Gearing Up for 21st Century Supply Chains

Intuitive networks hold great potential for businesses — if they seize the opportunity.

The way we move goods has never been static. In the 1940s, innovation meant streamlining processes with forklifts and ocean-bound shipping containers. Then computers brought ones and zeros into the mix, and suddenly we could make better, faster decisions to modernize our supply chains. Our systems are getting smarter every day, with decades of progress to build on.

But today, the term progress doesn’t begin to describe the pace of change. The smart networks we know so well are becoming intuitive networks.

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The smart networks we know so well are becoming intuitive networks.

A supply chain in 2017 is interconnected, updated in real time and constantly evolving in response to shifting consumer demands, economic trends and business realities.

And out of these shifts comes one urgent, global and all-encompassing question: Are we ready?

Rapidly accelerating technological developments and rising customer expectations mean profound change for retailers, consumers and delivery service providers, not just in 10 years, or five, but tomorrow — and yesterday.

As we try to answer whether our economy is ready to capture the power of these rapidly evolving supply chains, the answer comes in three parts: the good, the bad and the beautiful.

The good

Never in the history of commerce have we had more powerful tools at our disposal. We can now develop intuitive machines that learn to make decisions based on new data. We have 3D printers that allow unlimited customization and reshape the manufacturing landscape. The Internet of Things connects the smallest of businesses to global networks.

To put it simply, consumers want it all, and technology says they can have it.

And it is not just consumers who can realize the benefits of technology. Suppliers and logistics providers stand to gain from these developments, too. Our modern technology allows for complete transformation in how we think about the transparency of our network — with blockchain technologies and big data providing new ways to analyze, secure and evaluate the movement of goods.

Technology also drives new efficiencies, where vehicles can operate without drivers, and robots can sort and select from warehouse floors at unparalleled speeds.

So there is no doubt that technology and intuitive networks hold a great deal of promise for creating better, faster and more flexible relationships between consumers and suppliers. But these advancements alone will not get us there.

The bad

The struggle for our supply chain’s future comes not from a lack of tools, but from the risk of missing opportunities. If businesses wait for customers to tell them what they need, it will be too late. For the retail industry, e-commerce is certainly on the rise — topping $2 trillion in 2016. But that is just 8.7 percent of the total retail market, and companies and supply chains must be nimble enough to embrace the drastic change that lies ahead.

Investing in technology improvements is not enough to keep up with change. The technology firm Gartner estimates that for every dollar invested in innovation, you need seven dollars invested in implementation to make it pay off. Information technology infrastructure is critical to taking advantage of the new tools, gadgets and processes of the information age.

Nobody has the luxury of innovating at their own pace.

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Nobody has the luxury of innovating at their own pace.

It’s not just businesses that have a role to play. Many governments are still trying to find comfort with the implications of the internet, cloud technology and free-flowing data across borders.

They seek to keep their data local or layer on redundant security requirements. The price for that control is the rest of the world is moving on without them.

We also see this anxiety in a reluctance to promote workable trade rules that harness the power of technology to drive intuitive supply chains.

The customs, single-window approach for clearing cross-border goods can powerfully streamline trade — but what good is an electronic platform if all the relevant government agencies are not at the table, or if paper continues to clog up the system? What good is pre-clearing goods prior to arrival if authorities put a hold on them until duties and taxes are paid?

We need governments to create customs rules and use technologies that engage with the realities and demands of new global processes. And as elusive as they may seem at the moment, we must continue to fight for fair and equitable rules of trade. These times call for pragmatic and courageous efforts that create policies to facilitate rather than frustrate the inevitability of e-commerce.

The beautiful

And out of the good and the bad, we arrive at the beautiful. Perhaps it takes an engineer to call a supply chain beautiful, but when you step back and look at how a new-age supply chain can change the world, beautiful is the perfect word.

Intuitive supply chains will accelerate the possibilities for even the smallest entrepreneurs. Small businesses will be able to compete like big businesses, and vice versa — enabling growth, jobs and innovation.

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Small businesses will be able to compete like big businesses, enabling growth, jobs and innovation.

We have seen the glimmers of this future already — like when UPS partnered with Zipline, a drone manufacturing company, to deliver blood supplies to remote areas of Rwanda, where roads are often impassable. But this is only the beginning.

Given the incredible power of the new tools at our disposal, it might be tempting to see the future purely as a technology story. And no doubt technology has democratized solutions and accelerated progress. But people make this technology truly transformational, leveraging their power through sound policy and new ways of thinking.

The season of change is already separating the winners from the losers.

The winners will be those who invest aggressively in the good, who understand and address the realities of the bad and who can embrace the incredible potential to change the world with the beautiful.

The winners will constantly ask, answer and then ask again one compelling question: Are we ready?

And with that mindset, the answer is yes.

UPS Chief Information and Engineering Officer Juan Perez spoke on May 17 at the U.S. Chamber of Commerce’s Annual Global Supply Chain Summit in Washington, D.C., which focused on critical issues influencing supply chains today and into the future.


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Juan Perez is Chief Information and Engineering Officer at UPS.

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