MGT: Topic 16
virtual reality
"an artificial environment which is experienced through sensory stimuli (such as sights and sounds) provided by a computer and in which one's actions partially determine what happens in the environment -lthough the term was coined in 1987, we are just beginning to see how VR might be used to enhance business productivity (see Table 16.2). By making virtual experiences/settings seem real, VR let's you ask and answer, "what would it be like to . . .?" In another application, Microsoft's VR-based hololens enables you to interact with other people as if you were in the same room—even if you are a continent away. VR Applications for Business31 See 3-D images that you can manipulate (like Tony Stark in Iron Man).Prototype new buildings (e.g., a service center), walking through them before building them.Visit a new community, experiencing what it would be like to live there.32Be trained via a hands-on simulation or seeing what you should do—step by step.Try on virtual clothing to get the right look, feel, and fit the first time.Attend a meeting with colleagues from around the world—without having to get on a plane.Let job candidates spend at a virtual day at the hiring firm to see if the job is a good fit.
stay customer centric
-Nobody puts money into a supply chain except the customer. -You need to do everything possible to meet customer needs better than rivals. Your quest begins by knowing the rules of total order performance. Order Qualifiers The minimum qualifications to be considered as a potential supplier to a company : Great quality and competitive cost get you into the game. Order Winners: Distinctiveness wins. You can differentiate via unique delivery capabilities, agility, and innovation. If you know what your customers really value, you will invest in the right differentiators. Order Losers: Being in position to win is not the same as winning. If you are out of stock on an item or can't deliver it quickly, the customer might walk away, even if she otherwise loves you. Simply put, a failure on any of the five value dimensions (cost, quality, delivery, agility, and innovation) can disqualify your company. Customers define what's important. Delivery. Amazon Prime has redefined customer delivery expectations. As a result, rapid delivery has been moving from order winner to order qualifier. People now expect one-hour delivery in New York City and two-day delivery across the United States. Although the standard in rural India may be 10-14 days, delivery times are being compressed everywhere. Cost. Walmart used to be the every day low price leader. Aldi, the German deep discounter, now beats Walmart on price by about 17 percent. How does Aldi do it? Answer: Aldi only carries about 1,200 SKUs in 15,000 ft2 stores. By comparison, Walmart carries 30,000-40,000 comparable SKUs in 100,000 ft2 super stores. You may be wondering, "Who wants to go to a store with so few choices?" Apparently, many people do. Aldi's sales are increasing by 15 percent a year in the U.S.—compared to 2 percent sales growth at Walmart.1
Big data and predictive analytics
-enable SC managers to plan and optimize in an efficient manner -rather than react in a costly manner to events that impact supply or demand patterns As an OSCM professional, you are most interested in big data for its predictive capabilities. For example, Amazon mines big data using predictive analytics to anticipate what customers will buy and when. Knowing this enables Amazon to position products closer to customers in anticipation of their orders!13 Big data may become the crystal ball you are looking for.
"(s)he who hesitates is lost"
-survival of the "fittest," the quote is true -ou really do need to start building your future skills today. To help you get a head start on insuring your future indispensability, let's take a look at some things that won't change—we call this foundational principle -Anytime you attempt to predict the future, you risk being wrong. But, given the number, and disruptive nature, of emerging technologies—among other game changers—if you don't scan and plan, you face a greater risk of being left behind!
Internet of things
A vision where low-cost sensors, processors, and communication are embedded into a wide array of products and our environment, allowing a vast network to collect data, analyze input, and automatically coordinate collective action. -According to Gartner Group, the real value of the IoT is to improve control over and visibility or operations, linking supply chain information with key customers (CRM), carriers (TMS), suppliers (SRM) and internal functions (ERP). Via IoT, you can monitor a production line, remotely diagnosing and fixing problems when they arise. Another application of IoT is asset tracking, which let's you identify the location of a physical asset, divert an in-transit shipment, or, in the future, start making an item (using additive manufacturing) on a truck that is headed to a customer's operation! The possibilities are endless.
