by Elizabeth Hines | Jun 20, 2018 | Blog, Current Events, Leadership, Logistics, Strategy, Supply Chain
Artificial intelligence is forcing change on the supply chain in many ways. But robots, autonomous vehicles, and drones are just part of the equation. Does AI pose a threat to supply chain leadership as well?
A recent Harvard Business Review article explores the idea that “in an AI age characterized by intense disruption and rapid, ambiguous change, we need to rethink the essence of effective leadership. Certain qualities — such as deep domain expertise, decisiveness, authority, and short-term task focus — are losing their cachet, while others, such as humility, adaptability, vision, and constant engagement, are likely to play a key role in more-agile types of leadership.”
Can AI change supply chain leadership as we know it?
What is AI and why does it matter?
Artificial intelligence is coming to your business whether you’re ready for it or not (if it hasn’t already). Why does it matter? Because AI — the ability of machines to carry out tasks in a way we consider “smart” — can boost productivity and profitability.
What AI does “extraordinarily well,” according to consulting firm McKinsey & Co., “is relentlessly chew through any amount of data and every combination of variables.”
[bctt tweet=”Today we’re experiencing a second machine age as computers take on some of our mental workload by making data-driven decisions.” username=”Fronetics”]
Some technologists draw parallels to the Industrial Revolution when machines lightened the load for humans by performing tasks that once required brute strength. Today we’re experiencing a second machine age as computers take on some of our mental workload by making data-driven decisions.
The glass-half-empty crowd is worried that machines will replace humans and take our jobs. But the glass-half-full team sees new opportunities to unburden ourselves from repetitive tasks so we can focus on bigger strategic issues that need the nuanced emotional intelligence only we humans possess.
Traditional vs. AI-ready skills
“At some point in our evolution… leadership acumen transitioned from physical to cognitive skills, putting a premium on intelligence and expertise at the expense of force and strength,” writes HBR article authors Tomas Chamorro-Premuzic, Michael Wade, and Jennifer Jordan.
Offloading repetitive cognitive tasks to machines frees up time to develop new leadership skills. According to the authors, tomorrow’s leaders will be more empathetic, more agile, and more connected to people around them. The authors describe four specific qualities that will define leaders of the future:
Humility
Valuable intelligence won’t be delivered from the top down and may not come from the most experienced people on the team. It will come from every direction. Leaders should be open to suggestions and input from people using data at every level inside and outside the organization.
Adaptability
Changing your mind is a good thing in the age of AI. Learning organizations should expect to revise plans and iterate quickly. Managers should be confident enough to propose a change of course based on new data and not feel the need to defend their decision.
Vision
Operations can feel like shifting sands in an AI environment. An organization that continuously adapts to capitalize on new opportunities can leave employees feeling like they don’t know what they’re supposed to be doing from one day (or minute) to the next. Successful leaders will emphasize long-term goals, encourage questions, and provide clear, thoughtful, consistent answers.
Engagement
Successful leaders will come out of their executive suites and connect with customers, partners, and employees. You can’t wait for reports and meetings when fast-paced data-driven decisions are happening all around you. “Agile leaders need to stay engaged… and find ways to keep their teams engaged, particularly when the going gets rough and the path gets challenging,” according to Chamorro-Premuzic, Wade, and Jordan.
So will AI change supply chain leadership?
Learning and applying new skills won’t come easily for many businesses. Some managers might not be comfortable asking employees to demonstrate humility, adaptability, and vision. These are hard skills to measure and haven’t always been rewarded.
Real digital leadership will require a blend of human and machine learning and a new way of understanding how things get done. Any company stands to gain by adopting these new ideas.
Logistics companies, at the nexus of operations for so many industries, can lead the way into the AI age by modeling new skills and applying them to their own businesses.
Machine-learning expert Jeremy Howard sums it up nicely in a McKinsey & Company report: “There is no organization that shouldn’t be thinking about leveraging these approaches, because either you do — in which case you’ll probably surpass the competition — or somebody else will.”
What ways do you think AI will change supply chain leadership?
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by Elizabeth Hines | Jun 19, 2018 | Blog, Content Marketing, Current Events, Logistics, Manufacturing & Distribution, Marketing, Supply Chain
Tesla has been long-favored to lead the charge in the mass adoption of EVs, but recent challenges have halted production. Can the Tesla become the next Honda Accord before they run out of money?
Plug-in electric passenger cars achieved a market share of only 1.16% of all car sales in 2017. That’s tiny. Some predicted 2018 might be the “year of the electric car,” but sales aren’t expected to break 2% this year.
