Transformation Age: Shaping Your Future, the third publication in the MHI Roadmap Series, is intended to provide material handling, logistics and supply chain industry professionals insights into trends impacting success in the next 10 to 20 years.
The effects of the COVID-19 pandemic of 2020 have swept the globe, disrupting daily life in countless ways — big and small. It would be impossible to predict when the virus will run its course, but nearly everyone agrees that the world will ultimately reach a “new normal.”
Some of the predictions found elsewhere in this report have already come to pass: more professionals are working from home (if their job permits), for example. Meanwhile, companies that can afford to do so are accelerating their plans for implementation of digital, next generation technologies and solutions. Taken as a whole, these tools promise the benefits of increased visibility, greater flexibility, and nimble adaptability to the unforeseen.
Moving forward, in addition to technology investments, some organizations will choose to embrace a more regional-local sourcing, manufacturing, and delivery approach — what some call “nearshoring.” Others will be looking to diversify their supplier base. Still others will seek greater balance in inventory management, blending “just-in-time” with “just-in-case.”
Driven by the unprecedented effect of the pandemic, associations and companies across multiple industries sought to collaborate on best practice solutions to safeguard the health and wellbeing of their employees and their customers. This new spirit of cooperation may continue, as organizations reap the benefits of sharing the most effective management tools. Looking ahead, more companies will be evaluating their contingency plans — and their strategic planning process — to shore up shortcomings in their preparations for the unexpected.
Digital Supply Chain Technology Investments To Accelerate
Nobody is as immersed in the supply chain adoption and buying plans trends for NextGen, digital technologies than Thomas Boykin. A leader of Deloitte’s Supply Chain & Network Operations practice, he has served as lead researcher of the MHI Annual Industry Report for the past seven years. He explains why companies will be accelerating their investments in these solutions after another 12 months.
I see COVID-19 as a stress test of the supply chain, and that test revealed some of the vulnerabilities — as well as opportunities — in a revelatory way for many companies, as well as for consumers. That’s because the stakes were much higher than usual. Typically, the stakes for supply chain being effective and efficient are about a company’s survival; in this case, it was about the survival of the people who are the ultimate consumers of the supply chain. In some cases, supply chain inefficiency for personal protection equipment (PPE) put front-line healthcare professionals at risk.
The issues weren’t just about logistics, or moving products, but also about planning. Part of planning is not just predicting and looking forward and forecasting. It’s also about building flexibility and resiliency. COVID-19 exposed that there wasn’t enough attention paid to those potential, critical issues. Going forward, I anticipate organizations will be putting more attention and focus on continually evaluating their supply chains based on key performance indicators to ensure they can quickly adjust to changing conditions and circumstances.
We’ve been actively assessing the rate at which supply chains have been adopting the digital technologies that will help them both predict and respond successfully to challenges for the past seven years in the MHI Annual Industry Report. Things like Big Data, predictive and prescriptive analytics, cloud computing, sensors and automatic identification, artificial intelligence and machine learning, robotics, automation, wearables and mobile technologies, the Internet of Things (IoT), blockchains.
In the most recent report, we shared our findings for projected adoption rates of these digital solutions. Depending on the industry and its current financial situation, I expect those who said they’d be adopting these technologies within 3-5 years will accelerate their pace of adoption to within 1-2 years.
However, I don’t think that timeline will begin for another 12 months at least. Most companies right now are putting off major capital expenditures as they wait to see how the next several months play out. In the meanwhile, I see many organizations shifting into a more strategic planning mode right now, investigating these technologies, their potential use cases, and the benefits they will deliver so they’re ready to implement the solutions when the time comes.
Critically, however, as we discussed in the 2020 MHI Annual Industry Report — and this still holds true, if not more so today in light of the pandemic — solutions that leverage data and technologies that enhance operations work together, in lockstep, to empower the supply chain of the future. No one single technology can deliver the digitization necessary to successfully respond to unforeseen challenges like the one we’re all dealing with right now.
IFS: 70 percent of businesses increase or maintain digital transformation spend amid pandemic
At the end of June 2020, a global research study from IFS Industries — Digital Transformation Investment in 2020 and Beyond: Factors That Will Impact the Success or Failure of Technology Investments in the Post-Pandemic Era — found that 52% of companies plan to increase their spending on digital transformation. Further, the survey indicates that operations concerned with economic disruption were 20% more likely to plan increased spending on digital transformation.
Buying plans differ by industry. The survey found that 75% of respondents in construction will invest this year, followed by information technology (58%) and manufacturing (55%). The most cautious investors are energy and utilities (37%) and retail (35%). The biggest concern among decision makers is the ability to deliver a measurable return on technology investment quickly, and to the satisfaction of internal stakeholders (64%).
“The study confirms that many companies are wisely using the global downturn to divert resources to technological renewal and innovation,” says Antony Bourne, IFS Industries Senior Vice President. “As the majority of businesses are adapting to the anticipated economic recovery, and not permanently scrapping digital transformation initiatives, there is reason to believe that companies with a progressive mindset toward technology investment will be well equipped to rebound.”
Digitization, Automation Investments Should Accelerate Due to COVID-19
David Maloney, Editorial Director of DC Velocity, shares insights into the types of digital and automated technologies companies are considering during the pandemic.
Will COVID-19 accelerate digitization of the supply chain?
I think the companies that already had digitization on their strategic roadmaps are probably going to proceed with that investment. You’re also going to have companies who are who were thinking about digitizing, and now realize they need to accelerate that strategy to have better information to know how to respond quickly, because the pandemic and its impact are moving targets. Digitization helps operations manage better in an environment where things are changing rapidly, and you need flexibility to respond quickly.
As part of digitization, I think there will be growth in Internet of Things (IoT) technologies, where products or parts of the operation relay data on status back to a central gatekeeper. That allows an operation to utilize that information to make better, more timely business decisions based on the feedback from the sensors on the products or within the operations.
But I also think there will be a lot of companies that sit on the fence because they’re afraid to make the wrong move. Obviously, what happens with the economy will impact buying plans. We saw everything fall off a cliff, so to speak. Currently, it’s unclear if the recovery will be U-, V-, or swoosh-shaped. And different sectors will likely recover in different rates. As of this moment, I feel a lot of investment will be predicated on whether or not there’s a second wave of COVID-19. Nothing’s going to be resolved until we get a vaccine that works and that people are willing to take.
What about investments in automation technologies as a result of the pandemic?
It should accelerate, but I don’t know if it will. Companies may not want to spend the money because it can be a very expensive transformation. Most of the suppliers I’ve talked to report they’re getting a lot of inquiries, and a lot of companies are saying they wished they had made those investments two years ago.
I think overall, consumers are still not spending as much as they did before due to the uncertainty about the economy. I’m not sure how quickly traditional retail will come back. Many people are still nervous about re-entering physical stores because of other customers not following social distancing rules. Retailers can, of course, do pick-and-collect for their customers. But hand-picking items, such as groceries, from store shelves is extremely labor-intensive and most retailers can’t make money doing that. That makes automated goods-to-person micro-fulfillment a very good answer because it allows retailers to utilize floorspace they already have in their stores to accommodate customer pick-ups. However, they have to choose systems that can be implemented quickly and cost-effectively.
In the warehouse, I think investment in picking robotics is going to be a lot bigger as their ability to employ artificial intelligence (AI) and deep learning advances. I interviewed a company, Covariant, for our August issue, and they talked about using AI to enable trial-and-error learning. After one robot figures out how to correctly perform a process, it shares that learning with all the other robots in the system.
Cobots are also going to be big too, as they allow people to work collaboratively with robots for less human interaction. For example, I think we’ll see more picking stations where humans pick the more complicated items, and robots pick the lighter items that are easier to maneuver.
Coresight Research: As Lockdowns End, Online Grocery Shopping Slows
As local U.S. governments begin easing restrictions and shelter-in-place mandates, consumers are buying groceries online with less frequency, according to the June 17, 2020 weekly consumer survey by Coresight Research. The findings note a week-over-week decline in the proportion of respondents who have bought groceries online in the past two weeks, from 31% to 29%. Further, expectations of buying groceries online are down by around four percentage points versus actual behavior in the past two weeks (as shown in Figure 1).
Supply Chains’ Post-Pandemic Automation Investment Plans Mixed
With a four-decade career covering supply chain and material handling, Bob Trebilcock, Editorial Director of Supply Chain Management Review and Executive Editor of Modern Materials Handling has been reporting industry developments from the onset of the pandemic. Here’s what he’s hearing from multiple sources about the post-COVID-19 supply chain of the future.
What are some of the lessons supply chains will take from the pandemic?
I recently moderated a webinar featuring two academics who study procurement and operations. They started by noting that COVID-19 was a 100-year event; heck, it might even be a 500-year event. You might think, ‘how often does a 100-year event actually happen?’ But they shared some pretty high percentages about such occurrences, which may or may not be a pandemic. The lesson to be learned is two-fold: one, your company needs to have a playbook about how to respond to a crisis; and two, you need to address whatever operational deficiencies that were exposed by the pandemic. If there was something that was hindering your performance, then you need to fix it.
What kinds of technologies will be applied because of the pandemic?
Frankly, I believe we’re still in firefighting mode. People are still trying to figure out what problems they need to solve. But I believe that the pandemic will be with us until we have a vaccine, and that may be as far away as 12 to 24 months. So, then we’re all going to have to learn how to live with it. We can’t keep shutting everything down forever. Companies are going to have to think differently inside the four walls of their warehouse.
That said, safety is still number one and now it’s taking on a different dimension beyond physical injury and into protecting health. Therefore, I think companies are going to look for tools that help minimize contact. I recently talked to a warehouse management software (WMS) company that can route picking traffic in a certain way to minimize human contact in the aisles, as well as at the time clock and the lunchroom.
It follows that warehouses, which are already looking to reduce the number of touches per product for cost cutting, might now be worried that every time something is touched there’s the potential for cross-contamination. I think that could hasten the adoption of automation, as well as of autonomous mobile robots (AMRs). The robotics companies I’ve spoken with say they’re getting all kinds of inquiries. Notably, however, none have said they’re getting all kinds of orders. Likewise, I recently spoke to a supplier of goods-to-person automated picking solutions. They are seeing some companies accelerate their buying plans, others putting their current orders on hold, and a third group making inquiries.
We’ve also been doing a lot of surveys, including one on NextGen technologies, and questions include buying plans over the next 12-24 months. When we asked if companies were planning to increase, decrease, or pause their investments in automation because of COVID-19, it was roughly an even split among the three. When we asked if companies were considering investing in robotics due to the pandemic, it was around 28% that said yes. That may not seem huge, but year-over-year for our survey, that’s the highest percentage we’ve ever seen.
Are current social distancing efforts impacting productivity within facilities?
To share a specific example, I’m doing a podcast called The Rebound with Abe Eshkenazi, CEO of the Association for Supply Chain Management (ASCM). We just did an episode featuring Greg Toornman, VP of Global Materials for AGCO. AGCO is one of the world’s largest manufacturers of agricultural equipment and spare parts, operating in 30-plus companies. When rumblings started coming out of China in January about the Coronavirus, they listened. Particularly as three of their biggest supply bases are in China, Italy, and Brazil — three of the areas hit hardest by the pandemic worldwide.
AGCO immediately implemented policies and practices for safe operation at their Wuhan plant in China once they were allowed to reopen. Initially the facility shipped 10 containers a week instead of their usual 75; within two weeks — once the new safety procedures became second nature — they were back at their normal output. And within a week after that they shipped 105 containers. Then, they applied their experience in Wuhan to Italy. They also stockpiled personal protective equipment (PPE) in a central facility in the U.S. In addition to distributing it to their plants, they also shared it with their suppliers, who were asked to prioritize AGCO’s orders.
What will the impact of COVID-19 be on Lean supply chains?
What’s the alternative to Lean and just-in-time? Fat, or just-in-case. When I interviewed the President of UPS’ supply chain solutions division for July’s Modern Materials Handling cover story, we discussed this. He relayed that in the conversations he’s had with companies, there’s a lot of talk about just-in-case inventory, but it’s mostly just talk. I think we’ll see some of that occur, but I don’t think it’s the end of Lean.
I think we will see more nearshoring, also called reshoring. Part of the argument for that approach is it shortens your supply chain by getting your inventory closer to the point of consumption. I suspect the pandemic will accelerate a movement toward more regional-local production. Meaning products are built within a given market to be sold within that region, as opposed to having one plant in one place that ships products all over the world. That trend is not new, but I think it will accelerate for certain products such as pharmaceuticals.
Did COVID-19 Kill “Lean”?
That’s the question posed in an article in The Load Star by Cathy Morrow Roberson entitled, “Coronavirus May Mean the End of Just-In-Time, As We Know It.” In the piece, she explains that the practice no longer works, pointing to the automotive inventory by way of example.
“Thanks to natural disasters, such as the Japanese tsunami and earthquake in 2011, fluctuating transport and fuel costs, recent tariffs and other disruptive incidents over the years, costs have often outweighed the benefits of just-in-time, depending on individual companies that practice this process.”
Roberson argues for the practice to be used more wisely going forward, possibly through near shoring. It’s part of the argument for re-balancing priorities from just-in-time to just-in-case supply chains, whose characteristics are explored in this article from Lauren Pittelli in IndustryWeek. She writes: “To withstand a crisis, or better yet to come out of it stronger, balance the low cost and efficiency of the JIT model with the need to be nimble and agile in reacting to market changes.”
Robert Martichenko, ALAN Board Member and Founder/CEO of LeanCor Supply Chain Group recently wrote a white paper, “Post COVID-19 Crisis Supply Chain: A Time to Rise,” agrees. He believes supply chain professionals are uniquely equipped to develop inventory optimization solutions to the shortfalls experienced in personal protective equipment (PPE), ventilators, medications, masks, hand sanitizers and disinfectants experienced during the immediate weeks after the pandemic reached U.S. shores.
AI Investments Will Be Fast-Tracked Across Supply Chains
Jim Tompkins, Chairman of Tompkins International, is widely recognized as a supply chain consulting and solutions guru. He believes strongly that — as a result of COVID-19 — investments in artificial intelligence (AI) will be greatly accelerated across nearly every aspect of supply chains. He explains why, here.
COVID-19 has accelerated history. Chances are good that the bulk of the predictions in MHI’s Transformation Age report are going to happen. But they’re going to happen a lot faster than initially anticipated, because nobody could foresee that this pandemic. Therefore, the supply chain now has to do the same — accelerate the solutions. I see this as an opportunity for organizations to leverage artificial intelligence (AI).
Forecasting is the first area where we’ll see an acceleration of AI applied. Because historically, when we’ve had disruptions, they were disruptions of supply. In the pandemic, however, there’s been disruption of supply AND demand — and demand is typically constant.
Take the toilet paper shortage. Why did that happen? Not because there wasn’t enough toilet paper. It’s because manufacturers were making the wrong type of toilet paper. Two-ply is what consumers use at home; single-ply is what businesses use in offices, restaurants, retail stores and so on. Production of both remained constant, but more people were home and fewer people were at work or out in public. The single-ply wasn’t selling.
The toilet paper challenge was rooted in a lack of ability to manage the supply to the demand, because manufacturers didn’t know what the demand is going to be. Therefore, supply chains need forecasting augmented with AI in order to not only predict the demand, but also to predict the amount of supply they will need. Ultimately this will help synchronize supply and demand.
Next, companies need to accelerate the application of AI to gain better visibility. It’s no longer enough to know that the boat of product left China two days late; now operations managers need to know the impact of that delay when the boat arrives in Los Angeles. With AI, a company can be aware two weeks in advance that its factory in Columbus, Ohio, won’t have its supply as expected. The enhanced intelligence utilizes an AI mechanism to inform the visibility.
I also see accelerated AI application to multi-channel networks. If all you’re doing is selling in your own stores and on your own website, it’s pretty easy. But with the growth of e-commerce, different people are shopping in different places based on demographics, and they’re shopping on websites built for them. Therefore, those retailers need to be able to manage those multi-channels in an integrated solution, and to do that successfully they need to use AI.
All of these capabilities are no longer nice to have; now they’re mandatory. That’s why the adoption of AI is going to be a lot faster than originally anticipated. Personally, I’ve learned more in the last three months that I’ve learned the last three years. The pace at which all this is happening is unbelievable. Now is not the time to sit back and watch the world go by. It’s time to get on top of the horse and then ride off and make something happen, because action is required.
AI in Supply Chain Projected To Grow at 45.3% CAGR from 2019
According to research from Meticulous Market Research, the artificial intelligence (AI) in supply chain market is expected to grow at a compound annual growth rate (CAGR) of 45.3% from 2019 to 2027 to reach $21.8 billion by 2027. The researchers attribute this growth to:
- Rising awareness of AI, big data and analytics
- Broader implementation of computer vision in both autonomous and semi-autonomous applications
- Continuous technological advancements in the supply chain industry
- Increased demand for AI-based business automation solutions
- Expanding industrial automation
The researchers note potential impediments to AI’s growth in supply chain currently include high deployment and operating costs, as well as a lack of infrastructure.
Thoughts on Organizations’ Post-Pandemic Digital Investment Plans, Timelines
As a supply chain and IT strategist and researcher, Dr. Randy V. Bradley, Associate Professor of Information Systems and Supply Chain Management in the Haslam College of Business at The University of Tennessee, Knoxville, is an expert in digital business transformation, supply chain digitalization, and the strategic application of business analytics and IT in the supply chain. Here, he offers his thoughts on the organizations’ post-pandemic digital investment strategies.
As a result of the pandemic, do you expect more companies to embrace supply chain digitization?
The pandemic and the issues that organizations have faced as a result of it have likely increased the desire to think about pursuing digitalization — not just automation. I want to clarify this distinction, because a lot of technologies that are referred to as automation are actually mechanization: that is, equipment that replaces a human to perform a repetitive task. However, that mechanized equipment doesn’t necessarily generate actionable information that supply chains and supply chain professionals could use.
If an organization does this correctly — innovates, uses and leverages emerging digital technologies —those solutions should not steal jobs, but rather they should fill gaps in talent, knowledge, capabilities and bodies. When you think about COVID-19, particularly in the material handling space, if you need to social distance in a warehouse, you can’t easily retrofit or redesign the facility to enable more square footage for your people to maneuver. Instead, you’re going to have to reconsider the way you deploy those individuals, which may mean fewer people per shift. And that could have a huge impact on productivity.
That begs the question, can we now leverage autonomous solutions, such as autonomous mobile robots (AMRs), to support the need for productivity without having as many people within a certain square footage of each other? AMRs enable an operation to have fewer people on a given shift. They can run more shifts to spread out their people but can still have that same level of — if not better — productivity. Alternately, they could utilize collaborative robots, increasing human-to-robot interaction while minimizing the need for human-to-human interaction.
With COVID-19, will investment in automation, such as AMRs or cobots for example, accelerate?