five principals that apply to all of business
Alignment Matters. You need to make sure your efforts support the day-to-day, month-to-month, and year-to-year business goals of the organization you work for! Holistic Decision Making. You need to know how the decisions you make affect the rest of the business. If you don't, you may unintentionally destroy more value than you create. -considering how various parts of a system or process interact with each other as well as the overall outcome having a big picture viewpoint Technology is an Enabler. Don't forget that technology of ALL types is an enabler of value creation, not the end goal. Culture Eats Strategy for Breakfast. If you cultivate the right culture, good strategy, effective execution, and outstanding results will follow. Doing the Right Things Matter. If you live the preceding principles, you can take care of people, planet, and profit—all at the same time. -: You will make better decisions, be a more effective problem-solver, and help your organization create outstanding value. Let's take a closer look.
Technology
Amazon, Apple, Google, and Facebook are the world's most dominant companies—at least in terms of market capitalization, effect on the labor market, and impact on market expectations. Amazon, for instance, has transformed the retail sector, causing a restructuring of the creative economy.1 What do these companies have in common? Answer: They rely on technology-enabled business models to not just win market share but also to shape the future. Let's take a look at the technologies they are unleashing on the world and let's go in alphabetical order. By the way, these are constantly changing. So if the details sound a bit out of date—google it and get the latest.
autonomous vehicles
Aside from personal transportation, how will autonomous vehicles affect OSCM? Self-driving cars may replace taxi services as well as ride sharing companies such as Uber and Didi Chuxing. Self-driving trucks may also eliminate the driver shortage in the trucking industry. In fact, autonomous vehicles could replace 50-70% of truck driving jobs in the US and Europe by 2030—roughly 2 to 4.4 million jobs!10 And autonomy isn't limited to over-the-road vehicles. Rolls Royce has tested self-piloted cargo ships in Finland.11 By eliminating crew's quarters, these ships will have more cargo space. The potential pros and cons are shown
natural resources -air
Clean air is also essential to economic prosperity and a healthy life. Air pollution is now the fourth leading risk factor for premature deaths globally. In China, smog cuts 5.5 years from the average life expectancy.43 Overall, air pollution costs about $225 billion in annual lost labor income—and this cost estimate doesn't include low-productivity days caused by exposure to air pollution.44 Alternative energy sources are beginning to make a difference—improving air quality even in developing countries. For example, in 2017, China announced that to access its market, which is the world's largest, at least 10% of a carmaker's sales must be electric vehicles.
integrate design and control
Design. Design decisions determine where and how you deploy your assets—especially plant and equipment as well as storefronts. These infrastructure decisions can't be changed easily or quickly, but they define your long-term competitiveness. So, you really need to do your homework before making design decisions. Control. Control decisions are the day-to-day decisions that define how, and how well, you make things. If you don't have the right inventory, if you can't schedule effectively, and if you don't manage quality, you won't be able to meet or exceed customer expectations. -Importantly, world-class companies like Toyota manage design and control decisions differently. They cultivate a long-term, holistic approach to decision-making that helps them make related design and control decisions simultaneously -Great companies are always tweaking and improving the design and control of their value-added networks and processes.
cons of autonomous vehicles
Economic Loss; i.e., millions of jobs will be lost. New Risks; i.e., Cyber security issues related to potential hacking Slow Transition—The greatest benefits arise when all vehicles are autonomous, something that may take years to achieve. New Costs; e.g., need to constantly update software
natural resources- renewable energy
Fossils fuels—including petroleum, coal and natural gas—have been the dominant source of energy for over 100 years. For example, in 2015, the latest year for which global data are available, fossils fuels generated around 81% of U.S. of energy consumption.45 However, some countries are aggressively seeking to reduce their dependence on fossil fuels. Costa Rica, for example, now generates 99% of its electricity from renewables. Costa Rica aims to be carbon neutral by 2021. Scotland generates 97% of all household electricity from wind energy. And Sweden set a real stretch goal—i.e., to be the first country to eliminate all fossil fuel usage within its borders. Volvo, the iconic Swedish brand, has committed to eliminate all gasoline-only cars by 2019!46 Ultimately, innovative technology, augmented by conservation and good public policy, is the key to solving our impending natural resource challenges. Effective and innovative supply chain design can make a valid and valuable contribution. It is a very exciting time to be a supply chain professional!
