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AdexinBlogBecome autonomous by 2035 like 45% of supply chains

Do you expect to become autonomous by 2035? - 45% of supply chains confirmed this trend

Jan 19, 2024
5 min

Summary

Companies in the supply chain are now focused on taking steps towards critical technological advances that will enable their business with autonomous operations. There is a significant emphasis on self-driving vehicles, which, in fact, support logistics and transportation solutions. When we consider the supply chain context, the application of self-guided vehicles (SGV) is an ongoing trend affirmed by many of today's companies. Nearly half of the respondents in the latest report from The Business Continuity Institute (BCI) from the UK have confirmed that they are transitioning their business operations to become autonomous by 2035. [1]

How to automate 70% of operations?

Supply Chain Management covers many operations, and sophisticated planning, which is essential for selecting the best possible carrier within the procurement process. You need to combine and optimize distribution and production sequences. Each principle for covering the entire subject was well defined by the Supply Chain Management Review. These principles have a visible influence on measurable results regarding autonomous operations. Here are these principles [2]:

SCM fundamental principles
SCM fundamental principles
  1. Segmentation of customers based on the service needs and consequent adaptation.

  2. Creating a responsive logistics network that seamlessly adapts to service requirements.

  3. Vigilant interpretation of market signals and harmonious demand planning throughout the supply chain.

  4. Personalizing products close to the customer to accelerate communication throughout the supply chain.

  5. Strategic sourcing management to tactically reduce the total cost of ownership of materials.

  6. Formulating an expansive supply chain-wide technology strategy to facilitate nuanced decision-making and provide a transparent overview of product, service, and information flows.

  7. Adopt cross-channel performance metrics as a collective measure of success in effectively reaching the end user. [2]

Each principle is linked to more autonomous operations that create less dependent businesses and are better tailored to business needs. But the sixth principle mentioned, which is about a supply chain-wide technology strategy, defines autonomy as a requirement, as it represents current technology development supporting all mentioned areas along with self-driving vehicles and solutions for the supply chain. Many examples illustrate the natural outcome of autonomous supply chains and applications of self-guided vehicles.

Study case #1: Self-driving robots perform 70% of tasks in the "smart warehouse" from Alibaba (H3)

In 2018, Alibaba, one of the biggest retailers in the world, established the first smart warehouse with more than 700 robots responsible for moving goods to designated areas where employees can pick up items and ship them further. The deployment was focused on a warehouse floor with a facility covering about 3000m². [3]

Study case #2: Autonomous vehicles will handle up to 85% of last-mile deliveries by 2025 (H3)

In recent years, many companies, such as logistics providers like FedEx or UPS, have launched pilot programs and implemented new models for same-day delivery. UPS is starting deliveries by using Waymo's autonomous Class 8 trucks. According to McKinsey's forecast, autonomous vehicles will handle 85% of last-mile deliveries by 2025 (McKinsey, 2016). [4] [5]

Supply chain leaders' investment in innovation exceeds 74% in 2023

Researchers at McKinsey analyzed over 2,000 work activities spanning more than 800 occupations. The study examined the time allocated to specific tasks and evaluated the potential for automating these activities. [6]

The statement from McKinsey clearly shows that there is a right moment to break industrial trends. As stated in The 2023 MHI Annual Industry Report, more than half of respondents have condemned their investments in innovations, including autonomous operations and green energy developments. More than 2000 companies have stated that they will invest in the following areas:

  • Artificial Intelligence (AI)

  • Blockchain Technology

  • Cloud-Based Computing & Storage

  • Internet of Things (IoT)

  • Inventory Management & Network Optimization

  • Predictive Analytics

  • Robotics and Automated Systems

  • Self-guided vehicles (SGV) and automated guided vehicles (AGV) 

  • Sensors and Automatic Identification

  • Wearable and Mobile Technologies

  • 3D Printing

Year over year average investment in innovations
Year over year average investment in innovations

Custom software development

Focusing on all these areas, custom software development is a significant requirement. When we use SGV or AGV as an example, it is an electric vehicle that runs on pre-programmed software to operate in a controlled space, moving within fixed paths and known locations using guidance. It means these vehicles directly apply to the supply chain, supporting warehouse operations. There must be software in place to integrate all logistics legacy systems. The chart below shows the growing value of software compared to traditional vehicles. [3]

Hardware vs Software in supply chain
Hardware vs Software in supply chain

A very important aspect for each industry is data collection and automation. These areas are crucial for autonomous operations. Only by collecting data within supportive software do companies have a chance to be more accurate in their predictions.