Currently, when surveying on investment plans in the MHI Annual Industry Report, we’ve we talked about advanced robotics and automation holistically. [In the 2020 report, 73% of respondents anticipated investing in robotics and automation within the next five years.] Going forward, we probably need to get more granular and separate that category into different technologies and specific use cases to better determine what are the optimal tasks for robotic solutions.
To answer your question, yes, I think so. With the 2019 MHI Annual Industry Report we saw an inflection point [with projected spending on robotic and automated solutions up 95% in 2019 after a trend in respondents reporting a decline from 2015 to 2018]. To us, that seemed to indicate the end of the pilot projects and the beginning of the actual investments as companies began to realize the potential use cases and subsequent benefits. Simultaneously, we began to see new funding models, such as robots-as-a-service, which enabled organizations to acquire robots as an operating expense instead of as a capital expenditure.
What sectors are most likely to make these investments post-COVID-19, and when?
The ones that are not financially strapped. Hospitals, for example, took a big revenue hit during the shutdown as they stopped doing elective procedures, which are a prime revenue generator. Sectors like that won’t have the cash flow to enable them to move forward. In the fulfillment space, yes — they’re bursting at the seams with increased demand and struggling to keep up with it — I see more investments coming from there.
When we look at material handling, it’s going to depend on what segment of the economy they cater to, because there’s going to be heightened desire for those automated solutions; as a result, we will see increased adoptions. However, I think the increase in adoptions is going to pale in comparison to what it would have been had most organizations’ financial position been at the same level coming out of this pandemic as it was going into it back in early March.
As for the timeframe, in my opinion, we won’t see an exponential increase in the adoption of these types of technologies for about 36 months from now. The best case for some organizations is maybe 24 months. The reason is practicality — the human factor. If we’re at least 12 months away from the release of the first viable vaccine, how many people are willing to sign up for that? Nobody I know, because people understand that there is a tremendous risk when you rush a vaccine to market.
That’s why I think adoption of digital and automated technologies will be slow for two to three years, then it’s going to be exponential. Not because I don’t believe in the benefits the solutions can deliver, but because of human nature. When I work with executives in our leadership programs, I almost always first ask them to identify their personal affinity to adopt new technologies as a consumer. Then I ask them a series of questions about how they make decisions for their organization specific to the innovation adoption cycle and process. It’s almost always a near perfect correlation. Many people, and organizations, are going to ease into investing in digital technologies solutions primarily because of a need to better manage cashflow. They’ll also act out of caution or concern about the uncertainty of a second — or third — wave of lockdowns due to a resurgence of COVID-19 cases.
In what other areas do you think organizations will ultimately invest?
I think we’re going to see investments in visibility solutions. Currently, many organizations have limited upstream visibility; they can’t see beyond Tier One or, at best, Tier Two. The pandemic brought to light that this is a major problem that can no longer be ignored or put on the shelf to be dealt with at a later time. Companies will have to revisit their sourcing strategies to assess the point of origin of materials, because even if you have six potential sources of supply, if there’s a single point of origin, you’re still going experience disruption. I also think we’re going to see an increase in risk analysis solutions, as well as expanded capabilities within those solutions so organizations can manipulate a risk model to assess potential impacts, such as digital twin simulations.
Futurist Expects Significant Changes to Food, Medical Supply Chains
Jason Schenker, Chairman of The Futurist Institute and President of Prestige Economics published his newest book, “The Future After COVID: Futurist Expectations for Changes, Challenges, and Opportunities after the COVID-19 Pandemic,” on April 1, 2020. The following is an excerpt of that publication.
Paper product and fresh food shortages in the United States resulting from the COVID-19 pandemic came as a surprise to many people. But as a result of this dynamic, many people have also come to recognize the importance of the U.S. supply chain, the global supply chain, supply chain and material handling industries, and the challenges of the last mile.
The COVID-19 pandemic experience was jostling for many Americans, and there are significant changes to supply chain that I expect we will likely see in the post-pandemic period.
First, the vulnerability of U.S. and global supply chains have been revealed. I believe that it should now be clear to many that disruptions in the supply chain can occur anywhere in the global economy and that the negative impacts of supply chain disruptions can be exacerbated when inventories are thin.
Second, medical supplies and medical devices that had long been taken for granted as easily accessible have been revealed to be sometimes difficult to obtain. Hearing from medical professionals looking to reuse previously single-use personal protection equipment (PPE) or medical devices is scary. In the future, the medical supply chain is likely to be recognized as more critical. And policies are likely to be enacted to reduce medical supply chain risks.
Third, the supply chain of the U.S. economy is something that almost everyone now more clearly understands. The words “supply chain” were barely uttered in business schools in the 1990s and early 2000s. But now, supply chain needs to be a top-of-mind topic for every executive, every politician, every leader, and every consumer.
Changes in Medical and PPE Supply Chains
It is very difficult to have both a thin supply chain and very large distances across your supply chain. In fact, very thin inventories plus a very long supply chain can be a recipe for disaster during times of disaster, which is exactly what we have seen as a result of the COVID-19 pandemic.
As a result of this experience, we are likely to see a future shift of policies and strategies to favor more robust inventories spread across supply chains. This could include some regulatory incentives and/or mandates related to the manufacture, storage, and inventory of medical and PPE supplies in the future.
It is also quite conceivable that there could be a regulatory or policy attempt to completely reshape the entire supply chains for medical equipment and PPE, so that more goods are produced within the United States or the USMCA/NAFTA region. Shortening the distances of supply chains can help counteract the risk that accompanies supply chain inventories that have been spread thin. And global supply chain risks are inherently greater than domestic supply chain risks because of the distance, number of parties, and regulations involved.
Awareness of Supply Chains
One big impact of the recent COVID-19 pandemic is that people are likely to be more aware of supply chains. And they may be less likely to run down their own “at-home” inventories of food, paper products, cleaning products, and other goods. In other words, people might keep more things at their house.
Because people have been able to get goods with relative ease for some time, people did not worry about what was in their cupboard. After all, you don’t mind if you have a bare cupboard if you can get whatever food you need to your house in under 20 minutes.
But in the COVID-19 pandemic situation, people found supply chains disrupted while their cupboards were also bare. This problem became exacerbated by the risk that people might need to stay in their homes for extended periods. People had to restock their cupboards rapidly because they had low in-home inventories and they expected a rise in demand as alternative sources of food (e.g., restaurants) became less viable.
In the future, we will want more secure supply chains. But it remains to be seen if people will prevent their cupboards from going bare again after the COVID-19 pandemic passes.
Ultimately,I believe we could see additional financial incentives or regulatory incentives from the government that shore up the supply chain in the future.
The Future Nexus of Supply Chains and National Security
For U.S. national security, the COVID-19 pandemic exposed the importance of being vigilant with our borders. It also highlighted the risks of overly thin supply chains, as well as the potential downside of being dependent on the global supply chain for critical goods — like medical supplies, medical devices, basic necessities, and personal protective equipment (PPE), including gloves and masks. How might this impact our national security.
Jason Schenker recently contributed an article to the Air Force Warfighting Integration Capability (AFWIC) publication, “Global Futures Report: Alternative Futures of Geopolitical Competition in a Post-COVID-19 World.” He writes:
The United States from a national security perspective may very well wish to more firmly shore up technology, healthcare, medical, food, consumables, and other supply chains in order to ensure maximum stability over time. Additionally, COVID-19 has inadvertently revealed that a pandemic-level bio attack on the United States could be beyond economically devastating.
If adversaries of the United States were to implement such an attack, they could pair such action with social media and traditional media disinformation for maximum disruption, political destabilization, and economic devastation in a way that could completely destabilize the United States as an entity for at least a brief period of time.
COVID-19’s Impact on Cities, Deliveries
Dr. Anne Goodchild is Founding Director of the University of Washington’s Supply Chain Transportation and Logistics Center and its Urban Freight Lab. An expert on last-mile and last-50-feet deliveries — specifically in metropolitan areas — she discusses how cities and their citizens might change as a result of the pandemic.
If more people who can do so continue to work from home, how will cities be affected?
I think the movement to working from home will be accelerated as part of social distancing measures. Particularly for the people whose companies were essentially required to implement that practice as part of protecting their employees. Post-pandemic, there won’t be an insignificant percentage of people who continue to work at home. But, at the same time, there will still be a huge percentage of the workforce that has to be at their place of business.
As a result of that, in the short term there was initially a dramatic cut in the amount of urban traffic. Here in the Seattle area, we saw reductions of roughly 85% in peak period travel at the high point of our “Stay Home, Stay Healthy” mandate. Now, in the Seattle area, traffic is only down about 35% and as of today, mid-June, we’re still in Phase 1+ of the four stages of recovery. Traffic has picked up to the point that there is congestion now during peak periods; this is the experience in most metropolitan areas. Further, there’s some concern that cities will actually have more congestion than before the pandemic because now people aren’t comfortable ride sharing. They’d prefer to be alone in their cars than using public transit.
Will people likewise be less comfortable living in more densely populated areas?
Humans have been urbanizing for hundreds of years and pandemics have occurred before. There is some discussion that cities maybe won’t have the same appeal post-COVID-19, but the arc of history has always been towards urbanization. In the grand scheme of things, I am sure that we will see a short term effect, but I’m quite confident that in the long term, the same economic principles of why cities are the most productive, the most economically robust, and the most innovative places in the world, people will continue to be there.
How might last-50-feet deliveries change going forward?
First, many more people are using delivery services now, and we expect that to continue — perhaps not at the same rate — along with accelerated adoption of online purchasing. Although the types of deliveries are quite nuanced. There’s prepared food picked up at a restaurant and delivered by services like Uber Eats, there’s grocery deliveries coming from a warehouse, and there’s traditional truck deliveries from UPS and FedEx. So, while there’s definitely been increased growth in deliveries, there’s quite a bit of variation in traffic patterns around the types of vehicles and the times of day.
There’s also been an increase in home deliveries compared to business deliveries because people are home more. That’s something we’ve been studying because we look in a quite detailed way at infrastructure and parking and curb space. That change can have a significant impact on how to manage the city and what kind of traffic can be expected in different parts of the city at different times.
As a result of the increase in deliveries, I believe we’ll be seeing larger and faster adoption of technologies that support secure, touchless parcel exchanges. We’ve been testing locker systems for a couple of years now to assess their impact on congestion, delivery time, and other operational benefits, such as how they separate the delivery driver and the package receiver. Because of that, we see a lot more interest from shared apartment buildings as the lockers reduce the risk of introducing a potential vector for the virus. That was something landlords were interested in before COVID-19; now it’s changed their level of motivation to put lockers into practice.
Post-COVID-19 Supply Chains Will Benefit from Cross-Industry Collaboration, Better Contingency Planning
A conversation with Kathy Fulton, Executive Director of the American Logistics Aid Network (ALAN), which leverages supply chain expertise to solve disaster recovery challenges while most efficiently and effectively getting critical aid to survivors. As a disaster-preparedness expert, Fulton offers her thoughts in this discussion of the impact of the pandemic on supply chains of the future.
Will there be an acceleration in investment and application of digital technology in supply chains because of COVID-19?
According to the people I’ve been talking to, yes. ALAN has regular contact with our business partners who report having accelerated five-year digital implementation plan to execution in the past two-and-a-half months. But to do that requires infrastructure, investment, installers — all things also disrupted by the virus. That’s compounded by market volatility, as well as limited access to the integrators and installers whose companies are not allowing them to travel, and warehouses that are limiting access by outsiders. Therefore, at this moment, I see a desire to accelerate digital investments, but a struggle to balance that with availability of assets.
Further, whatever digital solution a company chooses to invest in has to make financial sense for the business going forward. For example, they’re thinking about: Will people continue to embrace pickup or home delivery of groceries? Will consumers still be willing to pay for those services once the pandemic slows down or ends? How can stores provide those services efficiently and cost effectively? Accelerated investment in digital supply chain technologies has to make financial sense for the business and ease of use for the consumer.
How will companies keep their employees both safe and productive moving forward?
Twenty years ago, when remote work tools began to appear, companies started including a work-from-home strategy in their business continuity plans. Now, with COVID-19, multiple companies have had to execute that plan for employees whose jobs can be done at home. I have heard, however, that some companies have struggled to put this into action for reasons such as they didn’t have enough remote work licenses for their software.
At the same time, we’re talking logistics and supply chain. There are some roles that can’t be done from home. We’re seeing many operations implementing health and safety policies to keep their employees safe. In warehouses, cleaning and social distancing policies seem to be working. Those added measures don’t appear to be significantly impacting productivity or throughput.
What has been a challenge are the value-added assembly and light manufacturing or processing lines where people stand shoulder-to-shoulder, side-by-side. Those operations are where we’re seeing the outbreaks, so we’re seeing more plastic or plexiglass shields. But those operations are still trying to figure out how to adjust their workflow to account for increased protection measures.
My takeaway is: What a time to be an industrial engineer and working in supply chain! Up until mid-February in the U.S., your job was to figure out how to use the least amount of space to get the most product pushed through. Now, your optimization equation has changed to, how do we keep our employees healthy and safe while still maximizing throughput? Perhaps by increasing space or staggering shifts. Going forward, these sorts of measures will not be just nice to have, but rather an operational requirement.
Do you think there will be mandates from OSHA or the CDC about such requirements or regulations?
Currently, the government institutions have only issued guidelines, but no mandatory requirements; what they will do next is outside my knowledge zone. Right now, however, it’s been incredible to see businesses rapidly create — and more importantly, share — policies and best practices on how to keep their employees safe. I am grateful that multiple association leaders are willingly sharing members’ policies on their websites or by email for companies across diverse industries to utilize and adapt to their unique operations. When this situation resolves, I hope this sense of collaboration continues.
As an organization that leaps into action in areas that have experienced a disaster, what are your thoughts on the future of urbanization? Will people be less likely to want to live in cities?
The World Economic Forum recently published an article on this topic that predicts that COVID-19 will reverse the increased globalization and urbanization we’ve seen over the past several decades. It also talks about bringing more manufacturing back to North America. I don’t necessarily think that is going to be the way of the future, but I do think that as a country we will probably be less urban. Before the pandemic, we were already seeing companies establish smaller distribution centers (DCs) closer to population centers as a means to provide faster delivery. Moving DCs closer to smaller population centers tends to attract people to that area because there are jobs, and it’s easier to social distance in less urban areas.
Any other predictions for COVID-19’s impact on supply chains of the future?
When I think about disruptions like the pandemic, my hope is that companies have learned a little bit of a lesson about the importance of preparing their businesses and their employees to work through disruption. Notably, our supply chains never failed. They were stretched really thin, but we never lost critical capacity across any of our supply chains or transportation. Toilet paper was still being manufactured. Meat was still being processed. Throughout the shutdown, the people doing the work within logistics and running supply chains figured out a way to get things to people who needed them.
Shaping Your Future
It came sooner than many thought.
The Transformation Age is in full swing and with it comes a heightened environment of change, uncertainty and complexity.
In 2020, the material handling and logistics industry is experiencing rapid change, diverse opinions on the sure path to success, and shifting demographic profiles and skills sets of industry leaders. All sectors are beset with unending announcements of new technologies and equipment upgrades, as well as growing customer demands for immediacy and customization.
Industry leaders are accustomed to change and good at adapting to new market requirements. But the magnitude of the shifts underway are exceeding even the expectations of the largest companies and the most experienced integrators.
The Transformation Age brings great change, but also tremendous opportunity.
Key questions include how will this environment shape the industry going forward and what strategies will enable companies to survive and succeed.
What factors will distinguish market leaders from average players and leave some players lagging behind?
Which trends will emerge as long-term factors and which ones will fade from the headlines?
A single transformative technology shift can spark innovations, discovery and new capabilities. Those developments, in turn, lead to multiple advancements in design, manufacturing and delivery that move the needle significantly for the evolution, and, indeed, transformation of industries.
And the time is ripe for such opportunity in the Transformation Age.
When taken individually, key industry trends are forces around which business strategies should be built and executed. When they occur as an integrated set of factors, each morphing with a different velocity and timing, the call to action is something larger, requiring new business models and shifts in skills sets and expertise.
Leadership is key. Transformation of companies must be owned at the top.
One thing is clear. Leaders must fully own shaping their company’s future. This is not a task for delegation. It is one to be owned at the top and developed with thoughtful, deliberate collaboration.
Go first with new behaviors and practices to signal meaningful shifts in expectations and culture.
Shaping a company’s future requires vision, planning, an appetite for change, and above all, communication with the board of directors, the executive team, the broader workforce, suppliers, customers and other key stakeholders.
Vision and change management are two critical leadership requirements in this environment. Courage, collaboration, flexibility and resilience are vital attributes.
Thought leadership must evolve to a new, flexible and dynamic process.
Success in this environment requires an evolutionary shift in thinking…
Success in this environment requires an evolutionary shift in thinking, one that moves from a focus on doing more of the same, or even using better approaches for traditional processes, to one that encompasses options for accomplishing goals in new and different ways. This transformation in thought leads to evolution of approaches and development of new ideas and solutions.
Leaders must prepare and engage their organizations for these shifts. Fear is the most pervasive emotion expressed by employees facing significant change in the workplace. Lack of understanding, buy-in and execution of new goals, approaches and processes will derail even the most effective plans.
Engagement and collaborative planning are essential. One-off initiatives don’t work for broad and deep lasting change. Engagement of the board of directors and alignment across the senior leadership team are critical first steps in implementing transformative change. Education on trends, opportunities and barriers coupled with scenario planning to address multiple strategic and tactical options engages both groups in the initial exploration of ideas. Without the understanding and a consensus buy-in by these two groups, the organization will falter in implementing strategic initiatives.
George Prest, CEO, MHI
Leadership vision and planning are critical elements in shaping a company’s future. Market information and insights play a key role in strategy development. The Transformation Age: Shaping Your Future report paints a picture of market and industry trends that will present opportunities and challenges to companies in the material handling, logistics and supply chain industry over the next two decades.Read More
Emmy Lou J. Burchette, President & CEO, Burchette & Associates
The Transformation Age: Shaping Your Future report represents an evolution in the approach to the MHI Roadmap Series. For this edition, we combined insights from in-depth personal interviews with industry leaders and trend experts with findings from secondary market research to provide perspectives on ways material handling and logistics companies should prepare and take action to be successful in the coming decade.Read More
To win in this era, a new game plan is required. One that includes a new business structure, in both literal and conceptual terms.
Companies with siloed operations will not be well positioned to reap the benefits of the highly digital and integrated environment of the next two decades. An evolution in business models is already underway, with early adopters moving to a collaborative, integrated and transparent ecosystem that incorporates multiple engines for growth and profitability while allowing flexibility to adapt quickly to changing conditions.
A new game plan is required to succeed in the Transformation Age.
An effective ecosystem includes transparency across the core business as well as visibility of key partners throughout the entire value chain, including sourcing, manufacturing, warehousing, distribution, customer delivery and final disposition of product assets.