[bctt tweet=”The auto industry is betting billions that electric vehicles will soon be as “cheap and ubiquitous as conventional cars.”” username=”Fronetics”]
Nearly all experts believe, however, that change is indeed coming. The auto industry is betting billions that electric vehicles (EVs) will soon be as “cheap and ubiquitous as conventional cars.” Some projections put electric vehicle sales over 20% by 2025. Others are more cautious and predict a slightly delayed rise to 25% by 2030. If the industry hits those numbers, it will be a boon to the electronics industry, as the number of cars with electronic components and the number of electronic components in each car grows by leaps and bounds.
Tesla has been long-favored to lead the charge in the mass adoption of EVs. But production of the company’s Model 3, the carmaker’s attempt at a mass-market sedan, has had major challenges, including issues with its supply chain. Can Tesla beat the ticking clock before the massive influx of money dries up?
Tesla’s ticking clock
Tesla is racing to overcome obstacles that have slowed the Model 3 progress, and the company’s make-or-break moment is fast approaching. The carmaker must boost production of the Model 3, or they will run out of money by the end of the year.
Since going public in 2010, Tesla has burned through an estimated $10 billion. Last year alone, Tesla spent more than $3.4 billion in cash — almost $1 billion a quarter — largely to bring production and sales of the Model 3 to sustainable levels.
Earlier this month, Tesla revealed that it nearly hit its target to manufacture 5,000 Model 3s a week, a production goal that is necessary to generating enough cash in house to sustain its own operations. Without it, the automaker will need to raise even more capital from outside investors.
Everyone expects that Tesla could, in fact, raise more funds if necessary. But proving it can build Model 3s at the thrice-promised target rate would go a long way in securing it.
The issues working against EVs
Even without its production issues, Tesla and other electric-vehicle manufacturers have their fair share of roadblocks.
The biggest issue to the supply chain? Electric-car battery manufacturing depends on the supply of certain minerals, including cobalt and lithium. As demand increases, these raw materials are increasingly scarce. Manufacturing is literally running into a metal crunch.
The biggest logistical issue? There are currently not enough places to re-charge.
Where exactly will we charge all those electric cars we plan on buying? Experts say that simply duplicating the existing refueling system, where motorists “charge up” like they “gas up” today would likely require dozens of new power plants or massive new investments in solar and wind farms.
The biggest issue to the American consumer? Battery-powered cars still cost more. Until that changes, consumers will still have a reason — a big reason — to go for more traditional gas-powered vehicles.
Could the Model 3 become the next Honda Accord?
So, even with all these current issues, could the Model 3 still be the highest-selling car of the next 40 years?
Tesla may still have a fighting chance if:
- they can solve their production issues;
- the battery market can find alternatives to its raw-materials shortage;
- the American public can feel confident that their batteries won’t die on the highway;
- the cost of EVs can rival that of traditional vehicles
Admittedly, that is a lot of “ifs,” but somehow no one is REALLY doubting that Tesla will pull it all off. But, not yet. A study last year found that 70% of millennials don’t yet want an electric car. Huh. Electric cars have mystique but simply don’t yet have widespread appeal.
Even taking these surprising stats into consideration, that still means 30% of young buyers consider an electric vehicle even now. So, by 2025 or 2030, when all the kinks are ironed out, they just may be as vanilla as Honda Accords. Except that the Model 3 is gorgeous, and electric, and made by Tesla. So maybe more like vanilla with rainbow sprinkles.
This post originally appeared on EBN Online.
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by Elizabeth Hines | May 29, 2018 | Blog, Content Marketing, Current Events, Data Security, Data/Analytics, Manufacturing & Distribution, Marketing, Strategy, Supply Chain
While information-heavy companies employ entire teams dedicated to cyberattacks, American factories have quietly been growing more and more susceptible.
It’s been eight years since the widely publicized Stuxnet virus was released to wreak havoc on its unsuspecting victims. Are we in a better place now to deal with a highly sophisticated next-generation Stuxnet-style attack?
[bctt tweet=”Information heavy companies have entire teams dedicated to cyber defense, while American factories have been left more and more susceptible.” username=”Fronetics”]
Most experts say no. In fact, studies suggest that manufacturers, in particular, are increasingly vulnerable to cyberattacks. While information-heavy companies have grown to employ entire teams dedicated cyber defense, American factories have quietly been growing more and more susceptible.
Time to Pay Attention
Ransomware attacks, in which hackers use malware to encrypt data, systems, or networks until a ransom is paid, are alarmingly common. According to a recent report from Radware, 42% of global companies have dealt with this kind of attack. That number has been steadily rising. The number of companies reporting financially motivated attacks has doubled in the last two years.