Autonomous operations require fast data processing that cannot be performed by the typically used Excel spreadsheet. Data collection is one of the biggest problems in today's supply chains. Companies strive for data quality, for all costs, to implement more efficient solutions that can improve future operations and contribute to technology development toward autonomous operations.

The most commonly used tools in supply chain
The most commonly used tools in supply chain

Final takeaway 

The autonomous supply chain is a closely emerging reality, but no company will likely become independent, in the supply chain context, in the next few years. Because of its nature, there is not much room in the supply chain for the complete elimination of technological shortcomings.

The autonomous supply chain highly depends on custom software development that finds ways to integrate various systems. It is how companies can shorten the path of digital transformation towards autonomous operations and eliminate technological shortcomings in the supply chain.

At Adexin, we're closely monitoring recent developments in transportation, logistics, and the supply chain. By understanding ongoing trends, we can help businesses be more agile in these uncertain times. Contact us today to learn more about custom software development for your industry.

Reference:

[1] BCI Supply Chain Resilience Report 2023; Retrieved from: https://www.thebci.org/resource/bci-supply-chain-resilience-report-2023.html

[2] 7 Principles of Supply Chain Management; Retrieved from: https://www.slideshare.net/ifuchfuhg/7-principles-of-scmpdf

[3] Self-Guided Vehicles Impacts in Supply Chain; Retrieved from: https://core.ac.uk/download/pdf/200986906.pdf

[4] Where machines could replace humans—and where they can’t; Retrieved from:  https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/Where-machines-could-replace-humans-and-where-they-cant-yet

[5] The 2023 MHI Annual Industry Report; Retrieved from: https://www.mhi.org/publications/report#download10

[6] How customer demands are reshaping last-mile delivery; Retrieved from: https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-insights/how-customer-demands-are-reshaping-last-mile-delivery

[7] UPS will make deliveries using Waymo’s autonomous Class 8 trucks; Retrieved from: https://www.theverge.com/2021/11/17/22787278/ups-waymo-autonomous-truck-freight-texas-deliveries

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FAQ

What is the importance of autonomous operations in the supply chain?

Autonomous operations in the supply chain refer to integrating self-driving vehicles (SGVs), artificial intelligence, and other advanced technologies to increase efficiency and reduce reliance on manual processes. These innovations provide seamless planning, procurement, production, distribution, and customer contact, supporting a more agile and flexible supply chain.

How do the core principles of supply chain management relate to autonomy?

The core principles of supply chain management, as identified in the Supply Chain Management Review, provide a framework for achieving autonomy. These principles include customer segmentation, responsive logistics networks, interpretation of market signals, product personalization, strategic sourcing, technology strategy development, and multi-channel performance indicators. Adopting these principles leads to less dependent businesses and better-aligned operations.

Can you give real examples of autonomous supply chain operations?

"Alibaba's 'smart warehouse' employs more than 700 self-driving robots to handle tasks such as moving goods in the facility. In addition, significant logistics providers such as FedEx and UPS are investing in autonomous vehicles for last-mile deliveries. These examples demonstrate the practical application of autonomous technology in streamlining warehouse operations and transportation efficiency.

In what areas are supply chain leaders investing in innovation in 2023?

According to MHI's annual industry report 2023, supply chain leaders are investing in a variety of innovative areas, including artificial intelligence (AI), blockchain technology, cloud computing and storage, the Internet of Things (IoT), robotics, autonomous vehicles (SGVs) and others. These investments increase efficiency, automation, and overall supply chain performance.

Why is custom software development critical to autonomous supply chain operations?

Custom software development is key in integrating autonomous technologies such as self-driving vehicles (SGVs) and automated guided vehicles (AGVs) into the supply chain. The software facilitates coordination between logistics systems, ensuring smooth operations and communication. As can be seen, the value of software in autonomous operations surpasses traditional vehicles, underscoring its importance in modern supply chain management.

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