I am tomorrow, or some future day, what I establish today. I am today what I established yesterday—or some previous day.
Harvey Spencer Lewis
crystal ball analysis
If you want to succeed, you will need to proactively scan, accurately forecast, and take good risks. Equally important, you'll need to stay flexible!
scenario planning: an application
Let's talk through an example. Imagine you work for a business that provides in-home senior care for today's aging population (from health care to nutrition to yard maintenance). You are tasked with creating a vision and plan for the future during an upcoming strategic-planning retreat. To help everyone prepare for Phase 1, you identify key articles that discuss emerging challenges and possible solutions. You also provide background information on demographic and psychographic trends. Your goal: You want to ground the brainstorming in the relevant facts. Your question: What will life will be like for an aging population 5, 10, and 15 years into the future. Table 16.4 lists ideas your team might come up with. Factors that will effect tomorrow's aging population Need for Companionship Access to Healthy Food Mobility Robots as Service Providers Smaller Family Sizes Longer Life Expectancy Advances in Health Care Balanced by Rising Costs
pros of autonomous vehicles
Lower Costs; i.e., no need for human operators Improved Operating Safety; i.e., elimination of human error and fatigue Better Space Utilization—Save on space and weight occupied by human operators Faster Service—Can operate continuously, providing faster service
what are millennials looking for
Meaningful work that engages them emotionally and intellectually Financial stability; i.e., competitive salary and benefits Personal and professional development opportunities Healthy and purposeful life Active community and strong social ties A workplace that adapts to them
integrated process and projects
One simple answer that has the virtue of being true is, "Supply chain professionals manage processes (e.g., assembly, lean, quality) and projects (NPD, IT implementation, strategic initiatives) to create customer value." Process Management. Whether you work for a manufacturer or a service provider, your company's survival depends on how well it manages value-added processes to meet customer needs profitably. No company—with the exception of Amazon—has ever broken this rule. But, even Amazon will need to learn to make a profit on its core online retail operations. Project Management. You may have never thought about it, but your company is constantly managing one or more projects that impact its ability to meet customers' needs profitably. Your job is to help your company establish the processes and build the teams to execute NPD, technology adoption, and other projects efficiently and with agility. . To retain customers over the long haul, Grainger must do both well. Your company is no different. Survival depends on how well you create unique value through the integration of process and project management.
During Phase 2 you and your team develop the following scenarios.
Scenario 1: One-size Fits All. Assuming a shrinking future workforce, your team suggests a large-scale governmental initiative will emerge to take care of senior citizens. The initiative will rely on emerging technologies—e.g., robotics, sensors, personal digital assistants, health monitors—to make people more self-reliant. Scenario 2: Freedom of Choice. Perceiving that more direct government intervention may become popular, your team describes a scenario where everyone who needs care is entitled to incentives and financial support, depending on his or her health condition. Seniors would use these subsidies to purchase a wide variety of care services, at many price points, from the open market. Scenario 3: Volunteering Community. Recognizing that the government may not be the solution of choice, your team ideated a volunteer-based scenario. Volunteers could include the senior citizens themselves, relatives, charities, neighbors, and school children among others. The government's role would be to coordinate the volunteer effort.