Flexibility and adaptability will be critical components of successful businesses, allowing leaders, their boards and their business units to respond quickly and effectively to changes in market conditions. Companies with the ability to shape shift will be best positioned to take advantage of new and sometimes fleeting opportunities and to protect themselves from negative impacts.
Given that rapid change will be the characteristic feature of this time frame, creating an operating model that incorporates multiple options for market engagement is key. The capability to adapt and move among those options quickly is the competitive differentiation of winners in the coming decade.
Shaping a company’s future requires vision, planning, an appetite for change, and above all, communication with the board of directors, the executive team, the broader workforce, suppliers, customers and other key stakeholders.
“Your business approach and philosophy over-ride trends,” says Jim Tompkins, CEO of the supply chain consulting firm Tompkins International. “In this era of volatile change, optionality is optimal. We urge our clients to use business strategies that incorporate rapid learning, flexibility and above all, options. You can’t be brittle and succeed in this environment.”
A business model that accommodates multiple earnings engines works well in this environment, allowing capital allocation and resources to be shifted according to market conditions. Clear distinctions among B2B, B2C and B2e business units, as well as between product lines within those units, will provide valuable insights into lanes of opportunity, risk parameters and competitive factors.
Customer experience must be aligned and unified across internal business units, but the business propositions, functions and measurements of each business should yield a clear picture of separate and distinct earnings streams, risk parameters, market activities and competitive positioning.
The emerging business model is one that serves multiple stakeholder groups not just corporate shareholders. Interest and appeal is growing for investments in projects and initiatives versus whole companies. Following venture capital scenarios, these investors will fuel new and innovative products and processes.
Jim Tompkins, Ph.D., CEO, Tompkins International
Winning Business Strategies
Success in the Transformation Age will come to those companies that are willing to think differently about opportunity and risk, and to engage the marketplace in new ways.
Focus on problem-solving and providing value for customers. A customer-centric, outward-facing culture begins with the way business goals are expressed and incentives are awarded.
Find and deliver customer value in all aspects of product delivery, from components, features, packaging, delivery modes and sales channels to service and after-use disposition. View products and services from customer perspectives of problem solving, preferences and benefits.
Incorporate sustainability into corporate culture and all processes.
Broaden risk management perspectives and leverage enhanced decision-making tools that allow improved and timely insights into upside and outside risks.
Shift innovation to a core competency and process. Capture, encourage and share enterprise-wide ideas, activities and results.
Get in the game. Act on commercially viable solutions today within a flexible environment that can be modified quickly as future enhancements and capabilities become available. Don’t delay participation in smart automation and digital tools. The coming decade will be characterized by waves of innovation and enhancements.
Pilot and succeed or fail quickly. Learn. Adapt. Repeat.
Plan for alternative market scenarios using data decisioning tools to assess different strategies.
Be resilient. Adapt quickly to changing conditions.
Collaborate. Companies and their leaders do not have to win this race alone. Leverage outside partners and peers to collaborate, learn and implement new solutions faster and further than your organization can achieve alone.
Scale, broaden scope and invest in differentiating capabilities. Market boundaries will broaden in this decade, bringing disruptive competition to every geographic market and industry sector.
Leverage the new environment. Advances in the internet and digital tools, as well as evolving practices such as shared physical assets and freight delivery, allow even small and medium-size companies to leverage capabilities and information in ways previously only in the purview of larger organizations.
Forty years ago, financial services organizations collaborated to build regional and national electronic exchange networks to support ATM transactions across the United States and eventually the world. Similar opportunities in material handling and logistics will underly sharing of assets from satellite constellations to EV charging infrastructure.
Mergers and Acquisitions
The pace of industry consolidation will increase over the next decade. Firms will utilize mergers and acquisitions to increase scale, broaden scope and strengthen infrastructure positions in the market. These approaches can be utilized successfully by large, medium and small-size enterprises.
Lessons learned in other industries such as telecommunications and financial services that have been reshaped significantly by consolidation offer insights into key success factors: 2
There is no such thing as a merger of equals. Apparent equality changes after the transaction. There is always a single clear winner.
Over-communicate. Keep board members, employees and customers informed of changes and timelines.
Focus on integration not just conversion of systems and processes.
Shape post merger integration for long-term future state rather than post transaction status.
Distinguish between goals of increasing market share and productivity versus leveraging infrastructure and processes.
Ensure acquisitions are aligned with longer-term corporate goals.
Invest time and resources in a deep due diligence process prior to execution of the deal to ensure a smooth transition. Surprises come at a cost.
Fill leadership team positions with those who have the skills needed for the resulting company size and future growth goals.
Be deliberate in selecting the resulting company culture. Choose one and select a leadership team that will champion that culture.
Implement tight controls and processes, including board oversight.
Engage all financial business tools including tax and legal entity status early in the planning process to benefit from savings and other financial opportunities.
Expect a different regulatory environment as the company size increases. Increased scrutiny and controls and a different style of interaction with regulators should be expected as size increases.
Don’t overpay. Save money to use funds for other opportunities post merger or to pursue other acquisitions.
Growth and expansion of technology and engineering capabilities will spur some firms to diversify and invest in infrastructure, digital expertise or an emerging technology as a separate business. Other firms will divest operating businesses and focus on these singular capabilities as their new core.
Entrepreneurial activity will increase over the coming decade. Innovation and discovery will occur in stand-alone ventures as well as in company funded specialty business units established to leverage opportunity while protecting the established entity from risk.
Increased activity in all of these approaches will contribute to the re-engineering and transformation of the material handling and logistics industry over the next twenty years.
As smart automation and digital tools improve and adoption increases, pressure will mount on production, and timelines for delivery of equipment will lengthen.
The process of planning and scheduling the purchase, installation, training and implementation of new technologies is best done collaboratively, involving both outside suppliers and internal managers, to achieve desired outcomes for a successful and timely transition.
A convergence of technological and engineering advances, environmental issues, global and domestic policies, demographic changes and evolving consumer trends promises a challenging but exciting time in the material handling and logistics industry between 2020 and 2040 and beyond.
Long-awaited opportunities for dramatic increases in productivity, lower capital requirements for new equipment acquisitions, enhancements in portability of equipment, greater flexibility in manufacturing and distribution facility design, and evolutionary strides in transportation and freight delivery make the Transformation Age a time of memorable excitement and change.
Industry leaders must now heed strategic imperatives that have been under discussion for some time. Action in the near term is required for success and survival over the coming decade.
The path to 2030 is clear and the road beyond to 2040 is coming into focus.
Transformation requires change. But with a new course comes opportunity.
Industry leaders must now heed strategic imperatives that have been under discussion for some time.
Action in the near term is required for success and survival over the coming decade.
Leadership vision and planning are critical elements in shaping a company’s future. Market information and insights play a key role in strategy development.
The Transformation Age: Shaping Your Future report paints a picture of market and industry trends that will present opportunities and challenges to companies in the material handling, logistics and supply chain industry over the next two decades.
We want this report to engage industry leaders in thought and discussion on key strategic topics. We will build on the themes identified in this report in other communications throughout the year, including podcasts and features in the MHI Solutions magazine, culminating in the annual conference in October where we will further explore these topics with keynote speakers and topical break-out sessions.
Emmy Lou J. Burchette
President & CEO
Burchette & Associates
The Transformation Age: Shaping Your Future report represents an evolution in the approach to the MHI Roadmap Series. For this edition, we combined insights from in-depth personal interviews with industry leaders and trend experts with findings from secondary market research to provide perspectives on ways material handling and logistics companies should prepare and take action to be successful in the coming decade.
This website serves as a digital report and provides an opportunity for readers to delve into a variety of subjects, from technologies to business strategies, and to consider how trends will impact our businesses, our industry and our world.
We invite readers to explore each of the six sections. Some topics are repeated and presented in varied contexts.
Let us know your questions as we work together to prepare for the future.
Firm of the Future
A New Look
Looking out ten years, the vision for the firm of the future is clear. There is no doubt: the environment will be much different than what we experience today.
Leaders and their teams will be younger and steeped in technology. The workforce will be diverse, dispersed and highly skilled.
Warehouses and factory floors at leading companies will be highly automated and flexible to accommodate shifting priorities and demands.
The technology focus will embody human needs, making the shift to man + machine rather than emphasis on one to the exclusion of the other.
Education and training will be a career-long activity with both education institutions and companies utilizing advanced technology to speed and enhance the effectiveness of the learning process.
Collaboration and partnerships will bring together competitors and peers to leverage industry opportunities in new and exciting ways.
Industry consolidation will create new powerhouses, while entrepreneurial activity will abound in specialty areas.
Beyond 2030, change will not slow.
Continued commercialization of new technologies and enhancements of tools will emerge in waves of development throughout the following decade out to 2040.
Today, top executives of most material handling and logistics companies are over 55. Many are over 60 and a fair number are approaching 70. The mix at the executive team table reflects experience, success and a good bit of gray hair.
The next decade promises to see a significant number of leadership positions transition to younger executives. The demographic shifts from older Baby Boomers to younger Baby Boomers, mixed with emerging Gen X and Millennial executives will bring new skills, perspectives and approaches to the industry.
Source: U.S. Census Bureau data. Graphic by Burchette & Associates.
These demographic shifts bring more than just age changes to the top ranks. Decision-making styles, risk tolerances, technology knowledge, global perspectives and comfort levels with change differ in this group from their predecessors. Members of the emerging group are comfortable with a higher degree of uncertainty, an environment most have experienced throughout their lives.
While some senior leaders will continue to lead through the next decade, others will elect retirement. Across the board, a lot of change at the top will happen throughout the industry. With that change comes loss of legacy knowledge, experience and valuable peer networks.
A concern commonly voiced among a number of younger executives is the potential loss of legacy information and expertise held by those retiring – information that is not widely known or well documented in some companies. Younger executives recognize the Importance of this key and sometimes proprietary knowledge and are seeking ways to capture these intangible assets as older executives retire. Companies would fare well by focusing greater attention on this information transfer.
These emerging leaders enjoy learning from their company’s executives and look forward to contributing to the future success of the organization. Their perspectives reflect a strategic view that will continue the strengths of their predecessors’s approaches and build on those with new technologies and processes. The combined result will arm their companies with knowledge and expertise vital in the Transformation Age.
Kevin O’Neill, President, Steele Solutions
“We need to pair younger executives with senior leaders to retain valuable knowledge and expertise as transitions occur.”
Living with Change
In recent in-depth interviews with seasoned supply chain industry leaders, top executives describe the industry as undergoing significant and rapid change. They are focused on making needed investments in facilities, equipment, processes, technology and workforce skills. Their view of the next 10-20 years is unanimous: the pace of change will accelerate as innovation and technology drive new approaches and capabilities.
Many have strategically positioned younger executives throughout their company to bring new ideas and skills to key operations. Technology knowledge is often cited by top executives as the area they look to younger executives to understand, navigate and lead.
Today’s leaders acknowledge the pace of change will increase throughout the next two decades, but they remain uncertain about the timing and scope of impact various trends may exert. Many view this uncertainty as unsettling while others are invigorated by the excitement of new frontiers.
Younger executives view change as a ubiquitous marketplace and competitive factor, and see technology as a valuable enabler of new levels of efficiency, speed-to-market and profitability. Technology is also viewed as the means for meeting increasing customer demands for customization.
Those under 50 are familiar with a wide range of digital, automation and engineering technologies. But just as their senior executives do, they rely on technology and engineering specialists in their company, integrators, and service and product partners to select and execute new platforms, equipment and processes. As a group, they tend to have a higher level of comfort than their predecessors in guiding their company directionally without having mastery knowledge of the technical tools required for successful execution.
In viewing the future, both groups believe advances in technological, engineering and data decisioning tools will drive continued improvements in safety, efficiency, time to market, and business partnerships and collaboration. They also share beliefs that consumer demand for customization and immediacy of delivery will continue to shape material handling and logistics in the future.
As a time-honored tradition, industry leaders actively pursue networking opportunities to examine and share ideas related to industry trends and changes. For many, their long-held friendships with company and industry colleagues represent important ties enabling productive collaborations and partnerships.
Younger executives are seeking meaningful industry networking opportunities. They view these opportunities as one of the most vital ways they can learn from other industry executives as well as global trend experts. They highly value inclusion in industry and association meetings and events, describing these opportunities as key to their continued professional growth and development.
Generation Z Workers
By 2030, the younger Gen Z employee group will bring another wave of new work styles, skills, preferences and expectations to the workforce. Their leadership styles will be impacted by the Gen X and Millennial group they encounter in their first decade of working, but they will equally impact corporate cultures and leadership models by the sheer size of their generation and their strong convictions and belief systems.
While a lot of attention is focused on meeting the needs of Millennial workers in 2020, companies need to prepare now for this next influx into the workforce. Representing a group larger in size than Millennials, numbering roughly 65 million in the U.S. and 2.47 billion worldwide, this generation will impact the industry from both within as employees and without as customers. 1
By 2030, older members of this group will be emerging as young professionals. This group is already known for high expectations for workplace diversity, inclusiveness and technological savvy. 2
Due to their lifelong exposure and use of technology, this group actively uses a variety of technological tools in their personal and work lives. 3 They look to technology rather than people as the first stop for information, whether that is to learn something new such as a game or a process, or to communicate among peers and co-workers.
The timing of Gen Z emergence in the workplace aligns well with the increasing prevalence of smart technologies, data decisioning tools, and geographically dispersed workplace locations.
The youngest generation emerged in 2010. The children of Millennials and GenZ will be entering the workforce by 2030, bringing with them a new reality of the world. Theirs is truly a viewpoint shaped by a technology lens and a global perspective.
Growing up with digital platforms, this group is already influencing families and institutions. 4 In the workplace, this generation promises to be the one that is skilled and prepared for innovation of thought and execution of new ideas. The grandchildren of Baby Boomers and Gen X , Gen Alpha employees will realize the dreams of industry leaders who are pioneering change in the dawning years of The Transformation Age.
The grandchildren of Baby Boomers and Gen X, Gen Alpha employees will realize the dreams of industry leaders who are pioneering change in the dawning years of The Transformation Age.
Gen Alpha are growing up with technology and digital platforms shaping their life experiences. Artificial Intelligence will power many of their choices and decisions, from clothing to careers. Augmented reality and virtual reality games and tools will prepare them for a workplace that manifests an environment of change measured in seconds not days or years.
Raised in environments customized and personalized for family and individual preferences, employers will have to deliver workplaces that mirror the context of individual uses.
It is not too early for the industry to address how this generation is educated and trained. Courses, content and delivery channels beginning with toddler toys can impact adult workforce readiness skills.
The Gen X and Millennial groups will bring greater diversity to leadership and broader workforce participation in the industry in the coming decade. Today’s industry leaders welcome greater participation by these groups evidenced by their support of industry and company initiatives to recruit and hire qualified candidates across the board. Global diversity initiatives in STEM education over the last decade are reaping an increasing number of diverse candidates for the industry.
In recent interviews, industry executives voice beliefs that having more women and members of various ethnic groups in leadership positions will help evolve industry practices related to Human Resources and contribute to greater understanding and improved relationships across supply chain participants.
Industry executives’ recognition of the need and their willingness to pursue greater diversity in the workforce are already helping the material handling, logistics and supply chain industry attract more women and more people from varied ethnic groups. Many industry firms participate in local education collaboratives to attract high school students in all demographic groups to careers in the field. A number are now advocating for more involvement with schools and students in primary grades to ensure skills are developed and interests nurtured well before secondary education courses and degrees are selected.
In the 2030-2040 timeframe, greater diversity in the industry will be shaped strongly by the Generation Z group that demands inclusiveness in real terms, not just numbers. 5 Their collaborative nature will impact the development of work groups and shared accountability systems that will increasingly drive integrated processes throughout the Transformation Age. One can expect the same impact from Gen Alpha. Age, gender, sexual identity, religious preferences, and even national citizenship will become less important than workplace credentials, with expertise and skills becoming the true differentiators. The proverbial “A Team” will become a respected, highly diverse group of individuals who work collaboratively across corporate ecosystems of employees, suppliers, and customers.
New technologies such as smart automation, robotics and augmented reality will enable older men, women and physically challenged individuals of all ages to participate in job classes previously less attractive to them due to physical labor requirements. As these technologies replace physical labor, and job requirements shift to intellectual capital, more individuals will qualify and be attracted to a larger field of jobs. This growing diversity will be present throughout the supply chain and have attendant impacts on related company cultures, policies and procedures.
Shifts in the organizational culture within supply chain industry companies began in earnest in the last five years. Success in the coming decade warrants a more significant evolution, one that literally transforms the Human Resources department’s functional scope to encompass all facets of Employee Experience (EX), and builds a climate supportive of innovation and discovery, collaboration and integration of functions, and career-long learning.
This dynamic requires attention now as expertise in these areas becomes as important as investments in smart automation and digital technologies.
Companies will need to increase funding for human resource initiatives over the next five to ten years in order to prepare, create and sustain the environment required for success in the Transformation Age. These investments are in addition to those needed for technical training. Additionally, existing management and leadership curricula will need to be retooled or developed anew to support the evolving environment.
While younger workers may come aboard with more finely honed technical expertise, communication skills for successful collaboration across the enterprise will be an area of increased need.
Industry firms need to become learning institutions and employees need to become active learners. A culture of career-long learning will differentiate leading companies and characterize industry champions.
Labor Force Shortages
Coming into 2020, the single greatest labor force challenge reported across the industry is finding and retaining qualified skilled workers. The outlook for the next decade and beyond brings no relief to that situation absent significant changes in the utilization of smart automation equipment and processes. Hence the evolving scenario, where the situation is not solved but rather changed by new approaches.
Both seasonal and permanent labor shortages abound. This situation already demands changes in recruiting, salaries, training and retention practices. Enhanced strategies in these areas will serve companies well in the future, as shortages and churn in the labor force are expected to continue. Projected demographic, education and training trends do not support an adequate solution to this labor shortage in the coming decade. Automation of jobs is viewed as the single greatest opportunity for relief.
The race to solve this issue is moving quickly. Companies that are able to marshal the financial resources to address their labor shortage through smart automation as soon as possible will reap significant financial benefits over the next 20 years while enhancing their speed to market and competitive positioning. Those who cannot make such investments in the next five years may lag behind at best or cease to operate or be acquired by larger organizations by the end of the decade.
Automation of Jobs
Industry leaders expect continued growth in automation of jobs, resulting in significant loss of people in some job categories. With this view comes the positive expectation for an increase in safety, efficiency, time to market, customization capabilities and competitive positioning.
Executives who have invested in new smart automation technologies and processes in the last 24 months report a good experience, a positive ROI for most investments in fewer than 12 months, and a belief that continued automation will benefit their company over the next decade. Some are accelerating their plans for additional investments in transforming their equipment and processes, which will result in increased job losses over the coming decade. The ripple effect of these job losses across the industry will in turn create economic market impacts over the next two decades.
