Digital Supply Chain: Hype, Confusion, and Reality

It’s safe to say that the pace of change in supply chain management, especially from a technology standpoint, has continued to accelerate. Everybody seems to be talking about the digital supply chain these days, but what exactly does that mean? Why is it important? What are some of the key capabilities companies need, not only to keep pace with this change, but also to find new avenues for growth and differentiation?

Those were some of the questions I discussed with Andrew Clarke, CFO at C.H. Robinson, in a recent episode of Talking Logistics.

Digital Transformation of Supply Chains is Taking Hold

“There’s hype, there’s confusion, but there’s also reality,” said Clarke in characterizing the state of the market today. “The reality is that [digital transformation of supply chains] is taking hold.”

“We’re still in the early innings of this digital revolution,” he added, and the business-to-business (B2B) world is still catching up with what we’re experiencing in the consumer realm.

“The shipper and carrier sides of the market are very fragmented,” Clarke said. “There are millions of shippers out there and it’s becoming increasingly important for them to get access to information about their supply chains, which they don’t have today and they don’t have the resources to build themselves. That’s why you have cloud-based services, software-as-a-service, and platform-as-a-service solutions that are cropping up every day to make this more of a reality. I believe the technology that you and I embrace as consumers will eventually bleed into the B2B world, but I don’t think we’re as far along as maybe the news stories might suggest.”

Perspectives on Machine Learning, Autonomous Vehicles, and Blockchain

Clarke shared his perspective on some of the technologies making the headlines today, including machine learning, autonomous vehicles, and blockchain.

“With some of these technologies, people might over-emphasize the impact they are having today and under-emphasize the impact they will have 5 years from now,” Clarke said. “In this environment, and in our business, timing does matter. You can certainly be way too early to it and be the first to storm the beach, and quite frankly, you can also be too late to it. So, we spend a lot of time analyzing these trends [to make the right investments at the right time].”

Here are some excerpts of his comments…

On machine learning: “From our perspective, it’s still very nascent…We have a group of data scientists in our organization and they do a wonderful job of programming and helping our operators and leaders make better decisions, but [the machines] are not making the decisions for them. It’s machine and human aided, which we believe will be the successful strategy in this area.”

On autonomous vehicles: “A group of us were out in Silicon Valley listening to a presentation by a company that is mapping the U.S. surface transportation network to achieve 2 centimeters of tolerance at 80 mph…The gap between [what you get today with Google Maps] and mapping to 2 cm of tolerance at 80 mph is huge, and that’s what Level 5 autonomy requires. Will we get there? Absolutely. Will it take a long time? Will people spend billions of dollars to get there? Yes, but it’s just not there yet in our space.”

On blockchain: “We’re doing a lot of research in that area, but it goes back to [the need to converge on a standard] and what people are going to agree to do. Putting the trust that exists between organizations into a distributed ledger makes complete sense, but the sequencing and timing of getting to that is where all of the work will get done. We’re not there yet [as an industry], but we will get there.”

Disrupt or Be Disrupted: Does It Lead to Progress or Chaos?

“Disrupt or be disrupted” has become a business mantra. I asked Andy if he subscribed to this belief. And if everybody is out there trying to disrupt everybody else, does that lead to progress or chaos in the industry?

“I’ll give you the ‘Yes, but’ answer,” Clarke responded. “I do agree with the saying, but you have to be thoughtful about it because disruption for disruption’s sake doesn’t really benefit anyone. That would just lead to chaos, as you suggest. The way we think about disruption is ‘How can we provide a better service, a better solution to customers, sooner, at a lower price?’”

Having Really Smart and Talented People Matters Too

Clarke also made the point that a lot of companies equate disruption with just technology, but people and processes are very important too.

“A huge element of providing customers with a better solution, sooner, at a lower price is people,” said Clarke. “So, what do we do? We go out and hire and develop and train really talented people. There’s 15,000 of us across the globe, to help our roughly 100,000 customers and about 80,000 providers be effective in managing their supply chains. It matters to have really smart people.”

I encourage you to watch the rest of my conversation with Andy for additional insights and advice on this topic, including his perspective on electronic logging devices and what’s required to build a strong foundation to actually succeed and get value from new technologies and processes. Then post a question or comment and keep the conversation going!

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