Posted by Adam Polka | March 8, 2022
For a supply chain organization to survive in the future, it needs to adopt new and more intelligent technology as a norm. This is not hyperbole. This is about keeping pace with the rate of change in market dynamics, truly appreciating the consumer psyche and realizing that the current struggle with labor is not just a spike. But as Nabil Malouli, vice president at DHL Supply Chain, contends, it’s not about waving a magic wand and manifesting a fully digitized and automated supply chain operation; rather, “The most important right now is really to be able to adapt to the technologies that are available out there.”
That was at the heart of my conversation with Nabil on the latest episode of The Great Supply Chain Podcast, The MODEX Episode: How are Supply Chains Adapting to E-commerce Expectations. We explored several themes around adapting to consumer expectations and the technologies that are enabling that adaptation, always relating it back to actionable insights for companies of all sizes.
With many years of experience in the world of e-commerce, Nabil helps DHL meet next-generation supply chain expectations through fast and sustainable solutions. Together with Guy Courtin, Bill Denbigh and myself, Nabil touches on the changing role of the warehouse, keeping pace with fulfillment expectations, robotics and their impact on contemporary labor challenges, and the role of the gig economy in modern fulfillment.
We kicked off by talking about disruption, a term near tantamount to supply chain these days. Running counter to much of the noise in the industry (a serial offender myself), Nabil claims that we have not seen a true supply chain disruption in the industry. He characterizes the massive shifts we’ve experienced as an acceleration rather than disruption. Still, I see the acceleration as having been prompted by a series of disruptions at the intersection of digital consumerism and a global pandemic. Where we vehemently agree is that there has been no technology disruption; robots and drones, even the most advanced, are merely making more efficient, more digital and more system-driven the processes that are already being performed. A disruption is something that changes the way we operate, and ultimately, we are just operating the same way, but more intelligently.
One major catalyst for what is likely to become a disrupted industry, however, is supply chain convergence. This is one area that Nabil noted is fast-tracking complexity.
“There are no rules anymore and segmentation of companies becomes really, really hard,” Nabil explains. That convergence translates into massively more complex fulfillment. It used to be pretty linear and straightforward; a container heads to a distribution center, gets broken down to the pallet and case. The pallets and cases head to a retailer, get broken down to eaches. The eaches get picked up by consumers and transacted at the register.
Fast forward to today’s reality and that linearity is quickly getting twisted by any number of disintermediated transactions spurred by digital commerce and omnichannel fulfillment. Nabil shines a light on that ecosystem and how to make moves to drive value within it.
Navigating that massive complexity, as Nabil contends, is not about carrying the weight of the world on your shoulders, but weaving together the right network of partners and suppliers to deliver on expectations. Two major themes in this part of the discussion are the outsourcing of certain logistics activities through the gig economy and the introduction of automation as a means to offload dependance on human capital in a challenging labor environment.
On the gig economy, Nabil notes, “I think the gig economy is here to stay. […] I think the combination of social change plus technological one is the most powerful combination. And we are really in the middle of that. COVID has been a big catalyst for this because all the delivery networks were at full capacity and when you have that type of situation, [the gig economy] becomes a very appealing value proposition.”
Where the gig economy addresses labor volatility in the last mile, automation addresses it in the warehouse. Nabil surmises, “The cost of labor is going to be what will drive adoption of technology at a much faster pace.”
When the conversation turned to automation, having Guy, vice president of Industry and Advanced Technology, on the podcast was fodder for fantastic insight. It was refreshing to hear two advocates for supply chain automation and robotics discuss practical and viable solutions at any scale and for companies of any size. In nearly the same breath as sharing the news that DHL had just invested millions of dollars in innovative robotics, Nabil highlights ‘light automation’ as a low investment mechanism that companies of any size can explore:
“You can get a 40% [productivity] increase into your operation and with very light and very low investments. I think we’re going to see a large number of new companies coming into the space that are going to focus on that small and medium sized segment.”
It is exciting times in supply chain. Nabil did a wonderful job in shining a light on the changes on the horizon and how supply chain organizations around the world are well positioned to stay ahead of the curve of innovation. Our conversation brought about an array of ideas and insights that I have tried to summarize below.
Despite the big moves to adapt to accelerated digital adoption, there has been no disruptive big bang in the supply chain industry. It is evolving based on consumer behavior and preference, but the core anatomy of supply chain has remained intact.
How does the gig economy factor into modern customer experience? Who owns the customer relationship? What is the impact of the gig economy on labor woes? As we architect out these omnichannel fulfillment strategies, we are empowering customers to choose how they spend their money, but we’re also farming out our company persona, which must be done judiciously.
Many North American supply chain operations are investing aggressively into system-driven processes more reminiscent of their European counterparts, where labor and last mile conditions have demanded more advanced supply chain technology to remain competitive. Further east, we can look to Asia as being at the bleeding edge of supply chain automation, especially around manufacturing. While they don’t have the same geographical constraints as we see in Europe around fulfillment and warehousing, ‘trickle-down automation’ puts them ahead of the curve and an excellent use case. While the geography is new, the supply chain fundamentals are not; what can North Americans learn from European and Asian automation in the warehouse?
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