planning are more than obvious: compliance with global standards, better forecasting, cost and carbon optimized routes, reduced hiring and training costs, and higher customer satisfaction and lower recovery costs through better quality control and more appropriate and timely responses to irregularities and disruptions.

Therefore, the next revolution in the supply chain will be the central orchestration team which collaborates closely across entire organisations to establish full visibility and ensure well informed decision-making. Applying predictive analytics and artificial intelligence will enable manufacturers, traders and logistics companies to receive clear predictions in respect to potential disruptions and even more so recommendations to store hairdryers at specific quantities and the perfect location – possibly long before we even thought about placing the order 18 hours ago.

This blog was originally posted on the World Economic Forum Agenda.

What happens when household appliances go shopping?

Running out of coffee or razors can be frustrating. Throwing away expired medicines and food too. Managing inventory of all kinds even in the smallest of households is an art perfected by few. Monthly subscriptions for deliveries on a regular basis offer some support. With 5 billion connected “things” in 2015 there should however be better solutions to make empty stocks and out of date products a thing of the past.

Today’s internet connects the world: buyers with sellers, smart devices like tablets and phones with the mushrooming online shops. At the same time, household appliances are becoming increasingly connected and more and more equipped with sensors to provide a broad range of information to users and other parties. For example, a prototype of a smart reusable milk cap that uses sensors to detect when milk starts to go bad was recently created by researchers at the University of California-Berkeley.

Meanwhile, wouldn’t it be great if sensors and smart appliances helped us replenish our groceries? This is not as far-fetched as it seems.

One important step towards auto-replenishment is Amazon’s Dash Button, launched on April 1 2015. Once pushed, the ‘Button’ – attached to appliances around the home – processes automatic refill orders and delivery requests. Each time the button is pressed, an alert is sent to the mobile phone connected to the account and, once the order is approved, detergents, coffee filters and other essential articles are soon after delivered to our home – some even within the hour.

More importantly, alongside the Button, the Dash Direct Replenishing System was launched as well. This service provides an API (Application Program Interface) – a specification which allows smart devices to communicate with each other. The API enables manufacturers to directly integrate the Dash system into appliances – bypassing the Button. Without any action on your part, your espresso machine might soon know when and where to place the order when the stock is low. No more frustrations, no more time to waste for writing the purchasing list for our day-to-day products.

The replenishment services are not only for our homes. Any business and organization can benefit from this development and companies can design new offerings. Xerox, for example, has identified that the most common reason people can’t print is that the printer has run out of toner. Therefore the company has launched an auto supplies replenishment service for printers.

The new replenishment services – whether for homes or organisations – will save space and time, stocks and money – and by avoiding waste from outdated products the development is good for the planet too. The only missing piece seems to be the app to align and combine the orders to reduce the number of deliveries, and consequently energy consumption and emissions. This all is probably only the beginning of a massive development of new services driven by connected devices and the capabilities offered by the internet. What if household appliances not only booked the orders for their refills but also the spare parts in the case of a breakdown and also notified the nearest repairman too?

With this new level of convenience comes new requirements and risks. Today’s supply chains are hardly prepared for the developments resulting from the highly interconnected world. The frequency and speed of the supply chain in delivering goods to organisations and more importantly our homes will be critical. Same day delivery for essential products will become the norm.

Of course, everything connected to the internet can be hacked. After two hackers were able to take control of a Jeep over the internet, 1.4 million vehicles needed to be recalled. In the hyper-connected world our security is at stake, both at home and in the workplace. The risk lies not only in the possibility that hackers take control of devices but also in the data gathered by the devices – may it be sensitive personal information or, for example, the secret research data of a company.

According to experts, part of the problem is that it is very difficult, if not impossible, to write a secure code. While devices like the Dash Button might not pose a direct risk, the fact that “things” communicate with each other through the internet create billions of potential backdoors into our homes and organisations as well as all possible places surrounding us – for example into the doctor’s practice or the tram we are using to get to work in the morning. The route towards tomorrow’s world of increased convenience and efficiency needs to be explored and with the respective precautions to be taken, not only by individuals but also companies, in particular the manufacturers of the smart devices.

What will the future of the highly connected world look like? Will we see bright and colourful branded buttons on appliances everywhere in our homes, companies and other organisations? Probably not. The likely mainstream scenario is the gradual increase of the number of connected “things” controlled by smartphones, tablets, and wearables acting more and more autonomously. The Apple HomeKit is an indication of the type of frameworks required to control this connected world of partially autonomous appliances and, moreover, the Kit might be one of tomorrow’s most stylish housekeepers.

This blog was originally posted on the World Economic Forum Agenda.

Image: An internet-enabled Dacor Discovery gas range and electric oven is pictured during the 2015 International Consumer Electronics Show (CES) in Las Vegas, Nevada January 4, 2015. REUTERS/Steve Marcus

How smart packaging can save lives

Can something as simple as proper packaging save lives? The reverse is certainly true.

The World Health Organization recommends that tetanus vaccines are stored in temperatures from 2-8°C, otherwise the vaccine might become not only unusable, but a health hazard. In areas where there is vast supply, losing a shipment is not the end of the world; however, a sudden disaster can lead to no supply, and the worst possible scenario: the loss of lives.

But that worst-case scenario is set to become a risk of the past. Newly commercialized methods of Smart Packagingpackaging allow for temperature stability for up to five days, overcoming probably more than 90% of disruptions in supply. The highest level of security can be obtained through the wonder of modern technology called the Internet of Things. The little pack of medicines, hidden deep in the air cargo pallet, can now send data to doctors in Kampala, telling them how warm or cold it is in the transit warehouse, and how long it has been stuck at the airport in Addis Ababa.

Consider the following real life example: During transit of a thermal pallet shipper, Henry Schein Inc. – the world’s largest provider of healthcare products and services to office-based dental, animal health and medical practitioners – was experiencing significant customs delays at a location in the Middle East. The important shipment of vaccines, diagnostics and antibiotics was at risk to become waste, and lost to those expecting and needing the supplies. However, the data provided by web-based technology alarmed Henry Schein that the packaging was reaching its thermal limits. Through close collaboration with the transportation partner the required reconditioning prior to delivery to customers was ensured, all occurring without any damage. Smart packaging prevented this shipment from spoiling in transit, which would have caused significant shortages of medical supplies to the areas of need.

Security packaging with anti-counterfeiting technologies plays also a vital role in fighting the $200 billion counterfeit drug industry. Smart packing will alleviate health risks associated with adulterated drugs, the catch-all term for contaminated, unsterile, unsafe, spoiled or expired products. According to a study published by The Lancet on 2,634 malaria drug samples, more than one-third failed as substandard after chemical analysis, and about 20% were found to be wholly counterfeit. Today’s packaging design goes far beyond material quality but helps to focus on improved barrier properties to moisture, UV light, oxygen, shock and carbon dioxide.

The world of connected and communicating things offers unprecedented perspectives into life protection and healthcare. Ultimately, packing will carry all vital information, ranging from the evidence that the product is genuine, to the conditions the goods experienced during the sometimes very long journey from the factory to patients and users.

This will not be the end, however, of the development. Increasingly popular wearables in the form of smart watches, glasses and even textiles will not only be able to receive and analyse the data sent by the smart packages, but produce and communicate individual information, which at some point will allow for individualized drugs and treatments.

This blog was originally posted on the World Economic Forum Agenda.

Author: Wolfgang Lehmacher is Director, Head of Supply Chain and Transport, Mobility Industries at the World Economic Forum.

Image: Various medicine pills in their original packaging are seen in Ljubljana REUTERS/Srdjan Zivulovic