It’s still the right time to invest in next-gen technologies

At first glance, you might think that the current business shutdown will put the brakes on the adoption of next-gen technologies like 3D printing, autonomous mobile robots and blockchain. Afterall, when the dust settles, many companies in business in March may be gone or on their last legs when business resumes in the coming weeks or months. The remaining businesses may be short of cash. But Jordan K. Speer, research manager, Global Supply Chain, at IDC, argues that this is a time of “challenge meeting opportunity,’ and that the adoption of next-gen technologies “will be accelerated, some immediately, some over time, by the demands made on the supply chain by this global pandemic.”

Those are some of the takeaways from Speer’s recent IDC Perspective: Supply Chains in the Post-COVID-19 Era: Changes to Expect. It’s a great read, based on IDC, 2020, the research firm’s 2020 supply chain survey. Perhaps most important, the survey was in the field at the end of March, while we were all experiencing a lockdown. The insights are fresh and reflect our current situation.

It may seem intuitive that companies strapped for cash will think twice about further investments in automation and technology, especially given the number of people who have suddenly found themselves in the unemployment line. Speer, however, believes that the factors that were driving automation in the supply chain as recently as two months ago have not gone away – not even the shortage of labor. Rather, she thinks they may be greater now. She points out that the top drivers of supply change in the recent survey weren’t different in late March than you would’ve expected in January:

The need to adopt new technology,
Handling growth,
Keeping up with competition, and
Internal demands

She expects to see technology and automation investments across supply chain functions, from planning to manufacturing to order fulfillment and transportation.

Nor does Speer expect the labor shortage to go away. “Let’s say the economy kicks in,” she says. “A lot of people who lost their jobs will go back to their old positions. And, if you consider that many of the people who lost jobs were in the service sector, you have to ask: How many waiters or waitresses will suddenly go to work in a warehouse?” Good point.

One other consideration: Taking touches out of the process could take on a whole new meaning once we’re all back to work. Pre-COVID-19, we talked about making processes more efficient by reducing the number of times a product was touched; efficiency will still be important Post-COVID-19, but so will alleviating human handling to keep surfaces as free of contamination as possible. We’re already seeing commercials from pizza makers touting the fact that the first time your slice is touched after it goes in the oven is when you take that first bite at home. Litco International, a producer of pallets molded under high heat and pressure is advertising that no one handles its pallets from the time the raw materials go into the mold until they’re touched by your people at your facility. I expect to see more suppliers in our industry making similar claims when possible.

For reasons such as those, Speer expects to see an uptick in the adoption of robotics, including piece-picking robots. And longer term, she writes in the Perspective “expect an uptick in ‘dark warehouses’ – fully automated facilities whose ... systems … manage warehouse operations without humans.”

Like Speer, I realize that the economic outlook right now is bleak. At the same time, I think the outlook for our industry remains strong. As I noted on a webinar the other day, consumers may cut companies some slack during a crisis when the item they usually receive in two days isn’t delivered for a week – or longer. But when the crisis is over, most consumers will be less forgiving. The companies that win will be those that continue to accelerate investments in their supply chain capabilities. Laggards will have no choice but to follow.