by Elizabeth Hines | Jul 24, 2018 | Blog, Current Events, Data/Analytics, Internet of Things, Logistics, Manufacturing & Distribution, Supply Chain
Automation in manufacturing can help create more, better paying jobs. But two leading economists have examined real-world data and concluded that the robots may be winning after all. Is it true?
Last year I wrote about artificial intelligence (AI) and the potential loss of American jobs. At the time, I thought; “Yes, people will lose jobs — that is inevitable. Automation, however, will create many more.”
Automation would create leaner, more efficient operations. Efficiency facilitates new market opportunities and business growth, which in turn would allow for expansion and job creation.
It felt like a good argument! And I wasn’t alone. If one looks at media coverage from last year, one can find plenty of references to “beating the robots.”
There was a palpable feeling, an energizing hope, that automation would, in fact, ultimately create more, better paying jobs. And these new jobs wouldn’t be the low-skill positions of their pre-automation predecessors, but rather higher-paying opportunities operating new technology and supervising automated processes.
In a paper last year, two of the most respected researchers on the subject said it was likely that increased automation would create new, better jobs, so employment and wages would eventually return to their previous levels.
It all seemed positive.
This year’s news
But wait. The same researchers — Daron Acemoglu of M.I.T. and Pascual Restrepo of Boston University — published an updated study that has gained a tremendous amount of attention. It was covered in-depth by the New York Times, with the title: Evidence That Robots are Winning the Race for American Jobs.
Sadly, their study appeared to be the first “to quantify large, direct, negative effects of robots.”
In referencing the difference in prognosis from last year to this year, the NYT article noted that the older paper was “a conceptual exercise” and the new study “uses real-world data — and suggests a more pessimistic future.”
I thought, I’m going to have to write a new article. It was tentatively titled, “I Take It Back: The Data Says the Robots May Be Winning.”
But as I sat down to write, something just didn’t add up. How did all this jive with the latest employment news? Only days ago, unemployment rates hit 3.9%, a rare low, mimicking rates we haven’t seen since 2000.
Taking in the whole picture
As I looked further into the study, I found that it covered 1990-2007, a lengthy but rather unique time in our economic history. The years from 1990 to 2007 saw a dotcom boom and burst. (Just for reference, unemployment rates rose sharply in 2009 and 2010, but have been on a steady decline since then.)
The robot vs. man study said that robots were to blame for up to 670,000 lost manufacturing jobs between 1990 and 2007. I’m not arguing with the study.
But they then go on to conclude the following: The numbers will rise because industrial robots are expected to quadruple. And from where I sit in 2018, I simply don’t see the facts to support that assumption.
Let’s look at manufacturing specifically. Are machines and automation blowing up the manufacturing sector? Well, yes and no.
Certainly manufacturing jobs have had a sharp decline over the last 20 years; that’s undeniable.
But since 2000, their percentage of the overall job market has held generally stable between 8 and 9%. And current employment statistics for 2018 show increases in the manufacturing sector.
Now, I’m not suggesting manufacturing jobs are “roaring back” by any stretch. But a positive trend line is … well … positive. The prognosis of a “pessimistic future” just doesn’t seem widely supported yet by the facts. Time, as always, will tell.
Of course, economists warn that employment rates aren’t the whole picture. While they may mimic that of 2000, they warn that the economy isn’t the same and that it is concerning that wages have been slow to rise even though unemployment has fallen.
From what I see now, however, I still feel optimistic that AI and automation will create leaner, more efficient operations that will, in turn, create new (even if different) jobs. To me, it still looks like the ones winning from the increasing technological advances in the manufacturing industry are, in fact, we humans.
This post originally appeared on EBN Online.
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by Elizabeth Hines | Jun 25, 2018 | Blog, Content Marketing, Logistics, Marketing, Social Media, Strategy, Supply Chain
Aiming to deliver value outside the sales funnel allows your business to build long-term relationships with customers, rather than focusing on a single sale.
Congratulations! You closed the deal. You hammered out the terms and set up the billing. But, according to marketing experts Mark Bonchek and Vivek Bapat, now the real work of growing revenue begins.
Successful 21st century businesses focus on what happens after they close a sale, not the transaction itself. That’s because consumers — and B2B customers — have higher expectations than ever before. They read reviews, listen to webinars, and download white papers before they buy, and they expect a better experience after.
Purchase brands vs. usage brands
Bonchek and Bapat describe two types of brands: “purchase brands” and “usage brands.” The usage brands “focus on the moments of truth that happen after the transaction, whether in delivery, service, education or sharing.” As a result, they command greater loyalty and higher prices than competitive brands that are content to end their relationship with an invoice.
[bctt tweet=”Suppliers need to shift focus from persuading people to buy, to persuading them to become a committed advocate for their brand.” username=”Fronetics”]
What does that mean for you as a supplier? You need to shift your focus from persuading people to buy, to persuading them to become a committed advocate for your brand.
“Be” the B2B customer
B2B accounts are complicated. They have many decision makers and many points of contact. You may have a sales team with multiple reps and sales support people on one account.
With so much going on, it’s important to “be” the customer. Try to identify and understand the people who depend on your product or service to get their work done every day. Those are the people you need to impress.
“What is the likelihood that you would recommend Company X to a friend or colleague?” According to Bain & Company, this is the one question that most closely correlates to customer satisfaction. “High scores on this question correlated strongly with repurchases, referrals and other actions that contribute to a company’s growth.”
And what makes people recommend a product or service? Success while they’re using it.
Social media: An important part of the B2B relationship
Bonchek and Bapat say, “The purchase and usage mindsets are equally, or even more, relevant for B2B brands. Business solutions tend to have longer life cycles than consumer products and there is an even greater opportunity to deliver value outside the sales funnel.“
So yes, you may have to tweet. And stay present on LinkedIn. Because your customers look there to follow trends and find good information to help run their businesses. Industry forums, YouTube, and Instagram are also great places to provide value beyond the sale.
Don’t worry if you’re not a creative genius. Most of us aren’t. Do try to talk about issues that are relevant and maybe even unsettling to your industry. If your customers are having a problem, chances are other businesses have the same concerns and vice versa.
You probably have an opinion, maybe even a solution. Use social media to share it with a larger audience, your users will thank you for it.
How do you deliver value outside the sales funnel?
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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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