While equipment and technical investments increased in late 2018 and early 2019, some slowing occurred in the latter half of 2019. Economists differ in their forecasts for 2020 through 2025, but industry business owners and leaders indicate a desire to continue investments in smart automation and emerging technologies in the coming years. The pace of the investment remains the question.
Current struggles with finding and retaining people with specialized skills fuel the belief that when those jobs are automated in the future, companies will experience less risk and lower costs related to the labor force.
Most companies that have moved forward with smart automation believe the challenge is one of skilling-up and leveraging the potential of Man + Machine.
Some industry integrators report their clients are uncomfortable with reducing their labor force headcount even as they implement new automation. The concept of hiring fewer people, especially during peak periods, creates concern for those who are not yet fully automated. This represents a short-term challenge in adapting to change.
Bottom line, executives at all levels share a view of the future that includes fewer employees and increased use of automation. There is no debate about the result, just differing time frames based on the size of the company and the financial resources available to implement new processes.
A New Mix of Workers
The vision for the workforce in 2030 and beyond is one that looks very different from what exists today. The relative number of physical labor jobs will decrease significantly, being replaced by automation, robotics and innovative processes.
Jobs requiring technical expertise in data management, data analytics, sensors, robotics, artificial intelligence (AI), and augmented reality (AR) will increase. Management jobs will place greater value on critical thinking, problem solving, creativity, and risk management. Technology skills will become a ubiquitous element of leadership and management resumes.
Leadership positions will require a working knowledge of a variety of digital software and hardware platforms and data decisioning tools in order to develop, execute and effectively measure operational models and business strategies.
The demographics and psychographics of the labor force will shift significantly by 2030 and continue to evolve through 2040. These changes, combined with shifts in job roles, will provide a work fabric and culture that is fluid, collaborative, diverse and smart.
Some but not all companies will increase the number of outsourced employees used for specific jobs, including “gig workers.” Those who elect this route will be challenged in managing company, brand and technical value belief systems across an employee base that is not fully engaged within a single corporate structure.
A growing element of human-automation interfaces will increase productivity while changing the very nature of the work environment, especially in manufacturing and distribution facilities. By 2030 advances in robotics, AI, AR, sensors and telematics will allow industry players to leverage workforce capabilities well beyond today’s operating levels.
Education and Training
Corporate needs for a skilled workforce are expected to increase over the next 20 years, requiring added focus on this topic, investment in at least collaborative solutions if not in-house delivery, and expectations for continued training of employees throughout their careers.
The skill sets required for success in the material handling and logistics industry in the Transformation Age fall into two large categories: (1) highly technical skills related to smart automation, data decisioning tools, and new technologies, and (2) cognitive skills related to critical thinking, innovation, problem solving and business process management. A significant overlap between the two areas involves knowledge and use of technology.
In 2020, company leaders report that education institutions and private training programs are not filling their need for qualified employees in either category, and are especially lacking in the area of technical skills. In some part, the lack of people interested in the skilled job categories is to blame.
Some companies are expanding their in-house training capabilities or partnering with universities to develop customized offerings to enhance employees’ knowledge and skills. The projected trend calling for life-long learning and skills enhancement is adding cost stresses to company budgets, a reality not expected to be abated in the coming decade.
Promising approaches include augmented reality enhanced training and customized programs developed and delivered collaboratively by employers, universities, community colleges, private training/education companies and equipment manufacturers. The mix of online and in-person curricula to deliver training has become well accepted and increasingly adopted. Remote, digitally delivered training is rapidly becoming the norm.
Industry initiatives for collaborative and networked training on topics of noncompetitive skills and issues represent an opportunity for cost savings and development time efficiency. Other industries such as financial services and legal and accounting professions have successfully leveraged pooled resources for education and training as they have undergone significant and continuing growth and transformation.
The concept of incremental academic or training courses leading to a degree or certification coupled with work experience, or “experiential education” as it is sometimes known, represents a path forward for many students who otherwise could not bridge the gap between education and a career in material handling and logistics. Companies benefit from this approach as well, as employers have the opportunity to work with students during internships and apprenticeships. 6
A growing cost factor for industry players is the need to invest in training to support the use of new technologies and digital tools across their workforce. This training is vital for the successful execution of an integrated information-based culture and for collaborative initiatives reaching across an enterprise and beyond to industry suppliers, partners, and customers. Increasing training budgets to support this growing workforce requirement is imperative for success over the coming decade. Without this ongoing education and training, the full benefits of investments in new smart automation and digital processes will not be realized.
Managers and leaders in the industry would benefit from programs addressing cognitive skills related to critical thinking, problem solving, creativity, innovation and discovery. Expertise in these areas as well as management approaches to risk management, flexibility, and resilience will be market differentiators in the years to come.
Training to prepare companies to deal with change management is something every industry player should be utilizing given the rapid change environment that exists today. From the board room to the factory floor, openness to change, mindset and skills for adapting to new approaches, mental flexibility and resilience are critical success factors that need to be taught, practiced, modeled and nurtured.
Another growing need in industry training is programs to address new types and styles of communication and management practices across an increasingly dispersed workforce. Cultural business values and expectations will have to be conveyed and practiced by individuals and work groups who often may not be in the same physical location. Remote working is expected to expand significantly by 2030, requiring tools and training to support this new work culture to be developed and launched within the next two years.
Expectations for continued consolidation in the industry bring with it the need for training to facilitate rapid integration of people and processes post mergers and acquisitions. The financial services industry learned quickly during the massive bank merger spree in the 1980s that financial benefits expected from mergers were impacted significantly by not just systems integration but the degree to which company cultures, brand promises and customer experiences were integrated and aligned. In fact, banks often found that systems integration could be delayed but people alignment could not.
1 Lee J. Miller and Wei Lu, Bloomberg, “Gen Z is Set to Outnumber Millennials Within a Year,” August 20, 2018
2 Kelvin Claviria, Vision Critical, “New Report on the Values, Attitudes, and Behaviors of the Post-Millennials,” April 24, 1019, visioncritical.com
3 Jeremy Finch, FastCompany, “What is Generation Z and What Does it Want,” May 4, 2015, fastcompany.com
4 Adrianne Pasquaerelli and E. J. Schultz, “Move Over Gen Z, Generation Alpha is the one to Watch,” adage.com
5 Katie Miserany, SurveyMonkey, “Trying to Recruit Gen Z,” Focus on D&I, surveymonkey.com
6 Cheryl Richards, WE Talks, “Where Will the Value Lie in the Workforce of the Future,” February 19, 2019.
Just as today, one size will not fit all operations in 2030. But by that time, the leading and even average performing industry players will have changed their environments to accommodate and leverage new processes, equipment and technology. By 2040, these environments will be further enhanced with developments not even under discussion today.
Industry experts paint a picture of 2030 and beyond that is a highly automated, productive, scalable and flexible environment. Technologies commercialized in the last decade will be further enhanced by 2025 and new innovations and capabilities will be in use by 2030. By 2040 the landscape will be truly transformed.
A critical key for success will be having the right environment in place to optimize performance. Leadership vision, a flexible, collaborative operating model, and supporting business strategies and processes will be required to inform and leverage workplace automation and digital tools in a highly integrated ecosystem. Without that approach, companies will miss opportunities to optimize earnings and competitive positioning.
Manufacturing plants will range from those with a small number of human workers to facilities that are truly “dark factories” running 24/7 and managed through digital interfaces with technical managers located onsite or hundreds of miles away.
Flexible “pop-up” mobile facilities and equipment will be utilized to enable rapid deployment of processes to meet seasonal or special market demands. Everything from mobile conveyer belts to packaging equipment will be modular and enabled to plug and play with permanent resources. Key design challenges will need to be addressed to achieve the speed and efficiency of today’s embedded equipment.
Distribution centers will range in size from large structures suited to service Panamax ships to small and geographically dispersed facilities located close to customer delivery points in urban settings. Loading platforms will be automated for robotic loading onto electric delivery vehicles
Retrofitting old plants with new equipment may become a significant challenge for some companies. Many of today’s manufacturing facilities cannot easily incorporate robotics and other innovative equipment solutions due to space constraints. Equipment manufactures are addressing these issues today with plans for hybrid and smaller-sized solutions in the works. Over the coming decade, companies will have more choices from which to select as they implement new or additional equipment.
George Prest, CEO, MHI
“The physical environment for material handling will transform over the coming decade. Smart technologies will improve operating efficiencies and advanced digital decisioning tools will enable scenario planning for adapting to dynamic market conditions. “
Urban designers and transportation experts predict a growing number of parking facilities, once overflowing with cars in urban areas, will be underutilized by 2030 and vacant by 2040. These spaces will be retooled to house manufacturing and distribution companies in major cities.
Malls and large retail box facilities will be converted and used as distribution centers. Some retail space will be retained for consumers to experience products such as large home furnishings, automobiles, music and TV systems. Studio experiences will showcase and teach skills ranging from gardening and cooking to sports. The lines between product sales, personal experience and experimentation, and art will be blurred.
Rural areas with good access to transportation networks will become attractive for some highly automated manufacturing sites and regional distribution facilities due to lower land costs, lack of need for a large labor force, and good access to other rural customer delivery centers. Improvements in broadband infrastructure in rural areas will be critical as an economic development asset required for entry to industry participation.
As in homes, ambient computing will be located throughout industrial and commercial facilities. Virtual assistants will facilitate tasks. Architectural surfaces will double as touch screens and other environmental features will include sense-sensitive technology – making “with the wave of a hand” a meaningful gesture.
Investments in data security and corporate and personal privacy within the workplace will increase as these issues gain more focus with the proliferation of digital tools and platforms.
Onsite solar and wind generation will be used to replace or augment public utility electric generation, reducing or eliminating the power bill and thereby freeing up cash for other facility expenses.
Electric vehicle fleets, made up of a mixture of autonomous and human-driven models, will ferry materials between facilities.
Autonomous vehicles will be incorporated into a variety of freight and passenger uses. Enhancements in visual and spatial capabilities will enable safety and speed. These vehicles will operate in the same space as human-driven vehicles, requiring more sophisticated vision and anti-collision systems than the robots and forklifts operating inside facilities.
Drones will monitor inside and outside environments, structures, people and processes. 1 Light-weight supplies, components and goods will be moved between facilities and inside facilities with specialized robotic drones. By 2040, passenger drones will be part of the Urban Air Mobility system ferrying people among facilities and short-distance stops. 2
Smart Automation and Digital Tools
Supply chain business facilities will be characterized by high levels of smart automation, digital tools and environments that facilitate and protect those tools.
Edge computing will be prevalent, leveraging proximity to data collection, cloud computing capacity and 5G or higher bandwidth. These digital capabilities will optimize functions ranging from product design, inventory control, and scenario planning, to production cycle management and freight delivery. This digital strategy will also allow large sectors of the supply chain, and more functions within each, to be simultaneously optimized.
A quantum computing capability, accessed on a shared network platform, will provide Individual companies digital speed and capacity well beyond their infrastructure and allow businesses of all sizes to compete with powerful data and analyses. Companies will be able to solve a variety of supply chain functional challenges, synthesizing solutions into a deployable enterprise strategy.
Technology requirements will be enabled by new telecommunication networks and satellite constellations, locally located edge devices, cloud computing, 5G and higher broadband capacity, innovative screens, wearables and ubiquitous computing devices and terminals. New configurations for office and operational areas to accommodate these technologies will be achieved without significant new construction requirements, but may require new HVAC considerations for temperature and humidity control.
Standardized industrial software will enable digital connections and collaboration throughout the manufacturing and distribution processes and the broader supply chain components. Increased open architecture and standardization of software will facilitate installation of equipment and speed investments across functions and facilities.
Industrial software and specialized apps will multiply over the coming decade, increasing customizable options for specialty manufacturing and packaging.
Satellite constellations coupled with 5G and later broadband will increase digital speeds, reduce latency, open new markets and expand access to new customers.
Artificial Intelligence will empower most digital functions and many management processes. AI becomes a predominant feature by 2025 and ubiquitous by 2030.
Augmented reality platforms will enable new forms of collaboration and engagement across physical space and time. AR technology will be incorporated into many functions, from equipment operators to delivery workers. Virtual reality platforms will be utilized for training and sales and marketing initiatives. Consumer uses will speed development and use of industrial applications. Both AR and VR applications will multiply in 2020 and continue to spread throughout the next ten years. By 2030 these technologies will be embedded in a broad variety of operating devices as standard features.
Autonomous mobile robots and smart telematic forklifts will be ubiquitous. Early struggles in adapting the workforce and workplace for robotics will be resolved by 2030, facilitating a more rapid and pervasive adoption over the following decade.
For more on workplace tools, go to TOOLS section of this report.
People at Work
Geographic disbursement of employees, a trend gaining ground in 2020, will continue to grow over the next two decades. Companies in all parts of the supply chain will employ workers at all levels who work from home, from satellite offices or shared public work spaces. Digital interaction among workers will increase versus face-to-face interactions.
As use of gig and full-service contract workers increases between 2020 and 2030, facility requirements for touch-down work space and secure guest digital access will increase.
People will work collaboratively in teams more than ever before, and that team work will be conducted face to face and over digital interfaces. Job descriptions will not speak to command and control as much as to skill sets, with more communication occurring across multiple levels of seniority. The need for collaborative work environments will change the look of factory, warehouse and office spaces to support group and individual tasks as well as communication across the room and across the globe.
Wearable, wired clothing and devices will be ubiquitous by 2030. Some of the technology will be personal devices, while others will be corporate assets used by team members while at work.
Recurring investments in facility and equipment upgrades will be required to provide cybersecurity as well as privacy and security of the workforce.
Go to WORKFORCE section of this report for more in-depth discussion on workforce topics.
1 Lukas Schroth, Drone Industry Insights, The Drone Market 2019-2014: 5 Things You Need to Know,” droneii.com; Millie Radovic, Drone Industry Insights, “Global Drone Outlook 2020: What’s on the Agenda,” droneii.com
2 Duncan Jefferies, Hack & Craft, “Are Passenger Drones About to Hit the Skies?” January 9, 2019, hackandcraft.com; Aerospace Technology, “Despite Safety Concerns, Drone Taxi Service Will Soon Become a Reality, March 21, 2019, aerospace-technology.com
Risk management and the resilience to adapt quickly to changing conditions and needs will be key market differentiators in the next 10 years. Both require planning, revised business approaches and new tools.
Good news for industry businesses is the significant increase in AI and digital modeling capabilities that have emerged in recent years. These scenario planning tools enable risk taking with guard rails. Multiple options can be tested, including changes in competitive positioning, market conditions and significant events and opportunities. Different risk tolerances can be set, guiding tactical execution as events unfold.
The more difficult challenge may be to align mindsets of leadership teams, board of directors, investors and other key stakeholders.
Taking steps now to create a consensus around adaptability and agree on actions to be taken under a variety of scenarios will serve leaders well in this dynamic environment. The pace of industry and market changes is only going to increase, making this competency a vital success factor in the years ahead.
“Moving forward, more emphasis will need to be placed on a variety of factors such as human capital risk, third-party management risk and cybersecurity,” says Shawn King, senior vice president of strategic execution and operations at Wells Fargo and a former chief executive of an industrial manufacturing firm.
King cautions that planning for change needs to include risk assessment and prevention for initiatives such as implementation of new equipment and technologies. “New factors such as workers operating new equipment but using old equipment knowledge and experience can lead to errors and failure to reap the full benefits of new technologies.”
Another risk analysis need King expects to grow in the future is assessment of third-party contracts.
“As outsourced services increase, the number and types of risks introduced through third-party personnel, systems and processes will grow.”Shawn King, SVP, Strategic Execution and Operations, Wells Fargo
King agrees with supply chain leaders’ expectation that cybersecurity will continue to be a significant risk factor in the future. But she believes cybersecurity specialty firms are better positioned to assess company risk than internal teams in many cases. “A cybersecurity risk audit is best performed by professionals outside of the firm, bringing specialized tools and threat information that most internal staffs would not have.”
The coming decade will bring traditional business and industry risks, as well as a number of new risk factors. King and other risk management experts recommend plans that incorporate a broad variety of topics:
Shawn King, Sr. V.P., Strategic Execution and Operations, Wells Fargo
“Risk management should be a key factor in managing any business at any time. But the pace of change is accelerating and I expect risks will multiply and take on different profiles. A key will be to identify the sources of potential risks and then develop a plan to manage those issues within acceptable tolerances.”Read More
Brand, Marketing and Sales Management
Organizations approach brand management, marketing and sales in a myriad of ways. For the coming decade, a number of principles and practices are critical for success.
Strategy is key: Strategic thinking and problem solving will be key assets in these functions. Much like in operational areas, scenario planning will be needed to underpin resilience to changing competitive forces.
Scenario planning will be needed to underpin resilience to changing competitive forces.
Market segmentation, research and measurement will be critical strategic tools and data analytics will fuel tactical execution.
User Experience Rules: The outlook for the decade promises a strong focus on customer experience – also known as user experience (UX) – beginning with purchase needs and considerations and extending through shipping, usage and disposal or re-use.
This concept describes all aspects of interaction between a customer and a brand or company, including all of the organization’s services and products. User experience is a broad concept, one that incorporates experiences across the spectrum from word-of-mouth references to social media commentary and personal use of products.
When someone calls for a replacement part, they have a user experience. When they operate equipment, open a shipping box, or visit a website, that’s user experience.
All forms of interaction – real and virtual – will be critical in customer purchase decisions, sales transactions, usage, service delivery and brand loyalty. Even a customer’s anticipation of what something like a robotic process might be can come into play.
In support of this perspective, brand managers must champion a customer-centric environment throughout the company. Everything from product design to delivery channels should be driven from a user experience point of view.
User Experience is broader than the more familiar concept of customer service or the digital reference to User Interface (UI).
UX is at the core of customer expectations for brands, companies, product and services. It reflects the customer’s valuation of many factors, from access, ease of use, and friction of return processes to navigation of a website and brick and mortar shopping. It can include sensory experiences such as the fragrance in the air of a retail shop or a brand sound element in an advertisement. It’s the whole spectrum of experience.
UX is the essence of what the firm of the future should be built around to meet customer expectations, to drive value and to reap profits in the Transformation Age.
Ashish Shah, Senior Director, User Experience, GEP
User Experience: Providing Customer Value Nets Big RewardsRead More
Omni-Channel Marketing: Omni-channel marketing approaches will be needed to address all facets of user experience.
This approach provides customers with seamless and integrated shopping with a unified message, voice and brand value proposition.
The number and type of communication channels will increase and the interrelationships among them will be complex.
Voice search and controls, video on new smart surfaces, holograms and true three-dimensional images – technically referred to as “3d free-space volumetric images”-– will be added to the marketing communications. This spectrum was broadened significantly in the last decade with the power of social media and alternative media formats.
