TMCnet Feature
June 24, 2019

Abdallah (Abe) Salloum Analyzes Technology's Influence on Supply Chain Management

For the first time ever, online U.S. retail sales surpassed the sales of general merchandise stores like department stores, warehouse clubs and supercenters in February 2019 according to the Commerce Department. 

As consumer purchasing behavior rapidly shifts from being concentrated within retail outlets to being conducted online, so too is the intricate balancing act of supply chain management (SCM) that is constantly evolving for many companies.

Abe Salloum, the Senior Executive for Supplier Management at General Electric Healthcare, says that the fracturing of consumer buying habits is making management of the supply chain more complex. However, new technologies are also rising to meet the challenge, promising supply chains that are more efficient and less expensive.

Salloum, who has decades of upper management and supply chain experience under his belt, including formerly serving as the global head of supplier quality at TRW Automotive, examines some of the technologies that will or already are impacting every aspect of the supply chain.

Autonomous Driving is Paving the Way to Decrease Transportation Costs

Tesla already has an autonomous, all-electric semi with a 500-mile range making test runs on American roads and Elon Musk’s company has already taken preorders for the vehicles from companies like Walmart, Pepsi, Loblaws, and JB Hunt.

It’s no surprise that companies are eagerly awaiting autonomous vehicles, as Abdallah Salloum says U.S. companies spent nearly $600 billion on motor carriers in 2016, which accounted for two-thirds of their transportation costs and over two-fifths of their entire business logistics costs.

Bernstein estimates that autonomous trucks could save the industry over $100 billion, cutting labor costs by as much as $300 billion, which would be offset by the cost of the vehicles. Tesla’s all-electric semi is doubly desirable given that it will also enable companies to lower their carbon footprint and cut their fuel costs, which amount to about half the cost of labor according to Salloum.

AI is Revolutionizing Supply Chain Processes and Customer Interaction

Abe Salloum points to AI as the one technology that will dramatically upend how supply chains are managed. AI has already heavily impacted the production processes at many manufacturing companies, but that’s just the tip of the iceberg in terms of its capabilities.

Advanced AI systems will be capable of monitoring and making instantaneous decisions across a broad spectrum of functions within the supply chain, from assessing and ensuring the performance of machines on production lines, to efficiently managing inventory.

AI is also being put to use in dealing with customers in the form of chatbots, which are increasingly popping up on companies’ websites. These conversational systems are capable of making sales, upselling products, handling transactions, and setting up delivery, all without the involvement of a human agent.

Wearable Technology is Changing How Work Gets Done

Wearable technology comes in many forms and is rapidly being adopted across the supply chain, particularly in warehousing. Amazon is one of the companies putting this technology to great use, outfitting their warehouse employees with wearable wrist devices that help them locate products and update customer ordering data.

Abdallah Salloum says virtual reality and augmented reality devices like Google Glass also have the exciting potential to disrupt supply chain management in various ways, such as by giving workers unfettered access to on-screen data and programs that will speed up their work processes. Health-monitoring wearables like Fitbit are also seeing wider adoption by companies as they seek to improve employee productivity and limit lost hours. 

According to supply chain solutions company MHI’s 2018 Annual Industry Report, wearables will see one of the largest jumps in supply chain adoption over the next five years, rising from 23% to 72%.

Predictive and Prescriptive Analytics Will Provide Unmatched Forecasting Capabilities

By sifting through mounds of historical data to extract (and then react to) the most pertinent information, predictive analytics will give companies crystal ball-like power to anticipate future events and even the far-future events that could be spawned from those future events.

Abe Salloum says that predictive analytics is beginning to enjoy greater adoption in e-commerce, where it’s used to show customers potential products to buy based on a combination of their own actions and the historical actions of other shoppers.

Salloum predicts this technology will also see greater use across the supply chain by allowing companies to avoid inventory shortages and to accurately assess the potential strengths and drawbacks of their decisions, such as their plans to expand into a new market.

Abdallah Salloum’s Final Thoughts

It is clear that each of the above technologies has and will continue to disrupt the supply chain management and the entire logistics industry, but what is not known is to what extent. The above technology is used to expedite processes, reduce human error, create eco-friendly solutions for major environmental issues, and increase the overall efficiency of logistics. According to Abe Salloum, technology in the supply chain is here to stay, we must find ways to promote sustainable growth through continued efforts in disruptive technology.

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