Manufacturers — if you haven’t been paying attention yet, it’s time. This summer, about half of the organizations targeted by the sweeping Petya ransomware cyberattack were manufacturers. The recent WannaCry virus actually forced a Honda plant in Japan to halt production.
And there’s a bit more: The Wall Street Journal recently reported on what they call a new type of cyberattack that targets factory safety systems. Hackers who attacked a petrochemical plant in Saudi Arabia last year specifically focused on a safety shut-off system.
Is the WSJ right? Is this a new trend? Will hackers begin targeting control-system computers that manage American factory floors, chemical plants, and utilities on a more regular basis? Maybe.
There are plenty of theories that even the most crippling ransomware attacks like Petya and WannaCry are, at their core, motivated by something other than money, namely sheer pleasure in chaos and disruption. The potential damage to factory production and safety systems is growing. Now is the time to wake up and pay attention.
Factories Growing More Susceptible
Factories and manufacturers are at a heightened risk for a few coinciding reasons.
The complexity of our supply chains is a liability. With parts and materials from diverse and sometimes changing sources, as well as networks that can span all phases of production, our supply chains are large and constantly adapting and, because of this, extremely vulnerable.
The intensity of the manufacturing schedule raises a second issue. Many manufacturing facilities run around the clock, and halting factory production for testing is often cumbersome and costly.
The third reason is, of course, the byproduct of a manufacturing sector that has become steadily more data-driven and dependent on information technology. As manufacturing has steadily merged with technology to create the Industrial Internet of Things, we too have unknowingly created a space in which hackers see the potential for massive amounts of under-protected data, equipment, networks, and intellectual property.
How Can We Prepare
We’ve all heard the mantra, “The first step to solving any problem is admitting you have one.” A core concern has been the manufacturing sector’s inability or unwillingness to face this growing threat.
A report summary issued through a joint venture between MForesight and the Computing Community Consortium warned, “There’s a widespread failure to reckon with the risks.” The report recognizes that solving the issue will be long-term and complicated, but offers a few suggestions, including wide-reaching efforts to increase awareness, collaboration with trusted third-party partners, and cybersecurity research and development.
In the shorter term, maybe this can help. Last year the National Institute of Standards and Technology (NIST) released a Cybersecurity Framework Manufacturing Profile that provides a roadmap to managing cybersecurity and reducing risk to your manufacturing systems.
But I think Sridhar Kota, professor of engineering at the University of Michigan, hit the nail on the head in his article entitled A Plan for Defending U.S. Manufacturers from Cyberattacks, when he wrote: “Cybersecurity needs to become a deeply ingrained part of every manufacturing company’s culture — embedded in management decisions, workforce training, and investment calculations.”
The risks to manufacturers are growing from all-too-common ransomware attacks to sophisticated Stuxnet-style assaults targeting our safety systems. Its’s time that we in the manufacturing sector think of cybersecurity, and cyber defense, in absolutely every decision we make. To do otherwise is reckless.
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by Elizabeth Hines | Apr 3, 2018 | Blog, Content Marketing, Current Events, Manufacturing & Distribution, Marketing, Supply Chain
In many cases, automation in manufacturing creates leaner, more efficient operations. Efficiency facilitates new opportunities and business growth, which in turn allow for job creation.
The rise of artificial intelligence (AI) and its applications in manufacturing have driven a palpable fear that mass job loss is on the horizon. We have to wonder: is the threat as real and as imminent as many think? Like many things, the answer is more nuanced than a simple yes or no.
A McKinsey Global Institute report predicts that automation could cause the loss of between 39 and 73 million jobs by 2030 in the U.S. alone. Clearly, the AI genie will not be put back into its bottle. However, this doesn’t mean that all jobs across all sectors will be affected evenly.
Generally, low-skill jobs are more susceptible to replacement by AI. This is especially true in industries like retail, which has worked to automate many aspects along the purchase journey, including processes designed to get packages into consumers’ hands faster.
Not the end of the world
Oddly enough, 73 million lost jobs doesn’t spell all doom and gloom. Yes, people will lose jobs — that is inevitable. Automation, however, will create many more.
Think about it: In many cases, automation creates leaner, more efficient operations. Efficiency facilitates new market opportunities and business growth, which in turn allow for expansion and job creation. And these new jobs aren’t the low-skill positions of their pre-automation predecessors. They’re operating new technology, supervising automated processes, and other higher-paying opportunities.
Amazon: Case in point
Consider the retail industry’s brick-and-mortar boom and bust and the rise of e-commerce. As stores shuttered, companies had to downsize the number of individuals they employed. Then, as e-commerce boomed, e-retailing companies were able to bring on more employees — often at higher salaries than in traditional retail.