Brand and marketing elements will need to be refined. How should your brand “voice” sound; how should your brand be personified? How many seconds will you have to engage a prospect with your message before they move on to something else? How will you incorporate the voice of the customer and convert voice search to sales?
To be successful, omni-channel marketing requires significant collaboration and information sharing across the business enterprise, as well as integrated customer information systems that yield actionable, timely information.
This decade will see the art and science of marketing become merged more than ever before.
Digital Approach: Increases in smart automation will produce corresponding increases in data on market conditions, customer profiles, product usage and competitive factors. The key will be to create meaningful, actionable information to drive business processes and meet customer expectations.
Brand managers must champion a customer-centric environment throughout the company.
Scenario planning will be needed to underpin resilience to changing competitive forces.
Brand managers must champion a customer-centric environment throughout the company.
How should you utilize equipment maintenance data to manage customer relationships or create sales opportunities? Are your edge systems in manufacturing plants or distribution centers interfacing with marketing systems to capture opportunities?Are your customers reacting differently to robotic processes than human interactions?
Investments in new data management, analytics and system interfaces will be needed to leverage new computing capabilities and create greater value for marketing and sales purposes and for the enterprise overall.
In many cases, investments in new systems will be more cost effective than trying to tie together legacy systems. For example, legacy systems may require an inordinate amount of time for retrieving and cleaning data by analytics staff. Newer systems and approaches will free these experts to spend time on creating actionable strategies from information gleaned across multiple systems. Outside providers should be considered as they may provide significant leverage and cost efficiencies to the processes required for updating marketing information systems and capabilities.
Collaboration: Leaders in brand, marketing and sales management will need to collaborate with each other and with other functional departments across the enterprise. Never before has such collaboration been more important to the success of business. The collaboration needs to be active and supported with transparent, shared information systems and decision- making processes.
The number and type of communication channels will increase and the interrelationships among them will be complex.
Finance, risk management, product design, information technology, manufacturing, warehousing and distribution are all key marketing and sales partners who have critical information and who drive processes that impact customers in some way. Shared insights can lead to innovation and even small improvements that benefit the customer and ultimately the bottom line.
Relationship Management: While data and digital tools will be critical information sources, personal relationship management of key prospects and customers will continue to bring added value. In this highly digital world, people crave personal interactions for what they view as key purchases and significant service issues.
The same is true for transactional touch points for all customers. Employees need to be empowered with information and processes that allow them to provide customers with quick, expedient solutions, whether online, on the phone or in a retail store. To this end all business functions must work together to support first line employees’ customer interactions.
Leading with Vision
The decade ahead requires vision, leadership and innovation from brand, marketing and sales leaders. Success in retaining customers and winning new business depends on a unified corporate vision with flexible means to accommodate a rapid pace of change.
The key will be to create meaningful, actionable information to drive business processes and meet customer expectations.
Market and customer insights must be embedded in the corporate strategy and risk management scenarios.
Brand positioning should be defined and managed for the user experience across every element of the company, including the employee experience.
Rapid change strategies for branding, marketing and sales must be developed to address dynamic market and competitive conditions.
The art of communication must be amped and adjusted with the science of data analytics.
Graphic design will need to accommodate diverse and new delivery channels and devices.
Collaboration with other company leaders can lead to shared insights and discovery.
Brand, marketing and sales functions will have a critical role to play in the coming decade as leaders of change, creators of customer value and contributors to corporate financial success.
Brand, marketing and sales functions will have a critical role to play in the coming decade as leaders of change, creators of customer value and contributors to corporate financial success.
The decade ahead requires vision, leadership and innovation from brand, marketing and sales leaders.
In 2020, sustainability is no longer viewed by most companies or people as a special initiative, but rather as a critical responsibility and accountability. This perspective will prevail throughout the decade.
Pressure from investors, employees and customers will not abate on this topic in the coming years. Expectations will remain high and stakeholders will expect to be able to confirm brands, companies and their supply chains are fulfilling their promises. Transparent views of compliance with sustainable practices will be a requirement.
A heightened interest in health and ecology by consumers along with companies’ deep sustainability commitments will drive purchase choices and usage behaviors on both consumer and commercial fronts.
Products and processes that support sustainable practices will be marketed for differentiated positioning. All features and benefits of products, from packaging and component parts to end-uses, can be promoted around sustainable value.
End-use of products and packaging will rise in importance, supporting growth of new businesses for disposal, recycling, and secondary markets.
Government policies and regulations related to sustainability will continue to shift, driven by political motivations and scientific debates. Industry leaders note compliance is growing as a cost of business, with variable impacts as regulations change.
Reverse logistics will gain increasing attention and added risk over the decade, says David Franchina, head of the environmental practice at McGuire Woods.
“As interest builds around sustainability in the supply chain, added risk points related to compliance are emerging.”
Franchina notes that some products considered safe for shipping to retail outlets or direct to consumers can be reclassified as hazardous waste when put into the supply chain for returns. Examples include items with ingredients such as nicotine, pesticides and pharmaceuticals. “Once classified as hazardous, these products must be stored, labeled and shipped in specific ways, Franchina says. “Hefty penalties are already being meted out and will mount for this issue. Companies need to retool their supply chain practices to account for these types of regulations.”
On a broader front, Franchina points out consumers are now recognizing more contaminants in every day life – from straws to Styrofoam – and making purchasing decisions based in part on companies’ sustainability practices, or the lack thereof. “These impacts will drive product development and supply chain practices in multiple industries, with billions of dollars at stake.”
David Franchina, Partner, McGuire Woods
Technology Advances and Business Trends Combine To Create Positive Environmental Impacts in The Transformation AgeRead More
Success in the Future
The industry landscape will continue to change and material handling, logistics and supply chain firms will be different in many ways in 2030 and 2040 than they are today. Making those differences the elements of a successful, prosperous business requires vision, planning and action today.
Senior Director, User Experience
User Experience: Providing Customer Value Nets Big Rewards
Emmy Lou Burchette sits down with Ashish Shah to learn about User Experience.
“Knowing your customer- the user of your products and the coveted target of your brand. More importantly, understand how they experience everything about your company. That is where you should begin in the journey to deliver value and win business in the highly competitive race of the decade.
“User experience is what underlies that value proposition.”
So says Ashish Shah, senior director of user experience at GEP, a leading global supply chain consulting and technology company headquartered in New Jersey.
“The key for success in this area is really a cultural shift, beginning with the top leadership. This is not about tools and technology, but about the belief that providing value to customers is the primary goal of every quarter of your company,” says Shah.
“Employees need to be viewed in the same way,” advises Shah. “If you provide value to your employees, demonstrate empathy and respond to their preferences and needs, you are modeling how you want customers to be valued as well.”
Value must be delivered in context of the ways customers experience your products and services. It’s not just product features and benefits.
“I was formerly the Director of Experience Design at KPMG. The company brought in KPMG professionals from all of our offices to a learning center for continuing education and renewing credentials. The firm wanted to make sure an employee’s trip to the center and their experience there were streamlined and convenient.
“In support of that objective, my design team designed a guest experience application with a unified digital experience layer that sat above different systems and became a pocket companion throughout the journey. Once the employee signed up for a learning session, beacon technology identified the user via their smart phone and responded to guideposts in different locations to provide relevant information.
“When you arrived at the airport, that technology became a guide for information. It guided you to your shuttle service and to the correct classroom at the Learning Center. It also provided you with your room access and helped you identify others who were visiting the center that had similar professional interests so you could meet and network.
“The experience of attending a class added tremendously to the value of the course in the minds of the attendees. Another benefit was that attendees experienced the convenience the company wants to provide their customers.”
Shah emphasizes, “Context, empathy, convenience and simplicity make for a powerful, winning formula for success.”
How would this apply to hands-on use of equipment in manufacturing facility or distribution center?
The first step would be to understand the work in that setting and to hear from the operators of the equipment. What are they trying to achieve, what tasks do they perform, what obstacles get in their way?
Using that information to drive your equipment design will allow you to provide value in product features and benefits. It can be something as important as the turning radius of mobile machinery or as simple as the size of a cup holder. The size of a screen, the resolution of the display, all of these things contribute to user experience.
It’s important to note that a single piece of equipment has to meet value expectations from multiple employees. There are many touch points from seeing or hearing advertising to placing an order or getting maintenance. Going back to my earlier example, that piece of machinery has to be offered at a price that appeals to the purchasing officer and a life span that appeals to the CFO. The equipment brand must be aligned with the brand values of the purchaser.
All of this is about user or customer experience.
How does the digital ordering process contribute to user experience?
That is hugely important. Even though the customer has not yet used the product, they are experiencing the brand in that moment. Let me give you an example I have often used with my team.
When you go to a typical online site to place an order you have to enter
your name, shipping address, billing address, credit card number, credit card expiration date and the 3-digit CVV number at the back of the credit card. It takes what seems like a long time and that moment also gives you time to reconsider that purchase.
In contrast, some brands now offer you the ability to place an order using services like Apple Pay or Google Pay using the information stored on your phone. So you just make one tap and all of the information is there. Minutes turned into seconds for the purchase. The experience just got so much easier, simpler, convenient. And the brand you are purchasing just got the glory even though Apple or some other provider really provided the technology to make that happen.
In my view, that’s an experience. It’s an experience for the company – they didn’t lose a potential buyer in the purchasing process – and it’s an experience for the customer who received instant gratification when it was easy to buy the equipment and that gratification is doubled when the equipment arrives on time and works as promised.
How does user experience differ or support brand positioning?
There are several elements of a brand, and many people confuse them. For example, a brand mark is part of an identity system. That is important as a visual representation of the brand. But that is only one element of the positioning.
By comparison, UX is the way humans experience the brand – how the brand is embodied in every touchpoint. It includes the positioning when a prospect has a need and thinks about a product, makes a choice, buys it, receives it, opens it and uses it. Then there is maintenance or even the return process. All of those touch points are part of the customer experience and the brand needs to be positioned correctly through all of those spectrums. If your brand positioning is about simplicity or convenience and you promote your equipment as easy to use, make sure the ordering process is as well.
Let’s drill down a bit more about how UX should impact the design of equipment.
In a design department, the engineers need to understand who they are designing for, what is the persona of that user, and what is the context of the times and places that product will be used.
For example, are all users in one country? If not, the engineers need to take into account that the average height of people in some regions differs from what you find in the U.S. So you may have to have different models or configurable models to ensure users in different countries can operate the machinery correctly and without physical stress.
Testing is also an effective way to learn about the user experience. Build a prototype and test it with different users to learn what solutions work best.
The insights from users will help you design a better product.
Be sure that testing is then expanded to include the shopping process as well as the purchase process, delivery, unpacking, installation and servicing. It is important to look at the whole ecosystem of use.
Can you give me some examples of companies that you believe are doing a good job with UX?
Three immediately come to mind.
The first one is Apple. This is a company that came into prominence by making personal computers, iTunes and iPhones. But now they are extending into the financial landscape and they are leveraging the
I own an iPhone. Apple knows that and sends me a message that if I’d like to apply for an Apple Card just go to my digital wallet. I go to my wallet and there’s my invitation for applying. They ask me just 4 things – what is my zip code, what are the last four digits of my social security number, what is my annual income and what is my date of birth. I answered those four things and in less than 20 seconds I have that Apple Card ready to use for any online purchase from my phone.
And the physical card came in 3 business days. When I opened up the package I didn’t have to call anyone to activate my card. I just put it near my phone and it activated and now I’m ready to use the physical card.
Now I’m using the card and the statement provides a lot of information. They designed it so it actually brings up a map of where I spent money. It is much more than just a financial statement. They have done informative visualization, one that really educates me about what I spent, where I spent it and how much I need to pay so I won’t pay any penalty.
A second example is Panera. My family likes their food and we live close by so I’ve spent a lot of time there over the last ten years and have experienced how they have transformed.
Originally, I used to go there and I would stand in a queue. I would stand, order and they would sell me the food. Then came the day when I could use a kiosk, I didn’t have to stand in line and they would deliver the food to our table. If there wasn’t a line I could choose to buy from the counter. So they offered several different channels for purchase.
Then came their app. I started ordering on the app and I could order takeout or in-store using their app. The app would remind me of what I had ordered in the past.
This is a great example of how a company is using technology to improve the customer experience for convenience and simplicity.
My third example is Home Depot. When I used to go to Home Depot I would struggle with finding things. Now I can use their app and see where things are located in the store and search for things that I need.
They have also added tools that let me take a picture of something and it can help me measure the dimensions so I’m buying the right stuff. All of that makes my project easier, not just the shopping. My user experience extends to doing the project.
How can technologies such as Augmented Reality impact the user experience?
In 1960, NASA literally had to break down building walls to install an IBM mainframe computer. That wouldn’t have to happen today…you can add tremendous value with AR, especially in demonstrating or selling large equipment. Think about a large piece of equipment that is manufactured on the east coast. They prospective buyer is on the west coast. It doesn’t make sense for the equipment to be shipped just to see how it would fit into the customer’s facility.
Using AR, you can see how that equipment would literally be placed in the facility, you can gauge the level of sound the machine makes. Things like spacing around equipment or distance between machines are critical elements to the installation.
Before AR, you might have to guess at the fit, or even take down a wall to bring in the machine.
How will Artificial Intelligence play a role in improving user experience?
We are entering a time when we will have increasing amounts of data. That data needs to be translated into actionable information. AI will help us do that. Many companies are already leveraging this technology.
Companies can adjust product inventory, manufacturing schedules and
even product designs based on algorithms that use past behaviors to predict future patterns. You could learn that in the month of March your demand for specific merchandise will increase by 15%. That is valuable information to everyone in the supply chain.
Transportation uses AI to predict shipping volumes and plan for shared loads. This predictive analysis allows companies and end customers to realize lower costs and faster deliveries.
The applications can extend to things like security access to equipment or even your personal car. If you are trying to carry and load something onto a truck or a car, your hands are full. Now if you have the electronic key in your pocket, all you have to do is slide your leg below the truck bed or car trunk, and the vehicle knows you are in the vicinity. The ttrunk opens automatically and you can put your supplies inside. That shows awareness and empathy for the user’s needs. You just improved the user experience exponentially.
What are the best ways to measure your success in delivering a positive user experience?
You need to use an array of different measures to evaluate every part of the process. Measure metrics from the website, measure time of day and day of week sales in brick and mortar sales, measure ad recall and messaging, monitor returns and maintenance needs, use customer satisfaction research.
But I believe the most important measure is to use prototyping with users and learn from them. That process allows you to drill down on specific issues and not only learn what they like and don’t, but why they like something or not. That qualitative information is so valuable to improving your product or service or delivery channel.
Can you summarize how companies should approach user experience?
Begin at the top and make sure the leadership team understands and supports the strategy of driving company success with a customer-centric view.
Then build processes that are customer-centric and assign everyone accountability for user experience. But don’t make that a broad concept of accountability. Educate every employee on how their job, their role supports that accountability and reward them for excellence in delivering the best user experience.
David A. Franchina
Environmental Practice Leader
Technology Advances and Business Trends Combine To Create Positive Environmental Impacts in The Transformation Age
Dave Franchina is a partner and the environmental practice group leader at McGuire Woods. Based in Charlotte, North Carolina, his practice takes him all over the U.S. to advise and represent clients on legal, regulatory and compliance matters involving environmental and sustainability issues.
Emmy Lou Burchette talked with Dave about trends impacting the material handling, logistics and supply chain industry and how he envisions progress in the coming decade relative to the environment and sustainability.
Thinking about the material handling, logistics and supply chain industry, what will be the big drivers around sustainability in the coming decade?
Four trends come to mind that I think will play an important role in this decade.
First is the intersection of advances in technology with the desire for efficiency and lower costs. This factor will drive a lot of industrial and commercial initiatives that will also benefit the environment.
If you use technology to create higher capacity truck loads, essentially filling empty space, you gain incremental efficiency. By doing that you also need fewer truck loads, thereby reducing carbon emissions.
This process carries an interesting dilemma that I’m sure transportation managers have high on their list. More cargo in each delivery is a plus, but they have to make sure they are not mixing products on trucks that when combined could create an environmental hazard.
Overall I expect we will see solid gains from these shared mobility strategies.
Another trend is that some manufacturers are creating a cyclical process where they use their waste products in their production. Lumber companies used to burn their excess wood. Air quality regulations became much stricter so that waste went to landfills. Now more companies are trying to manufacture with the waste. Creating wood pellets for fuel for themselves or for others is an example of that sort of thing.
These lumber companies are also using scrap lumber to create shipping pallets which is another example of circular economy initiatives that will grow in the future.
Third is the growing challenge of managing reverse logistics. This issue will grow in importance and it is a bit quirky from a regulatory standpoint.
Let’s say you ship pharmaceuticals or e-cigarettes. When they are delivered for sale to consumers the shipments are not regulated from an environmental standpoint. But if those products get in the return cycle, they are deemed by regulators to be waste and can be reclassified as hazardous depending on their composition. Then you have a greater risk to contend with. You now have to store, label, and ship in a certain way.
Whole Foods was recently hit with a multi-million dollar fine for not managing reverse logistics correctly. So managing the reverse logistics process will become a more involved challenge and an important one.
The fourth trend is the rapid increase in the move to alternative fuels. The advances in this area will begin to pay big dividends over this decade. The U. S. has already seen reduction in carbon as a result of the move from coal to natural gas for a lot of processes. In the future, I expect we will see a lot migration to electric solutions.
Wind and solar generation will grow significantly.
Are there any downsides to consumers and businesses adding solar or wind energy infrastructure to their properties?
The utilities will have increasing challenges in managing the grid. That will get better with time.
What about electric vehicles?
In the past, issues with batteries have kept us from achieving greater use of electric vehicles. Batteries work well for short distances. With advances in batteries, we will be able to driver longer distances which will speed the use for supply chain deliveries.
Along with those advances will come a greater demand for metals like lithium for the manufacture of batteries. We will need to find other ways to make batteries because the supply of that natural resource is not endless.
An interesting fact is that lithium is found in Gaston County in North Carolina and also in southern Virginia.
What about delivery trends, both to businesses and consumers?
We all have to rethink the desire for immediacy. Some say that
e-commerce is a more efficient sales and delivery model. But those processes are creating a surge in deliveries which puts more trucks and vans on the road. Those additional miles impact air quality. The stacks of cardboard reveal the indulgence is not necessarily environmentally friendly.
The good news is that companies of all sorts are beginning to adopt electric fleets in growing numbers. Delivery services like UPS and FedEx are investing in electric delivery vans. If you combine that impact with more efficient freight loads, we can achieve huge gains in air quality.
Do you envision the use of nuclear energy increasing over the decade?
No, for several reasons.
