Fixing the Supply Chain with AI and Robotics

Automation, industrial robots, and other technology solutions have allowed manufacturers to shorten their supply chains, while also making them more efficient and reducing labor costs. One of the many lessons learned from the COVID-19 pandemic was just how fragile the global supply chain is. For decades, much energy has been spent streamlining the supply chain, building efficiencies, and finding low-cost options — but the result has been an increased vulnerability to shutdowns, labor shortages, and other disruptions tied not just to the pandemic but also to the global economy and the war in Ukraine. “With COVID, the level of volatility in supply chains rose to a level that was unprecedented and caught a lot of people by surprise — and not in a very good position,” says Claudio Knizek, global leader of Advanced Manufacturing and Mobility at EY-Parthenon. “There’s always been interest and appetite to understand and predict the supply chain, but now more than ever many companies are looking for technologies and software to predict supply chain issues before they happen.” Technology solutions range from an ever-increasing use of industrial robots to tapping into more powerful uses of data, artificial intelligence, and machine learning to gain effective insights. Organizations are looking for new ways to run their manufacturing and distribution operations with fewer people, while making more prescient decisions that can help avert shortages. Adding Automation to the Supply Chain The digital technology conglomerate ABB surveyed hundreds of American and European business executives on topics including supply chain plans. Just under half said they plan to use robotics and automation to build supply chain resiliency. Technology solutions range from an ever-increasing use of industrial robots to tapping into more powerful uses of data, artificial intelligence, and machine learning. A key aim, of course, is increased efficiency, and one result of relying a bit less on human efforts is added flexibility when making location decisions. A big factor in the recent supply chain turmoil has been the increasingly global reach of operations. If finding cheaper labor was a big driver behind overseas operations, automation can make it more feasible to locate operations closer to home. Indeed, the ABB survey found that more than a third of executives were making plans to bring production back to the U.S., and a third said they’d look at nearshore locations for new operations. In all, the survey found that 70 percent of companies are considering reshoring or nearshoring projects. “There is an increased appetite to bring manufacturing and supply chains closer to end markets, closer to the U.S.,” Knizek says. “There are benefits to having sourcing closer to the U.S., Mexico, or South America.” To be sure, costs remain lower in China and Southeast Asia, he says, and China has noteworthy supplier infrastructure advantages. “But increasingly, firms are looking to find ways to move production back to U.S. but need to lower costs and make the return on investment work.” “Around 2015 to 2016, technology kind of finally caught up to a certain extent with promises it was making,” says Jason Bergstrom, Deloitte’s Smart Factory Go-To-Market leader and a partner in the firm’s manufacturing practice. Manufacturing, he says, has really started to shift from a human-centered operation to a process that’s increasingly automated. “We’ve seen technology really catch up and advance at an exponential rate and have made that shift to what we now think of as a hybrid — humans and machines operating together.” The Future of Automation Automation is getting better and cheaper all the time, on the production line and in the warehouse, according to Bergstrom. “The level of the bar between what should be done by a human and what can be done by a machine continues to fall on a cost basis and rise on a capability basis,” he says. “What made sense to automate in 2015 looks very different today because of the continually falling costs to automate combined with the fact that you can now do so much more as you transition from weak automation to strong automation.” Less than a decade ago, he says, “you’d see just the automating of transactional, discrete tasks that required really no logic,” he explains. “A series of steps…a human used to do them, now a machine does them — easy to codify, with almost no logic.” To use an automotive manufacturing example, imagine having a piece of plastic move into a fender press, and rather than have a human run that press, a machine conveys the plastic through and […]

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