the scenario planning process
Scenario planning is part art, part science. Scenarios are built on the facts you know and the possibilities you can imagine. The key is to identify alternative views of the future and create plausible stories around them. Scenario planning can be described as consisting of three core phases: Phase 1: Identify Drivers Scenario building begins with a careful evaluation of both the facts and the unknowns. You have to precisely identify the "drivers" of the future state. Open brainstorming is vital to this identification process. Scenario teams should include people from different perspectives, and each person on the scenario team must take responsibility for identifying believable drivers. A common brainstorming technique invites team members to stick Post-It Notes to a blank wall—a process that promotes open participation. As ideas are shared, you and your colleagues are exposed to new ways of thinking. Everyone should feel free to move the Post-It notes around, placing them in emerging clusters of related themes. Once your team comes to a "consensus," you can discuss what the drivers really mean for the future. Phase 2: Create Scenarios At first, build as many mini scenarios as makes sense. Don't limit your ideation. As you thoughtfully discuss each scenario, you will begin to see themes that enable you to reduce the scenarios to the most-likely scenarios. However, be careful not to get stuck on a single scenario—especially early in the process. Settling on a single view of the future limits the discussion and exploration that you need in order to become aware of important issues and to challenge conventional wisdom. Phase 3: Define the Issues As you thoroughly examine each of your core scenarios, you will begin to identify the issues and the tradeoffs that affect performance. This discussion becomes a valuable input into your strategic planning. Scenario planning should not be limited to scenario teams. By creating compelling narratives around your scenarios and communicating them across your organization, you can generate active conversations about the future. The outcomes of these conversations will work their way into strategic plans, helping you develop needed capabilities.
scenario planning
Scenario planning is the formal process of considering alternative futures. If you're a fan of science fiction, you've probably seen the Hulu series 11.22.63 (or read the book 11/22/63 by Stephen King). In the book, the hero goes back in time to prevent the assassination of U.S. President John F. Kennedy. The hero perceives that saving Kennedy will make the future better. Historical disasters like the Vietnam War, which Kennedy's successor, Lyndon B. Johnson, accelerated will be avoided. However, when our hero returns to 2011, he finds a wasteland. Not only did the Vietnam War occur but it was a nuclear war. And Johnson's civil rights reforms never happened. By failing to consider alternative scenarios, our hero created a nightmare. By failing to consider key scenarios, you might put your company out of business. Scenarios are stories that consider "what if?" questions. Whereas forecasts focus on probabilities, scenarios consider a range of plausible futures and how these could emerge from the realities of today. They recognize that people hold beliefs and make choices that lead to outcomes. Our scenarios team considers changes such as in the global economic environment, geopolitics, resource stresses such as water, greenhouse gases, and energy supply and demand to help business leaders make better decisions. To paraphrase, if you consider the right "what if?" scenarios, you will be able to make better decisions. If you carefully track emerging game changers, you are more likely to explore the right "what if?" scenarios.
resources
Since Malthus' 1798 essay on population growth, economists have predicted that we will run out of resources, suffering famine and starvation. So far, the doomsayers have been wrong. They persistently fail to recognize the power of human ingenuity. That is, people are a part of the world's resource system, causing harm and devising solutions. Consider peak oil. In the mid 2000s, as oil prices rose to almost $150 per barrel, analysts forecast that prices would rise to $200 or more by 2018. These pundits failed to account for hydraulic fracking, which increased production dramatically, driving prices down to under $30 per barrel by2016. What does this mean? Answer: We live in a complex, dynamic ecosystem and although we need to worry about how we manage resources, we also need to focus those resources on innovation. Let's take a look at some of the resource issues that promise to affect OSCM.
human resource - talent management across generations
Talent management is the new tagline for "human resources." Beyond hiring and evaluating, talent management focuses on developing, motivating and retaining the best people.34 Developing the right talent is more and more critical in developed economies where populations are aging quickly. Despite living longer, people are having fewer children. The result: Less new talent is entering the workforce. Yet, people are leaving the work force at the same age. Consider this fact: When the US social security program was established with a retirement age of 65, life expectancy was 62 for women and 58 for men!35 In 2017, life expectancy is 81.2 for women, and 76.5 for men.36 Sixty may be the new 40? The emerging workforce shortage means that companies—and societies—need to rethink work-life and retirement expectations.
social media
The term social media was first used in 2004 and defined as, "forms of electronic communication (such as websites for social networking and microblogging) through which users create online communities to share information, ideas, personal messages, and other content (such as videos)."16 Social media has changed the way we interact, both in everyday life and at work. Without doubt, you use social media. But did you know that all that stuff you share on Facebook, Instagram, Linkedin, Twitter, YouTube is out there forever, enabling companies to try to sell you things, potential bosses to decide whether to hire you, and possible dates to swipe right—or left. The question is, "How are people using all of your personal data?" Maybe you don't want to know. -guard your reputation -Enhance their reputation as a trendsetter in the eyes of their customers. Of course, customers also use social media to learn about companies—and sometimes to expose inappropriate corporate behavior.