First, the complexity of nuclear engineering makes it a more demanding process than the alternatives. Nuclear power plants are very expensive to build and historically have drained utility resources before they are ever in operation. Look at the recent high overruns at Georgia Power.
Second, there will be continued opposition by groups who believe it is dangerous. The negative press is often more than a utility wants to weather.
Third, other sources are now cheaper – both renewables and natural gas.
Thinking broadly, how does America’s infrastructure impact energy consumption?
We have the challenge of great distances. So much of our environmental impact is driven by transportation. We also consume a lot of space with homes and businesses.
If you compare the U.S. with a country like Ireland you can see the difference. In Ireland people tend to live in small houses and they don’t drive very far for jobs. Its easier to be virtuous if your country standards for housing are different and if you can live and work in locations that are close.
Frankly, a lot of flawed decisions were made in the U.S. in the automobile age. Our highway system and local roads allow people to live all over, which requires extensive infrastructure including energy.
Do you expect more regulatory mandates relative to energy use in the next decade or two?
In the U.S. we have standards, legislation and regulations. Generally speaking, if the government sees a problem, then they institute regulations. By comparison, in Germany there is much greater collaboration between industry and the government in the development of manufacturing solutions and energy applications. So I think we will see different levels of regulation around the world.
What about cleaning up brownfields and the impact that creates?
That process has a very positive impact. For one the use of existing infrastructure makes sense. We just need to clean up any contaminants on the property. Otherwise, the land is abandoned and the contaminants remain and we don’t get to leverage any existing infrastructure such as roads, rail access, water and sewer.
In Europe, business is forced to use existing developed land rather than
expand their development footprint. There is a lot of benefit to that from an energy and infrastructure standpoint.
Shawn King, Senior Vice President
Strategic Execution & Operations
Risk Management Division, Wells Fargo
Managing Risk in the Transformation Age
Shawn King is the senior vice president of strategic execution and operations in the risk management division at Wells Fargo and the former chief executive of an industrial manufacturing firm.
Andrea Cooper talked with King about risk management strategies for the Transformation Age and her expectations for emerging risk factors.
Shawn King is no stranger to risk management on the front line. As CEO of an industrial manufacturing company, King navigated the dynamics of market conditions, the challenges of workforce management and the upside opportunities of launching new products. As an executive with Wells Fargo she has had the chance to help a variety of business unit operations manage their risk profiles.
Shawn, how do you view risk as an element of the challenges leaders will face in the Transformation Age?
Risk management should be a key factor in managing any business at any time. But the pace of change is accelerating and I expect risks will multiply and take on different profiles. A key will be to identify the sources of potential risks and then develop a plan to manage those issues within acceptable tolerances.
How can a leader of a company, division or business line identify those potential issues?
The strategy and business planning processes at the corporate and division levels should always incorporate risk assessments. Just because you can offer a new product or enter a new business doesn’t mean you should. You have to assess the risk of doing so. I think most leaders are aware of that. But where they might get surprised is in the ways new types of risks are emerging.
What types of risks might be new over the coming decade?
Some of these may be new and some may just grow in importance. But here are several examples.
I expect there will be growing human capital risk, especially in four areas. The first one is making sure your workforce is enabled with the skills you will need in the future. Investments in training will be required and you will need to decide whether to deliver that training internally or use an outside provider. It’s a risk letting someone else be the developer of your talent. But make no mistake: this is not an option. You must prepare the workforce for significant changes and shifts in technology, equipment and processes.
Another type of human capital risk deals with workforce operations. A lot of material handling, logistics and supply chain companies are enhancing their capabilities with new types of smart automation, technology and digital tools. If a company installs new equipment, the training of equipment operators is key. Companies need to make sure employees are not operating new machinery with what I call “old machinery knowledge and perspectives.” Safety and productivity are huge risks in new equipment installation and training is key to preventing problems.
Diversity in the workplace will grow significantly. Human resource issues will need to be managed with an eye toward different cultural and religious beliefs and customs. The mix of young and older employees will change. I expect we will see more older employees as people seek to work longer, and at the same time we will be incorporating the work styles and behaviors of new generations.
Probably the biggest labor force risk is going to be to manage people over a more dispersed footprint. A lot of people won’t be coming to an office or even a manufacturing facility every day, but will be working from home or from vast distances. Even someone managing technology at an operations center may be doing so from a facility hundreds of miles away. So leaders and managers will need to learn to effectively use technology platforms for communication and to find multiple ways to imbue the workforce with corporate standards and reinforce brand values.
How will the human resources department play a role in these labor force issues?
The HR group needs to be repositioned to have a more strategic role. They need to have a seat at the leadership table and help guide the company in decisions around the workforce and how to redeploy team members as the industry evolves and changes.
You need to look at who you have in HR – you will need a different kind of strategic skillset, much more as you would expect with your CFO or someone in the sales and marketing side who’s looking at the future. It can’t just be about managing benefits and on-boarding.
You need a plan for dealing with the increasing complexity of machinery and technology with computer-aided interfaces. Does your workforce have the skill sets to leverage those machines? Work will become less labor intensive and more mind intensive. You have to have a plan for ensuring your workforce is prepared.
What about other categories of risk?
I think certainly looking at third-party management is important. This is the outside vendors that a company is working with in a variety of different areas. A lot of firms are outsourcing more services and I expect that trend to climb. They need to consider what risks those providers might expose to their company. What do they know about the vendor’s stability as a business?
How are the technology interfaces secured and protected? What information will the vendor’s employees gain access to? Are those risks acceptable versus having those services delivered by the in-house workforce?
Vendors are usually engaged in areas that are outside of the company’s core competencies and we see a lot of that particularly in technology, data mining, and data management. I expect we will see even more of that with advanced smart automation. Those third parties may have access to some of the most critical and sensitive information. For example, they could be dealing with financial information, employee data or proprietary manufacturing data.
So you need to have a rigorous approach for how that information is being managed and protected. If that vendor goes belly up, have you done your due diligence to understand who are the alternatives? If they are the strongest player, what happens when a problem does occur? Most of this is common sense, but it must be planned for and managed.
On the flip side, using non-employees who are specialists in a field can be a valuable source of the most current information and technologies.
Sustainability is a topic that is getting close scrutiny from activist investors, employees and customers. Those groups hold company’s responsible for their actions as well as actions by others in the shared supply chain. Companies must have a transparent view of their entire supply chain and have a plan of action to deal with any risks that arise.
Supply chain risk is an obvious one and will grow in sensitivity. A good example today is the impact the Coronavirus is having on access to raw materials, component parts and manufactured goods coming out of China. The supply chains are deeply impacted and I’m certain a lot of companies are scrambling to adjust their production schedules and sales forecasts, and in turn manage their customer relationships.
Another area that will be important over the next 10 to 20 years will be to manage change in an intentional way with regard to operational processes. So many advancements in technology over the last decade will lead to new commercial applications in the next 10 years. So I expect a lot of new smart equipment and software will be purchased, which means firms need to assess everything from financing to maintenance agreements. The new mix will require new processes and schedules, not just new equipment. Managing that change in an intentional way will be key.
One other key factor will be to manage brand and user experience in a fast-paced dynamic market environment. A quick example for this topic relates to new equipment and making sure that you have an adequate back-up plan when you install new equipment. Do you have a parallel process to ensure production until the new equipment is proven? Or if you are using rental equipment do you have access to a replacement within a reasonable drive distance that can be brought in if there is a failure? These precautions save you from failing to meet customer deadlines.
What about cybersecurity?
That is certainly a big risk today and will continue to be an area requiring focus in the future. The best approach is one that involves using outsourced specialists. Those types of speciality firms have the threat data and tools to help you with cyber risks that your internal team won’t have. But even with these specialists, your cybersecurity strategies will need the support and involvement by all areas of the company.
Will advances in digital platforms help with managing risk?
Yes and not just managing risk, but helping companies identify risks and developing a more informed view of appropriate strategies for action.
A variety of digital tools can be used to help firms develop scenarios around various risk factors. Artificial Intelligence and machine learning algorithms are getting better and faster so businesses have the ability to frame scenarios, test them and respond either in real time or, if its part of a planning exercise, develop plans to have at the ready. I expect those tools will become more common in all types of companies.
With those planning scenarios you get a picture of what outcomes are possible, which allows you to then have important discussions on risk tolerances and choices you would make given specific risk factors. A rigorous risk management process gives you the ability to prepare for tough decisions before a challenge hits.
But just measuring the risk potential is not enough. Key executives must work closely with their board of directors and leadership team to educate them on these scenarios and reach consensus and buy-in on alternative strategies before the risks present themselves.
The topics will vary by company, but might include things like the need to determine if the leadership team is in agreement on divesting a legacy business if returns reach a certain level. Or, what are the expenses involved in exiting a business line and what impacts will that have on the brand? How will the company respond to competitive pricing or product shifts in the market? Will the board support expansion into new geographic markets – and which ones?
It used to be that these questions were discussed around fairly high levels of analyses. Now we can pursue these issues at much finer levels and pinpoint signals that require specific action. It’s a matter of degrees of tolerance and pairing actions with risk appetites.
You are not making risk factors go away. You are reducing potential negative impacts of those factors.
How should leaders identify new types of risks?
I believe an important fundamental is to stay curious. You really have to be curious about tomorrow. Look at what’s happening in other industries, and not just in your adjacent space.
Talk with trusted advisors and peers. Talk with your financial advisors, your insurance carriers and any business consultants you use. They work across industries and can give you insights into areas of risk that might be new to you.
Leaders in manufacturing might want to look at the medical field and how data is being used properly and not properly. Personal information is being shared digitally, so if you use cellular to send the information, what is the risk that data will be accessed by somebody else? What are the threats of somebody getting into your system through a digital communication channel or digital sensors and hacking into your process?
Does corporate culture come into play in managing risk?
Absolutely, and that can be a big factor in identifying and preventing problems.
For example, if you involve the engineers and the operations team in selection of new equipment you benefit from their knowledge and hopefully gain their support for new processes and approaches. They can also point out problems they foresee that will help ensure the best choices are made and that implementation will go smoothly.
You want to have a culture throughout the company that allows employees to raise their hand and share ideas or say something isn’t right. That open flow of information can prevent a lot of problems.
An issue under some debate right now is identifying who owns the data being captured with new sensors and smart automation. Another aspect of that question is whether companies risk losing control of their information with these processes.
The data ownership question should be spelled out in the purchase or leasing contract or any per-use service agreement. The specifications need to include very specific language around intellectual capital, production data, equipment operation data, customer data, access to data, protection of information – all of the ins and outs of anything that vendor could possibly access, see or hear.
If you do agree to any data access by others, you’ve got to know and understand how that data is going to be used. Where does it go? Who do they resell it to? These types of disclosures are critical.
Lay out your expectation. If that’s not part of the equation you’ve either got to negotiate it or find a different vendor.
I’ve heard a lot of discussion about more industry consolidation in the future. How does that introduce risk into a company?
Well, that topic is worthy of a book. But seriously, companies need to do a thorough due diligence before agreeing to an acquisition.
Before considering an acquisition be sure you have an overarching strategic vision and a set of goals to guide you in the M&A process. Being bigger is not always a winning strategy – but gaining market share in a highly profitable market will position you well for the future.
You have to be clear about your appetite for risk in the geographic area you are thinking about entering. Your firm may be a leader in a specific technology, equipment or process, but when you enter a new market there are a lot of factors unique to that market that can impact your success.
What we have for compliance requirements in the U.S. may be very different in another country. Even within the U.S. municipal regulations can vary from county to county. That’s in addition to regional or state regulations and laws.
Do you understand the culture of that country? Do you understand the competitors in that market? What is your appetite for risk in that business market under those conditions?
You might need to know and understand local construction ordinances and permits. How permits are issued in Charlotte might be different than how they are handled in Atlanta or London. Something like that might be $50 in Charlotte but $500 in Atlanta. You have to reflect that into your profitability estimate for the upside of that new business opportunity.
Are there any other topics you’d like to share?
I think this next decade is going to pose a lot of exciting opportunities. New tools and new perspectives will give us the ability to leverage opportunities, and with better risk management we can have greater confidence in our short and long-term activities and decisions.
The convergence of advances in computing power, technology, digital decisioning tools and change mindsets brings unprecedented opportunity to the material handling and logistics industry. And to our world.
What are you going to do with it?
The world needs new vocabulary to convey the continuous state of change of multiple factors that morph at differing, rapid rates. Even quantum physics doesn’t quite capture the conundrum that many are experiencing in this new era.
Success in the Transformation Age requires innovation and transformation for every industry player in some fashion or another. Clarion calls for new and improved manufacturing capabilities, integrated information flows, enhanced delivery channels and accelerated product design headline the list of needs for advanced approaches and tools.
This phase is messy for the material handling and logistics industry and will continue to be so, especially for the next five years. The promotional promises of new concepts outnumber announcements of solutions truly ready for commercialization and impact. Companies trying to embark on an evolutionary path are constrained by facility issues, cultural bias and even their own past success. So why change? Why invest in new tools?
If material handling companies and logistics companies want to be in the race, much less win it over the next five to ten years, investments in new, advanced approaches, mindsets and tools are required. Those that lag might not be around by 2030.
Industry leaders and process managers must gauge the timing and impact of new capabilities both for immediate use as well as for longer-term consideration. Some will have many shades of possibility. Others will morph in utility and effectiveness as customers implement solutions in live applications. Just as multiple versions of consumer products such as the Apple iPhone have been launched over the last decade, so too will various robotics and IoT capabilities emerge over time.
The key is to not be distracted by “hype locusts” as Jason Schenker, Chairman of The Futurist Institute cautions, but rather to distinguish among the factors that should be acted on today versus ones to watch for future commercialization and impact.
Innovation typically occurs in an iterative fashion. Waves of success and failure characterize the process, whether discovery is taking place throughout the industry, across an enterprise, or in a functional department.
Jason Schenker, Chairman, The Futurist Institute
“The key is to not be distracted by ‘hype locusts’…”
The change environment characterizing the Transformation Age dictates a need for clarification of corporate purpose and a definition of desired outcomes in order to choose how to best move forward with innovation and change related to equipment, tools and processes.
Companies should explore and define which outcomes they are pursuing and what action are tied to each. This strategic planning process helps clarify and direct tactical decisions and execution, and ties those decisions to longer-term corporate objectives.
Desired outcomes for transformation generally fall into three large buckets:
- Improve Operating Efficiency and Productivity
- Develop New Capabilities
- Meet Customer and Market Demands
Actions required to deliver value for each outcome are different and at times overlap. Key to the execution is matching technology, processes, and people to strategies and outcomes. Without such clarity, leaders may be frustrated with the gap between innovative steps and value goal achievement.
This process also helps companies wrestle with strategic change in more manageable steps. For example, purchase of automated sorting equipment with updated maintenance sensors can meet immediate needs for efficiency and productivity improvements and improve scheduling of down-time for maintenance. This use of smart automation checks the box for moving toward strategic improvement without overhauling workforce mindsets and workplace environments. The key is to make sure that investment aligns with the longer term vision for the process and facility.
Implementation of new capabilities for packaging or information flow, usually requiring significant investment of time and resources, provides opportunities for market differentiation and growth. Who knew the refrigerator box would sell more soft drinks? Again, this type of investment should be analyzed in the context of the long-term strategic view of the firm and be compatible with the vision for the broader equipment and technology platforms.
Customer demands will drive the industry in many more ways in the future than in the past. A key question for strategy consideration is whether the demand represents a differentiating opportunity or one that can be satisfied with a collaborative industry approach with no loss of market position for contributing players.
Test and Learn
The evolutionary nature of the Transformation Age calls for companies – from CEOs to design professionals to factory floor operators – to ask and answer questions about adapting processes and tools to achieve goals for growth, profitability and sustainability. Creating a culture around this approach is a key success factor in fostering innovation and change.
The scientific process of testing and learning, a journey proven to reap rewards for those with patience and vision, is a practice encouraged by Industry leaders contemplating strategic initiatives for this decade.
While testing is widely practiced in design activities, the process also reaps benefits in equipment purchases, installation, and implementation, as well as helping improve training and maintenance. Customer touch points can also provide environments for learning by testing messaging, pricing, packaging and promotions.
A powerful benefit of the invest + test + learn strategy is that it can reset the mindset across the workforce – establishing a collaborative culture, and accelerating the acceptance and deployment of new tools and decisioning systems. In the best scenarios, change represents steps toward opportunity.
Brett Wood, President and CEO, Toyota Material Handling North America
“The key is to invest and test. That philosophy drives our product development.”
Much has been discussed about the value of pilot programs in transforming company processes and approaches. Consensus among industry experts points to the importance of how such programs are led, structured, measured and monitored.
Companies with experience in utilizing pilots as part of their innovation and transformation initiatives point to a number of key success factors:
- Own and demonstrate innovation and transformation at the top.
- Create a corporate culture of innovation that rewards new ideas.
- Clearly define the desired transformation outcomes of the innovation pilot in terms directly tied to the company’s long-term strategy.
- Educate your board of directors and other key stakeholders about the purpose and use of pilot programs.
- Create pilots that involve more than one department or division. Cross-department collaboration results in more ideas and solutions, and increased probability of success.
- Structure pilots to provide rapid success or failure. Learn quickly and adapt.
- Reward employee efforts in the process, not just the results.
- Share learnings broadly within the company to accelerate new ideas and future pilots.
- Fund pilot initiatives adequately.
- Commit to a long-term pilot framework: pilot, learn, adapt, repeat.
Keys to Success
Did you ever wish you had known something before you began a new initiative? Industry leaders and experts have a general consensus on ways to increase the probability of success. Keep these critical success factors in mind as you plan and execute new tools:
- Determine long-term strategy, then tools. For what purpose are you implementing smart automation and digital tools?
- Build for flexibility, scalability, and modular enhancements.
- Identify a long-term software platform: The biggest threat to effective implementation is using multiple devices with different vendor software.
- Invest time in getting everyone on board.
- Talk to others who have implemented solutions you are considering: what lessons did they learn? For example, the pattern of adoption can make a difference.
- Budget for training costs and allocate training time for everyone from equipment operators to information users.
- Acknowledge implementation may be messy at times, with a learning curve for combining machinery + people + environment.
Smart Automation & Technology
Opportunities abound for new, smart automation and technology in the material handling and logistics industry.
The next twenty years will see dramatic changes in equipment and processes. Many of the changes will be enhancements to initial product releases, while others will represent step-change technology innovations.
Stepping away from specific equipment and technology choices, innovation in engineering capabilities available today and those expected to be viable over the coming decade will provide new avenues for cost efficiencies, product design, equipment training and customer solutions.
A key factor in identifying the value of new capabilities is to evaluate both their singular contribution as well as the value found at the intersection with multiple other factors.