Amazon’s expansion to the “once-thriving factory town” of Fall River, Mass., offers a prime example. The city, which boasted nearly 20,000 manufacturing jobs in 1991, saw that number dip below 4,000 by 2015 — in large part due to automation. The 2016 arrival of an Amazon fulfillment center was the single largest job-creation event in recent memory.
Employment at the Fall River center has crept above 2,000 in just over a year. And it’s apparent that number will keep rising and that humans won’t be phased out anytime soon. In fact, rather than replace human workers, Amazon’s technology helps each become more efficient. That stimulates Amazon’s growth and the need for more fulfillment centers and more talent to fill those jobs.
While the majority of the Fall River center’s jobs are not skilled and pay reflects that, other benefits such as overtime, tuition aid, and company shares make annual compensation comparable to or better than what local textile mills once paid. Fulfillment center jobs certainly pay above traditional retail and offer employees the opportunity to work withartificial intelligence — rather than in competition with it.
A double-edged sword
AI in the warehouse may stimulate job growth. But those most likely to lose their jobs to automation — low-skill workers — may not possess the transferable skills to be successful in the new wave of jobs created by technology. For example, would a former factory worker who put together boxes for fulfillment be hirable for a position operating custom box-cutting machinery?
Amazon, again, exemplifies a solution. The company offers its workers significant training and education to breach any skill gaps. Those who have never had experience in a warehouse or operating technology will need companies to invest in their training to ensure those who have lost their jobs to automation will have a place in the new economy.
History repeating
This isn’t the first time we’ve encountered such an issue. Before ATMs were the ubiquitous cash-dispensing machines, many thought them the great disruptor of the banking industry. The bank teller’s role was sure to become obsolete.
What actually happened is that ATMs led to more efficiently run banks. While some jobs were lost, banks were actually able to open up more branch locations, which led to the creation of more jobs.
Will automation in the warehouse cause the same scenario to happen? Will organizations become more efficient, allowing them to grow and hire more workers at better, higher paying jobs? In many cases, it looks like it already has.
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by Elizabeth Hines | Jan 4, 2018 | Blog, Current Events, Supply Chain, Transportation & Trucking
The FMCSA is not certifying ELD vendors’ products, which means carriers must ensure devices meet the organization’s technical specifications.
On December 18, new electronic logging device (ELD) regulations went into effect for commercial vehicle fleets across the U.S. The ELD mandate has caused major waves in the transportation industry. But it has the potential to rock supply chains and manufacturers around the globe — and not just because of anticipated transportation disruptions and increases in costs.
ELD manufacturers must comply with technical specifications outlined by the Federal Motor Carrier Safety Administration (FMCSA). They must also register their devices with the FMCSA. Motor carriers might assume that selecting a device that vendors are promoting as “FMCSA certified” would be a simple solution. Amazingly, however, that certification may not be worth the paper it’s printed on.
When does “certified” not mean “verified?”
Last year the FMCSA directed carriers to a site where they could find a list of registered ELDs. The problem with this is that the devices on this list are self-certified by the manufacturer. There’s no guarantee that they actually meet FMCSA guidelines.
To appear on the FMCSA’s list, ELD manufacturers must submit certain documents, including malfunction and diagnostics and product serial numbers. However, to gauge if their product is compliant, manufacturers must conduct their own tests. And the FMSCA is not vetting documentation of the testing.
The problem with this is fairly obvious. Without mandatory testing from a neutral, third-party source, devices are subject to only the rigor of their own manufacturer’s testing. They may not follow the FMCSA’s test specifications. And, of course, less-than-honorable manufacturers could use the lack of oversight to their advantage.
Consequences, however, will fall entirely on the shoulders of the operators and their carriers using non-compliant ELDs.
Compliant today, not tomorrow
Motor carriers purchase these systems under good faith that they will meet the FMCSA’s performance requirements once in use. But the possibility is looming that some ELDs may be noncompliant. Then what?
Carriers have eight days from the time an ELD is determined to be noncompliant to replace it with a compliant one. While drivers can temporarily use paper logs, this obviously isn’t a real solution, and will leave carriers scrambling to get their ducks in a row.
Due diligence
Before selecting an ELD vendor, carriers need to understand the details of compliance and hold vendors to those standards.
Carriers should push vendors for specific information about compliance with FMCSA test specifications. Or they should seek vendors who have opted to use third-party testing companies, such as PIT Group, to independently verify ELDs meet FMCSA standards. Either way, carriers should test and verify the ELDs they have chosen for their fleets on their own to ensure compliance as soon as possible.
The coming months are bound to see many headaches from the confusion caused by FMCSA-certified (but not regulated) ELD devices. Carriers need to be aware of this now, so they can properly prepare for any issues that may arise.
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