human resource- a flexible workforce
What percent of the American workforce is self-employed as freelancers? You might be surprised that 35% of the workforce—i.e., 55 million Americans—work as independent agents, taking on specific, short-term projects and then moving on to the next job. Work performed by freelancers generates around $1 trillion in revenue, and gives workers of all ages desired work flexibility.40 Companies value freelancers because they bring in needed talent without creating a long-term commitment and all of the costs that go with hiring a new employee. What types of jobs do freelancers do? Answer: You can find freelancers in almost all service jobs, including social media marketing, blogging, call center or chat support for technical issues, graphic and website design, bookkeeping, and more! You can track the evolution of freelancing at global websites, including upwork.com (formerly Elance), toptal.com, and fiverr.com. The bottom line: Talent management aptly describes the new human resource challenge—finding and employing the right talent to tackle today's and tomorrow's work.
the economist provocative views
What would the future look like if blockchains took over?—a real possibility. Would the world look like if borders were open?—not likely to happen. What would happen if America's grid crashed?—a nightmare scenario. -Borrowing from this tradition, let's identify and explore the game changers that promise—or threaten—to transform OSCM. Some are here already (social media), some are coming (the Internet of Things), and some have been talked about for a long time, but have not yet arrived (artificial intelligenc
robots
Workforce Enhancement. As the fastest-aging industrialized nation, Japan faces a serious shortage of productive workers. Sixty year olds possess neither the strength nor the stamina of a younger worker. The solution: Employ exoskeletons to help retain aging but skilled employees who would otherwise need to retire or seek out a less-intensive job.21 Similarly, Ford has begun pilot tests of EksoVest, an exoskeleton designed to minimize fatigue and repetitive stress injuries, among its manufacturing plant workers.22 The ultimate goal of incorporating robotics to enhance worker capabilities is to meld worker experience and cognitive skill with robotic strength and endurance. Workforce Replacement. Exoskeletons extend worker longevity, but they are not a complete response to the labor shortages emerging in Japan and China.23 Fully automating work via robotics is thus taking on a more prominent role in process design, replacing human workers in areas with either high labor costs or a very shallow labor pool.24 Today, you can already find robots in the following non-traditional roles: Minimum wage increases in San Francisco motivated CaliBurger to deploy Flippy, a robotic chef, to replace its burger cooks in restaurants.25 Amazon is testing a robot-run supermarket to minimize labor costs. In fact, Amazon's prototype only has three human workers.26 In Japan, hotels are experimenting with AI-enabled robots to check in guests and to provide concierge services.27 These robots are learning to respond to human emotions—and to new situations.28 People, especially seniors, who live alone now rely on robots for both care and companionship.29 Over time, and as the technical capabilities of robots continue to grow, the use of robots will only be limited by the cost equation—and by our imagination.
integrate people and technology
everything you do revolves around obtaining and using resources better than rivals. Your goal: Create superior customer value. Your two most important resources are your people and the technology that is embedded in your products and enables your processes and business model. Competency Management. No company, including yours, possesses all of the resources and skills to do everything customers expect. You therefore need to figure out what assets and activities that you should own and how you can leverage them with partner capabilities. One rule of thumb is, "Do what you do best, consider outsourcing the rest." Orchestration. Orchestration is the skill that enables you to bring the resources of your firm's network together. Orchestration involves selecting the right team members, assigning them the right roles and responsibilities, and cultivating the right relationships. Empowering people and using technology as an enabler will help you turn the resources that everyone has access to into unique competencies that create outstanding value.