As an example, new material handling or manufacturing equipment may yield greater volume and precision. But the pairing of that equipment with sensors that feed AI and analytics platforms provides opportunities for information to inform and enable scheduling, maintenance, training, sales and marketing. Adding edge computing resources paired with cloud broadband power creates near real-time information for management decisions. Utilizing AR tools that pair human work with machine intelligence reduces time and improves performance for operations, maintenance and repairs.
The combined lift becomes exponential in benefits and payback.
Quick Overview of Smart Technologies
A transformative view of industry tools includes a number of known categories, with expectations that the benefits offered within each will expand over time.
Continue to scroll through the copy below for more in-depth discussion, trend expert interviews and related articles.
Cognitive engineering is a multidisciplinary approach to analysis and design of complex systems and equipment utilizing human factors, psychology, cognitive science, human-technology interaction, and systems engineering. The desired outcome is to provide a wholistic experience enabling a faster, more productive, safer, and at times, more meaningful work environment. This approach characterizes much of the innovative design work underway in the industry, with a growing emphasis on the human-technology interface expected over the coming decade.
Cognitive engineering enables positive man + machine interfaces and process improvements which lead to easier adoption, and safer and more productive equipment and technology uses.
Applications for the workplace include improvements in equipment operation, maintenance, and safety for both human and autonomous operators. Today, cognitive engineering applications paired with telematics (telecommunications + informatics), abound in vehicles, from highway transportation to fork lifts. Advanced features and benefits will continue to multiply.
Wider range applications include shifts in workplace environments to accommodate temperature, lighting, sound and ambiance preferences.
John Paxton, COO, MHI
“The next decade will see great strides in commercialization of new and advanced tools in the material handling and logistics industry. Every sector, from manufacturing to retail stores will see transformations in the way materials are produced, stored, transported, tracked and sold.”
Incorporation of digital measurement devices with traditional and new equipment provides one of the greatest enhancements to long-standing and emerging companies, allowing rapid capture and transfer of information. Devices incorporated into wearables and mobile devices leverage man + machine information and enable work environments.
Sensor capabilities have grown significantly in recent years, adding a broad range of human senses to engineering-based measurements. Smart wearables that utilize IoT, video, text and visualization capabilities are becoming commonplace in the industry. These IoT tools are leveraging the man + machine interface and creating real financial value. Growth in the use of these tools is expected to rise sharply over the next five years, with continued growth for the remainder of the decade as cost decreases and uses multiply.
Ease of entry makes IoT technology one that companies of all sizes can begin to implement now. Applications for use of IoT are expected to expand dramatically over the next five years, becoming a best practice standard by the end of the decade. IoT interfaces along the supply chain will multiply, feeding accounting, safety, sales, marketing and regulatory information systems. Volume will drive the cost down, enabling more companies to utilize this technology.
Innovation in use of sensors comes with friction from debate over privacy, bias, data ownership, legal and regulatory compliance, and security. These issues will garner significant attention over the next ten years.
Bill Ferrell, Ph.D., PE Fluor Professor of Industrial Engineering Associate Dean of the Graduate School Clemson University
“The variety of ways that humans will interact with the internet as well as the number of implementations are going to increase dramatically and bring efficiencies and new capabilities to the supply chain. Wearables, equipment sensors, smart robotics and more will be useful for operations, maintenance and safety.”
5 Senses and More
Many new technologies will emerge with variations based on use of one or more of the 5 human senses – See, Sound, Smell, Touch, and Taste. Human behaviors such as gesturing are being added to man + machine interfaces.
Vision and voice recognition capabilities are expanding for robotics and worker-centric facilities. Touch and gesture commands are being incorporated into digital screens, assistants and equipment. Sight is key in the AR and VR worlds and smell and taste are already a part of retail experiential strategies.
The primary message here is that smart automation and digital technologies are improving in part because of advancements that humanize the user experience. This trend will continue, in turn creating greater adoption by companies, facilitating higher performance levels and increasing acceptance by workers.
Neurotechnology is where man + machine meet, interact, and enhance the performance of both.
Neurotechnology is where man + machine meet, interact, and enhance the performance of both.
Advancements in this brain technology will be an important driver of innovation in intelligent manufacturing and material handling systems over the next 10 years, with significant commercial impact in the decade to follow.
A variety of technologies measure cognitive and affective brain functions and translate the data into meaningful insights and actions for personal, commercial and industrial uses. Hardware and software tools are used to monitor, analyze, visualize and understand brain data for analytical purposes, behavior modulation and modification, or for interfaces with smart devices.
Advances in wearables and other portable devices, telecommunications, AI and computing are converging to provide greater uses and utility for this technology. Other technologies such as Augmented Reality and Virtual Reality will grow as a response to advances in neurotechnology.
Benefits for material handling and logistics environments include workplace wellness, safety, learning and productivity. Neurofeedback on employees’ levels of stress and attention can inform workplace management, leading to healthier employees and a safer and more productive workplace.
“Many companies are already leveraging this technology,” says Olivier Oullier, president of EMOTIV a leading provider of portable wireless brain-sensing solutions.
“These solutions allow a company to measure in real-time some of people’s affective and cognitive states such as stress, attention, and distraction. This information is then used to provide work assistance such as additional training or changes in schedules.
These neuro-tech based solutions also enable someone to mind-control connected objects, software or robotic workstations.”
Controls stemming from brain function, facial expressions and motion enabled machine operation, environmental control and human behavior modulation and modification. These science-based solutions leverage personalized neuroinformatics and machine learning.
In commercial use today, neurotech devices and machine learning algorithms are combined to convert brain waves into digital signals that operate a wide variety of smart equipment. This type of user interface can be used to control virtual and real objects just by thinking, replacing traditional input devices such as keyboards and keypads.
“Use of these technologies provides benefits to both employers and workers,” says Oullier. “We need to stop asking employees to adapt to a fixed work environment and start offering work environments that dynamically adapt to the employees. The end result is a safer and more productive facility and a happier, healthier employee.”
“We need to stop asking employees to adapt to a fixed work environment and start adjusting the work environment to the employee.”Olivier Oullier, President, EMOTIV
An area of great promise for this technology is the provision of useful applications for physically impaired individuals. Through the use of this technology, those traditionally unable to participate in the workforce will find new avenues for employment. Everyday life abilities will also be enhanced, supporting greater independent living, enhanced functionality and a broader scope of activities.
Olivier Oullier, Ph.D., President, EMOTIV
“Neurotechnologies coupled with responsive, adaptive work environments provide the best working conditions and deliver great workplace wellness, safety, learning and productivity.”Read More
Augmented Reality and Virtual Reality
Already appearing in both industrial and civic settings, forecasts for the expansion of Augmented Reality (AR) and Virtual Reality (VR) applications suggest these technologies will be prevalent by 2030 and pervasive by 2040. 1
Both of these technologies enable collaborative work in real time and experiences beyond present time and location.
Augmented Reality is gaining popularity in material handling equipment operation and maintenance. Glasses enabled with AR informatics and links to service experts reduce time for equipment maintenance. Similar benefits accrue for training.
Applications include: 3
- Visualizing digital twin images and data within a real-world environment context. This application helps with equipment design, customization, training and operation.
- Quality and performance monitoring, utilizing past and present images for comparison.
- Remote assistance allowing the technician and expert to work collaboratively, sharing a view of the live equipment as well as maintenance and repair data and instructions.
- Monitoring real-time health of equipment or products from close range or distance without having to traverse the factory or distribution center floor.
With acceptance growing and equipment costs dropping, use of these technologies will greatly expand over the decade. 2
Growth in Smart Cities that incorporate AR technology tools will in turn spur industrial and retail applications.
The integration of AR and VR technologies with neurotechnology systems represents a next step advance that will emerge in this decade. This integration will spur the use of both AR, VR and neurotechnology systems.
Still in its infancy, robotics is expected to become far more sophisticated in the coming decade, moving from replacement of simple, repetitive human activities to activities humans cannot conduct or even imagine today.
A key to imagining the future of this field is to remember that advancements in AI, Edge computing, quantum computing, semiconductors, material components, batteries, electric vehicles, industrial and urban infrastructure, and telecommunications will impact the pace of change and the breadth of applications.
Industry experience with robotics over the past five years varies dramatically. At the same time, the field has moved forward with innovations, making practical applications more effective, flexible and varied.
Robotics provides stationary and mobile capabilities for transforming material handling work environments. Improvements in flexibility, safety and guidance systems promise broader adoption in the next five years.
Nuances in robotic applications now include on-demand automation of activities and data collection, providing enhanced flexibility and safety of implementation and ongoing usage. Without the need for fixed guidance infrastructure, installation is quicker and uses are more flexible in industrial environments. This change has the potential to spur adoption significantly.
Robotics for material handling are not reserved for industrial settings. Innovation in commercial and home environments will incorporate AMRs and other robotics in the coming decade. 4 Needs for moving heavy loads, from office supplies to groceries and gardening mulch will be addressed with small-scale, portable robotic equipment and devices.
Key success factors related to implementation of robotics include (1) mapping out detailed process steps to be performed with robotics prior to purchase, (2) reaching buy-in and support of the workforce, (3) investing in time and resources for operator training as well as training for others working in the shared environment, (4) investing in programming resources to ensure robotics benefits are fully realized.
Melonee Wise, CEO, Fetch Robotics
“Robots have very different applications. For example, there are robots that weld cars, some go under the ocean, others are used to deliver toothpaste inside a hotel. It’s not one thing.”Read More
Great strides have been made in drone equipment, technology, regulation and uses in the last decade, and especially in the timeframe 2018-2020. The coming decade will see much greater use of drones and a wider range of industry applications.
Competitive differentiation opportunities exist along the supply chain for movement of goods and people, monitoring, mapping, surveillance, and other services utilizing proprietary drones as well as drone services.
The 2019 drone market forecast by Drone Industry Insights calls for the drone market to hit $43 billion by 2024, representing a compound growth rate of 20.5% and tripling the market value compared to 2018. 5 The forecast anticipates Services to continue as the leading segment in the drone industry with Software growing at the fastest rate.
End-to-end solution providers are expected to continue to lead market R&D and growth.
The Energy industry leads in use of drones and the forecast states that leadership position is expected to continue through at least 2024. Agriculture and construction follow, but Transportation and Warehousing companies are the fastest growing users and are expected to take over the second rank by 2025. Most notably, Kay Wackwitz, CEO and founder of Drone Industry Insights, says “…the drone market will grow much larger than initially expected and predicted…” 6
While a lot of growth and innovation will occur in this industry, with short-term benefits accruing to the material handling and logistics industry as well as others, much work remains to address issues pertaining to public acceptance, regulations, safety and infrastructure. Progress will be rapid, but mitigated by these factors.
The drone industry is now bifurcated into two categories of drones: those with existing commercial use, and others with great promise, such as eVTOLs, but require significant investment in R&D before broad adoption and usage is expected. The material handling and logistics industry will benefit from both types by 2030.
Understanding the various types and uses of drones will be important in building competitive transport strategies for the next several decades. Each type is built for a specific purpose, including flight length, load weight, and environmental factors such as whether or not a runway is available.
Data: Drone Industry Insights. Graphic by Burchette & Associates
Development and growth in drones will be dependent and intertwined with the evolution of the broader topic of Urban Air Mobility. National infrastructure, Smart Cities, transportation technologies, regulations, public acceptance and smart automation will all play a role in the future of drones.
1 Statista, Forecast Unit Shipments of Augmented (AR) and Virtual Reality (VR) headsets from 2019 to 2023, February 19, 2020, statista.com
2 Megan Ray NIchols, How Augmented Reality Will Disrupt the Manufacturing Industry, January 19, 2019, blog.thomasnet.com
3 Karthik Sundaram and Nandini Natarajan, Augmented Reality in the Future of Automation, 2018, 8, Frost & Sullivan
4 Raghav Bharadwaj, Artificial Intelligence in Home Robots – Current and Future Use-Cases
5 Lukas Schroth, The Drone Market 2019-2024: 5 Things You Need to Know, Drone Industry Insights, droneii.com
6 Lukas Schroth, The Drone Market 2019-2024: 5 Things You Need to Know, Drone Industry Insights, droneii.com
Kay Wackwitz, CEO and Founder, Drone Industry Insights
“The drone market will continue to grow much larger than initially expected and predicted.”
Millie Radovic, Market Analyst, Drone Industry Insights
“The disruptive power of delivery and passenger drones is the first step in the radical reshaping of both the aviation industry and the way we move in urban environments.”
Olivier Oullier, Ph.D.
Brain Sensing Solutions Bring Increases in Wellness, Safety, Learning and Productivity to the Workplace
EMMY LOU BURCHETTE: I have the pleasure of talking today with Olivier Oullier, president of EMOTIV, a leading neurotechnology firm headquartered in San Francisco. Oullier is based in Atlanta, Georgia but he is talking with me today from Marseille, France. The interview is edited for brevity and clarity.
ELB: I’m fascinated by your field. Neurotechnologies is one of the newer areas we are exploring in our trend research.
Oullier: I’m glad to share information about our work. Neurotechnology are an exciting field indeed.
ELB: Let’s start with a definition. How would you describe neurotechnologies?
Oullier: Any technology that allows you to monitor or change brain or nervous system activity and ultimately allows you to better understand how people function.
People’s behavior is at the core of how we understand humans today. We try to understand how people are feeling through observation and self-reports. These limited insights are biased data on how we function. It would be as if you would evaluate how your car is working by looking at the outside, or by the noise it makes. At some point we need to look under the hood at the engine.
It is impossible to know how the humans function in different situations, in context, without understanding what is going on with their brains.
ELB: How do you measure brain activity and what do you use the information for?
Oullier: EMOTIV is a pioneer in this field. We are able to record brain activity virtually anywhere and provide access to that information so we can better understand how we function and how our emotions impact our decisions and actions.
We use this information to improve lives. For example, in work settings people can be under stress and get distracted. Distraction can cause accidents that cost lives or create situations that are dangerous or lose money.
We are human, and events and issues in our lives lead to stress and distraction. Maybe your baby kept you up last night, or you aren’t feeling well. Maybe you just didn’t sleep well or you need a work break for a few minutes. You may not realize you are distracted. But if you did you could change your behavior or ask a co-worker to relieve you for a few minutes.
The way EMOTIV builds and uses these technologies is all about improving things like wellness, safety, self-development, learning and productivity. Brain waves give us insights into how and when to change or manage our behaviors and actions.
ELB: So it’s a way of measuring and using data?
Oullier: Yes. We refer to the data and what you do with the data as neuroinformatics.
The challenge is to make sense of the data. We use proprietary machine learning algorithms. The last step is integration of that information into the work environment.
ELB: What type of devices are used to capture the data?
Oullier: There are a variety of affordable wearable devices such as headsets and helmets with embedded sensors. We recently launched earbud sensors that people are finding to be less intrusive and more comfortable.
ELB: Does this technology raise ethical questions with the workforce?
Oullier: Our mission is to use this technology to improve lives, so we work closely with employers and employees to ensure they understand and follow ethical standards. We partner with our clients’ human resources and legal departments to make sure they fully understand the initiatives.
ELB: Are there certain types of work environments where this technology is most helpful?
Oullier: The applications are universal; from factories to hospitals and office environments.
ELB: Could you give me a specific example.
Oullier: Think about someone driving a forklift, moving a dangerous, heavy container of chemicals. Our technology detects you are stressed. The algorithms calculate the chances of you making a mistake. You should not operate the forklift if you are too stressed and too distracted. If you are just mildly stressed and distracted then the system detecting this can provide you with an alert, suggest you take a break or call for some help from a co-worker.
In healthcare, you don’t want a doctor performing surgery if they are stressed or tired. Similarly, you don’t want a nurse reading critical life-saving monitors if they are distracted. Remember we are monitoring humans as they are performing jobs. In this case it’s the human we are enabling to be more effective at a moment in time.
And there are benefits outside of work. For example, we have provided car manufacturers with information to show how distracting large dashboard screens in cars can be to drivers.
ELB: What are other ways these neurotechnologies can be used?
Oullier: Training is another example. Traditionally a lot of training has been tedious. With brain sensing technology the platform can switch from one teaching approach- such as reading a handbook – to watching a video to adapt the content and keep attention high. This really personalizes the learning experience. This approach represents the end of the one-size-fits-all approach.
A lot of companies are dealing with the need to re-skill or up-skill their workforce. Some employees will really have to up their game. This situation comes with challenges. Some people may feel their job security is threatened or they may be concerned about how well they will perform with new equipment.
In these situations, a more efficient and effective way to train is to approach learning from the perspective of knowing how the person’s brain is functioning throughout the training process. The learning platform allows you to totally personalize the training process.
The value here for the employee is enormous. And that value is extended into the work environment when the technology is incorporated into live settings. The system identifies what activities are particularly stressful for an individual and remembers that information so in the future when they have to use that process, the system can provide extra assistance or request another person to help.
ELB: I can see how that would be a real benefit.
Oullier: Yes, the reality in most companies today is that people have to adapt to a standard work environment. But people are individuals, they are all different and they have to switch their brain paradigms and adjust to processes that may be difficult for them. So it is be better for the work environment to adapt to people. Neurotechnologies coupled with responsive, adaptive work environments provides the best working conditions and delivers great workplace wellness, safety, learning and productivity.
That makes it a win-win for the employer and the employee.
But personalization can only happen after we have the tools to understand how the brain works when integrated into working platforms and systems.
ELB: How would this extend beyond equipment operation and training?
Oullier: In our work with companies and private organizations we have seen big increases in productivity from changes in time of day for work shifts and scheduled meetings and changes in frequency of breaks from specific tasks. The aggregate data gives us insights into the time of day and day of week when we can have the greatest success in getting and holding people’s attention.
For example, one company has two factories on the same site. The two operations have similar staff but different tasks. One is prepping products for shipping and the other is building things. The stress levels are very different. For one group the peak attention is on Tuesday at 10 a.m.; for the other that peak is Thursday at 2 p.m. But everyone had to eat lunch at the same time to get company updates. So they customized the time of the meetings for each group to increase attention and found people retained the information better and were happier with the meetings.
We’ve seen similar outcomes with varying the frequency of breaks for different work groups. The result is less absenteeism, fewer accidents, and in some cases we find that the workforce is able to accomplish work in less time and more efficiently.
I’m telling you- the employees like it when they can meet their goals in less time.
When we organize work in blocks of time based on the data, they are able to do the work faster, and better. They work better and wellness is improved.
ELB: I’ve read about this technology working as an interface with Augmented Reality and Virtual Reality applications. How does that work?
Oullier: If you need to manipulate things in a VR module, you have to make gestures or move. If you use a neurotechnology headset and embed brain sensors into the technology the process really becomes integrated and simplified.
In healthcare, AR maps medical imaging on the body of the patient. So the physician isn’t distracted by looking away or using their hands. They can use mental commands just with their mind.
On a supply chain the technology works great. Think about the hybrid of workers working with robots. Mind-controlled robots provide silent and motionless control of the robotic system. In other situations, the neurotechnology application enables a worker to use mental commands while allowing their hands to safely execute precision work.