artificial intelligence
lways asking, "what's next"? In the past few years, computing power has progressed enough to promote "Space Odyssey's" man-versus-machine storyline. Consider two milestone events: 2017: Alphabet's DeepMind AlphaGo beat the world's number one player in the ancient board game Go. 2017: Alphabet's DeepMind AlphaZero taught itself to play chess in 4 hours before beating the world champion chess program in a 100-game challenge.6 AI's power stems from its ability to enable machines to go beyond preset algorithms programmed by software engineers and become self-learning entities.7 Simply put, AI increasingly lets machines mimic human intelligence, including complex reasoning and decision-making. Does this sound a little scary? Elon Musk, founder of Tesla and SpaceX, and physicist Stephen Hawking think so. They have warned that AI is humanity's biggest threat.8 Yet, AI is already pervasive. From Google's search algorithms to computerized personal assistants (e.g., Amazon's Alexa, Apple's Siri, Microsoft's Cortana) to Netflix and Spotify's purchase recommendation apps, AI is helping companies help their customers manage everyday life.9 As AI's functionality increases, the man-versus-machine question will continue to arise. You may begin to wonder, "Is AI a complement or a competitor to humanity?"
Additive Manufacturing
often called 3-D printing, is making one-time science fiction (think Star Trek's replicator) conceivable—i.e., something you might see in your lifetime. Indeed, 3-D printers have already been used to make everything from airplane parts to automobiles and from human tissue to wearable exoskeletons that enhance human strength and endurance on the job.2 More importantly, 3-D printing capabilities are expanding rapidly New Product Development (NPD). Additive manufacturing is speeding the development and testing of prototypes from months to days. Spare parts. By making it possible to print one-of-a-kind spare parts in distant locations—e.g. a mine in Chile's Atacama Dessert or an aircraft carrier—3-D printing is changing the cost/availability equation of spares fulfillment. Invention. If you cannot afford 3-D equipment, third-party design shops and logistics service providers like UPS are investing in 3-D printing to let you join the maker movement. Shopping Behavior. Always looking to deliver faster and more profitably, Amazon has applied for a patent to install 3-D printers in delivery vans so it can print your order en route to your home or office.
the McKinsey Global Institute
released a report that is highly relevant to any supply chain manager trying to prepare for the future. The report was titled, "Jobs Lost, Jobs Gained: Workforce Transitions in a time of Automation The Big Finding: Job Displacement. The McKinsey study estimates "that between 400 million and 800 million individuals could be displaced by automation."2 Importantly, many of the lost jobs will disappear in developed economies—73 million in the U.S. The Big Takeaway: New Skills. Not surprisingly, the most pertinent takeaway is that in the future, companies will create value differently. To succeed, you will need new skills—and very likely quite different skills. -Are you ready to be an adaptable lifelong learner
industrial knowlege
they struggle to attract and retain millennials—a generation of workers who march to their own beat. What do millennials, the roughly 73 million (in the US) born between 1980 and 1996—want? One key behavior of millennials that other generations just don't grasp is their willingness to walk away from a job they don't find meaningful. However, because millennials wait longer to marry and start families, they are more flexible to walk away. Further, millennials tend to believe that life is too short to have a job that drags them down. Ultimately, to entice both old and young workers to join their teams, companies are experimenting with flexible hours, part-time work, and more concerted efforts express that employees are valuable—and valued. At the same time, companies are simultaneously experimenting with AI, robots, and autonomous vehicles. The goal: Operate more efficient and processes that are less people dependent. As technology advances, the day may come when robots take our place in the workforce and jobs just don't exist. Some pundits view this change as inevitable. Countries like Canada, Finland, and Switzerland are beginning to explore Universal Basic Income—a system that guarantees everyone a minimum income level.38
in phase 3
your team identify the issues that are consistent across your three scenarios—as well as those that are distinctive. Take a minute to do a little brainstorming. What outcomes and issues for each scenario? Here are a few ideas you may have come up with. Scenario 1: One-size Fits All. The key is automation. How much should you be investing in new technologies and training your people to use them? Your goal: Set the new standard. If automation does define the future and you don't lead the transformation, you could be out of business. Scenario 2: Freedom of Choice. Given your current offerings, you think you are well positioned for growth. The key is to manage costs as you invest in market visibility and a strong reputation for outstanding, personalized care. Scenario 3: Volunteering Community. In a volunteer-driven environment, you might be pushed out of any services that don't require professional training (such as nursing) or don't benefit from economies of scale and scope. Becoming the coordinator of choice might be a new opportunity.