ELB: How much of these neurotechnologies are viable for application today versus being in the conceptual or test phase?
Oullier: These are not just promises, we have rigorous application today. Everything I have described is fully operational and in use today in live settings.
I think most people would be surprised. Our company has been around for about a decade and we have worked with companies in more than 120 countries. Today we work with organizations in many sectors from healthcare to energy power plants and factories and government facilities. We have developed fully integrated solutions with some of the biggest software and cloud firms. It is very easy to integrate our solutions into most of these other platforms.
ELB: If I am the CEO of a manufacturing company or the head of a distribution center, my question would be how would your company work with us to get started?
Oullier: Generally we start with a proof of concept phase. We study the work processes first. We want to understand the typical day of work of each group of employees at that specific facility. Then over several weeks and months, we equip the group and people get to use the technology. We require that the process be entirely voluntary in this stage.
As we collect data we are able to show the company where there are opportunities for adaptive solutions that lead to increases in productivity and cost savings. They often find they can get lower insurance premiums because their workforce has a reduction in health claims and accidents.
ELB: Do you find that people don’t want to wear the headset or use the process?
Oullier: At first they may be curious or even wary. But when they learn what it can do and give it a try they are usually big fans. The technology can be embedded in a helmet so it is not cumbersome or visible. Our newest technology comes in the form of brain-sensing earbuds which we integrate seamlessly into your work. You can still take work calls or listen to music while you wear the buds.
We use workshops to introduce people to the technology. We play games that help people understand how the system works and, most importantly, we make sure there is no stigma attached.
But all of this is voluntary. And the company must sign an agreement to not add hours; they can remove work time but they can’t add time. They also must agree they won’t promote or demote people based on this data.
ELB: Do you find that employees are concerned about their personal data?
Oullier: We do not sell the data and the algorithm we provide can operate on the client’s local cloud. We put it in the project charter that any individual can have access to their information.
Many companies just want the aggregate data. We provide dashboards to help with understanding patterns in the data. They see stats and we provide an understanding or context of what it means. Intervals and thresholds of stress over frontiers of good and bad stress. We educate the team about what is good and bad stress as related to a task.
Some companies want access to individual data, but our approach is for only the HR department to be able to connect the dots. EMOTIV does not have access to individual worker data. We want this process used in a legal, ethical and respectful way. When the process helps the employee it helps the company.
The feedback we receive tells us that employees love it when they feel their employer is making an effort to customize work to their individual and workforce needs. When they feel they are not just a number and their company cares, their work satisfaction is much higher. The care factor is real.
ELB: Are brain sensing technologies used predominantly in some countries versus others?
Oullier: The United States is way ahead. Labor laws in the U.S. reflect that Americans care about employees. The necessity to have physically and mentally healthy employees is a concept well understood in America and it is a rich company with the means to take care of employees. We have strong partnerships in the Middle East and Asia, but Europe is lagging except for Germany.
ELB: Well this is a fascinating field. I can’t wait to give the earbuds a try. Thanks for your time today.
Oullier: Thank you and I appreciate the opportunity.
CEO, Fetch Robotics
Future Trends in Robotics
Emmy Lou Burchette shares a conversation with Melonee Wise, the CEO of Fetch Robotics, on future trends for the field of robotics.
I’d like to understand the purpose that underpins the mission of your company.
Our mission is to be able to get robots to do real work with real people in the real world.
What are the primary industries that robotics serves?
Today, it is predominantly niche verticals like surgery, large industrial manufacturing and warehousing. We are starting to see service robots in general population uses, and by that I mean work areas that are not as highly skilled.
Up until 2000 most robots in niche industries were for things like container movements- moving boxes – or for processes such as welding. Now they are used in more mainstream activities. Up until now the market was primarily in highly specialized settings.
When you think about the next 5, 10 and 20 years, how would you depict the field of robotics in terms of advances in commercial applications and use by material handling and supply chain companies? I’m trying to get a sense of potential progress and the pace of that change within those three timeframes.
Robotics moves a lot slower than sectors like consumer products. We have to think about 10 year segments. For the coming decade, we are thinking about it as the warehouse era of robotics. Starting about 2015 we saw a lot of robot companies coming into the warehouse space. From now until 2020 you can expect to see that market maturing a lot with a small number of predominant players emerging.
After that, we’ll have to wait and see. We don’t know yet where the big drivers will be for the 2030 to 2040 time frame. It will probably be either medical or restaurants. We will probably know in a couple of years which direction things are moving.
It takes technology approximately 10 years to get to relatively good viable solutions. For some things like autonomous cars that time is more like 30 to 40 years. If you think about it, the first autonomous vehicle emerged sometime in the late ‘60s. Sixty years later, we still don’t have mainstream autonomous cars.
Design and development and refinement take a long time, especially when safety of humans is a factor.
For us, the warehouse market is so large, we plan to concentrate there. That’s why we developed the large platforms we need. We’ve looked at other parts of the warehousing segment we can peel off. It’s a large market. We could probably drive innovation for 30 to 40 years before looking at other markets.
What are the biggest factors that impact the field of robotics and its prospects for the next decade?
The quality of sensors is probably the biggest. As they become less expensive and improve their usability we can do so many more things.
Cloud computing will have a big impact on robotics in the next decade. Robotics is just beginning to look at the cloud and think about how to use it. That technology will make it easier to create algorithms for operating robots around people which are more dynamic environments.
What is the next big thing in robotics?
That’s a hard thing to get at. The answer is a bit different for each industry and for each application.
Robots have very different applications. For example, there are robots that weld cars, some go under the ocean, others are used to deliver toothpaste inside a hotel. It’s not one thing.
So, the next big thing is really whatever is the next big problem to solve for each purpose. Think about computers and all the ways computers are used today. There are so many different applications. It is very similar.
What are the characteristics of companies that have adopted your technology?
One of the leading factors in adoption going smoothly is having an advanced IT strategy. The company needs to be forward thinking about their technology group. Those who are not as advanced tend to have a lot of concerns about being on their network. A forward-thinking team understands the risks and knows how to deal with the risks. This applies to both security and general technology management.
The other success factor is having an operations team who is willing to make changes to make the technology successful. A lot of people have different views about robots and some are not as willing to accommodate new processes and tools. If the purpose is ill-defined and the will is not there, they won’t be successful in implementation.
Do you see a trend in adoption with firms with younger leaders or more tech-savvy leaders? Do you see that changing?
No we don’t. Most of the companies we are selling to or at least those we work with are over 40 years old.
I’ve read that use of robotics can reduce outsourcing especially offshoring for reduced labor costs. Can you comment?
A lot of it is not about reduced labor costs. More about labor proofing. It’s about creating a stable, reliable work force. A lot of companies have problems with retaining workers or just having people show up for work. The re-training and hiring new people are where a lot of cost is occurring. With robotics you don’t have that problem.
From reading your website and other sources, it seems to me that robotics is one part equipment and one part software. Is that correct?
Actually it’s more like one part hardware and five parts software.
So are the differences among robotics applications more about the software?
Does Fetch Robotics manufacture equipment and develop code?
Yes, we design the equipment, develop code and do all the assembly. We do use vendors to form sheet metal and make component parts.
What are the benefits of your unified cloud-driven solution? Do your applications work with edge solutions as well?
Our unified cloud-driven solution provides a singular, integrated
view of all of your data. Most of our solutions are interfaced directly with the cloud.
Robots are like the edge. An edge solution just means the interface is with a computer located locally at the facility. In our case that is the robot and that robot then interfaces with the cloud.
How will other technologies such as AI, neurotechnology or drones bear on advancements in robotics?
If we look at things we use as a company, we are using tools that are 20 years old. Machine learning algorithms for example take a really long time to find the right mix.
So the challenge is to find better application of the algorithms. But it’s complicated. You really can’t use machine learning algorithms on navigation but you can use it on other types of uses.
Last October at the MHI conference you talked about getting the workforce ready to work in environments that incorporate robotics. How does your company prepare and train the workforce at new client sites?
We have taken an alternative approach to training. It’s more about showing them how to operate the robot and letting them use it for their work needs. There are a lot of interfaces so learning happens quickly. The process is intuitive.
We also share information about robotic etiquette. We tell them that if they wouldn’t do something to another human being, they shouldn’t be doing it to a robot. That might be something like jumping out in front of them.
Is the use of robotics in space industries like space exploration or mining any different than earth-bound uses? How does gravity or lack thereof come into play?
Robots used in space are very different. We already build different robots for space exploration today. Looks at the Mars Rover. They have to have a lot of redundant systems. They can only communicate once every several days so they have to make the systems very different.
They have to deal with harsh environments and limited sensor technology at their disposal.
Gravity is something they have to deal with and they can model that easily. NASA operates a neutral buoyancy lab in Houston. That’s where they train in a giant tank of water to prepare for microgravity in space.
If someone is interested in pursuing a career in robotics, how would you advise them to prepare?
I’d tell them to get a computer science degree. Robotics is 90% about computer science.
Data & Digital Decisioning Tools
Data and digital decisioning tools are bringing step-change advancements to material handling and logistics. In the next five years, digital technologies could well produce the greatest changes to the industry – and to the world – ever experienced and ever imagined.
The enormity of the impact will be evolutionary, creating lasting changes to the way data is obtained, stored, analyzed and used. In turn, the resulting informatics capabilities will impact everything from material and product design to marketing and logistics scheduling.
Advancements in these technologies will continue throughout this decade and well into the next. Every aspect of material handling and logistics will be impacted and every industry sector can benefit.
Quick Overview of Data and Digital Decisioning Tools
Infonomics – or the economics of information – is the discipline of managing and accounting for information. Approached with the same rigor as other business assets, companies have the opportunity to derive and optimize the value of their proprietary information.
This process examines the production and consumption of data and the transfer of money to produce, sell or obtain information.
Data and information will drive the next two decades as never before. Sales cycles, inventory controls, marketing initiatives, risk management, production cycles, transportation schedules – every facet of the supply chain – will be data driven. By 2030, leaders in material handling and logistics will be those who generate business value from their data.
Beyond immediate important internal uses, industry players will have myriad opportunities to leverage their proprietary data for financial gain. Debates surrounding data and information ownership and privacy will increase, signaling the need for greater clarification in communication surrounding data privileges and underscoring the value of secure digital information technologies such as blockchain.
Accounting practices do not yet recognize data as a formal company asset, but that too may change as more companies and brands find financial value in leveraging information about products, markets and customers.
Naras Eechambadi, President and Founder, Quaero
Data is Great, but What You Do with it is Where the Value Lies.Read More
The digital virtual world can mirror reality in actionable ways.
Other definitions extend the concept to include processes and people. 2
Gartner defines a digital twin as a software design pattern that represents a physical object with the objective of understanding the asset’s state, responding to changes, improving business operations and adding value. 1
A screen displaying graphic representations and data on the unique and integrated operations of equipment in a manufacturing facility provides a digital twin of the actual equipment operation. This type of digital twin is useful because it allows a facility operator to see the information in an aggregated form that is actionable. The same application is useful in a distribution center to view products and environmental conditions.
Training via internet screens or AR technology can utilize digital twins to provide the workforce with realistic simulations.
Uses of digital twinning also includes predictive twins, which
model the future state and behavior of a device based on historical data from other devices. 2 This predictive tool promises to further extend the value of twinning and IoT.
Use of digital twinning is expected to expand in the coming decade as more and more of life on Earth is conducted via digital means.
Standardized Platforms and Protocols vs. Equipment Based Software
Industrial Platforms and Protocols
Adaptation of smart technology and digital tools by material handling and logistics companies would be greatly enhanced by greater standardization of industry technology protocols and software platforms. Many firms cite this issue as an obstacle in their transformation initiatives.
This issue often inhibits companies’ ability to integrate processes across equipment manufacturers and impedes valuable data flow.
Much talk about the need for standardized industrial software platforms has yet to produce a meaningful breakthrough to resolve this issue. The firm or venture that cracks this design will become the enabler of rapid transformation for many industry companies.
Home Product Platforms and Protocols
In the consumer products world, a new working group was announced in December 2019 by Amazon, Apple, Google and the Zigbee Alliance to “develop and promote the adoption of a new, royalty-free connectivity standard to increase compatibility among smart home products, with security as a fundamental design tenet.” 3
This collaborative venture aims to tackle the challenge of standardizing in-home protocols.
Apple notes in the project announcement, “The goal of the Connected Home over IP project is to simplify development for manufacturers and increase compatibility for consumers. The project is built around a shared belief that smart home devices should be secure, reliable, and seamless to use. By building upon Internet Protocol (IP), the project aims to enable communication across smart home devices, mobile apps, and cloud services and to define a specific set of IP-based networking technologies for device certification.”
This industry working group, dubbed “Project Connected Home over IP,” already includes a variety of Zigbee Alliance board member companies and welcomes other device manufacturers, silicon providers, and other developers from across the smart
home industry to participate in and contribute to the standard.
If you’d like to get involved or receive updates visit connectedhomeip.com.
The use and effectiveness of AI has increased significantly in the past 3-5 years. The impact will grow exponentially in the coming decade, affecting every industry, business, and nation. Most individuals will be impacted in some way, whether they are aware of it or not.
Ponder these stats from the “AI Index 2019 Annual Report”: 4
- In a year and a half, the time required to train a large image classification system on cloud infrastructure has fallen from about three hours in October 2017 to about 88 seconds in July, 2019. During the same period, the cost to train such a system has fallen similarly.
- Prior to 2012, AI results closely tracked Moore’s Law, with compute doubling every two years. Post-2012, compute has been doubling every 3.4 months.
- In the five months since being launched in May 2019, the T5 Team at Google almost reached human baseline in the language-based AI SuperGLUE competition with a score of 88.9. Human baseline is 89.8. Industry bets are the team will exceed a score of 90 by May 2020.
The combination of AI and smart technology is the brain behind the use of IoT smart sensors, edge computing, cloud technology, 5G and next generation broadband, satellite communication systems, and more.
Best practices around AI uses will evolve over the next decade. The most frequently identified societal considerations relative to AI, as reported in the “AI Index Annual Report 2019,” include fairness, interpretability and explainability. Standards around ownership and usage of data will continue to be key points of discussion and debate within the industry as this technology evolves and more uses and users are added.
Key areas of AI usage today include data analytics, semantic segmentation, image classification, image generation and temporal activity localization. Development of production and activity benchmarks and innovative machine learning algorithms continue to advance the technology in each of these areas.
Material handling and logistics fields of robotics, IoT, product design, packaging and transportation will continue to benefit from AI embedded solutions. Improvements in computing capabilities will enable larger data sets to be used, which in turn will improve machine learning and machine teaching capabilities.
Next steps in advancing this technology depend on improvements in algorithms used to serve specific needs. For example, to improve AI applications in robotics, improvements are needed across cognitive functions of vision, natural language, spatial relationships and task-specific knowledge.
By 2030, innovations in compute technology and processes will greatly enable speed, memory and capacity of computers and machines. Capabilities announced in the last two decades will gain traction and existing solutions will be enhanced far beyond current state offerings.
Integration across platforms, devices and processes will enable AI and IoT in commercial, industrial, consumer and military applications. Compute processes will be integrated in new ways for technology underpinning a wide array of capabilities from EV guidance systems and Smart Cities to those in complex industrial manufacturing.
“Computers were the fundamental driver of digital progress until now. Going forward, machine learning will be the fundamental driver,” says Pablos Holman, inventor and founder of Komposite. 5
He cautions, “But we need to always keep in mind, technology is just a tool, and like a hammer we can use it to smash a head or build a house. We need to become possibilitists and think about how the future could be better.”
Going forward machine learning will be the fundamental driver.Pablos Holman, Inventor and Founder, Komposite
Technology advances as well as greater integration across the computing spectrum will allow meaningful collaboration among people and processes and enable faster decision cycles, while at the same time dictating greater requirements for information sharing throughout supply chains and business and personal processes.
Compute Technologies to Watch
MIT researchers announced a 3D chip fabrication method in 2017 that uses carbon nanotubes and resistive random access memory (RRAM) cells. 6 Commercialization followed when Intel launched a 3D silicon chip in 2018. Scaling chip production has already begun, impacting product design across many industry sectors.
The advancement from 2D to 3D is significant, allowing far more chips to be placed on a motherboard, and notably, enabling greater integrated chip functions and an increase in information pathways. The resulting increase in power and speed in a small space promises to advance infinite IoT applications powering large equipment, modular
systems, portable devices and wearables.
DNA computing is a branch of biomolecular computing that uses DNA as a carrier of information for arithmetic and logic operations. Still in its early stages, DNA computing is being explored by leading technology companies such as Microsoft and attracting attention from a world community of scientists.
“As incredible as it sounds, DNA can be used for computing, says Stephen McBride, editor of RiskHedge Report and contributing author to Forbes. “One pound of DNA has the capacity to store more information than all the computers ever built.” 7
This approach has important implications for information recording and archival data storage in molecular form.
In their nature.com article on digital data storage using DNA, Luis Ceze, Jeff Navala and Karin Strauss note, “Molecular data storage is an attractive alternative for dense and durable information storage, which is sorely needed to deal with the growing gap between information production and the ability to store data. DNA is a clear example of effective archival data storage in molecular form.” 8
The researchers point out a number of benefits of this data storage tool. High density storage in the magnitude of six times that of other approaches available today will become increasingly important as more and more data is generated through a variety of smart technologies. This high density characteristic promotes long-term preservation of data in molecules at low energy costs. The ease of replicating DNA enables copying large amounts of data faster and at lower costs.
DNA also offers advantages for long-term archival storage. As the researchers note, “DNA is time tested by nature, with DNA sequences having been read from fossils thousand of years old.”
When kept away from lights and humidity and at reasonable temperatures, DNA can last for centuries to millenia. An interesting point made by the researchers is that DNA has been time tested by nature, with DNA sequences having been read from fossils thousands of years old.
Researchers and data scientists agree that this digital tool is one to watch over the coming decade. Not only will storage capabilities be improved, but other technologies that feed and use the data will be advanced as well.
Answers lie at the edge. Costs savings and digital efficiencies are to be found there too.
There is much to discover at the edge, onsite or near an industrial or commercial activity. Smart Cities will benefit as well. So will consumer experience.
While cloud computing brings great memory and bandwidth for managing large amounts of data, there is great distance between most cloud platforms and their data sources. This distance introduces latencies that reduce the timeliness, and at times the usefulness, of information gleaned from algorithms in the cloud.
Edge computing provides the geographic proximity to functional IoT sensors, and, more importantly, proximity to decision makers who may need to act expediently to the information gleaned from monitors and analytics.
Already in commercial use, edge computing is providing impact on data security, speed, reliability, and scalability. Powerful, timely data collection is driving data analytics, developed and honed in cloud environments, that provide in-the-moment actionable results.
Many of the benefits of edge computing are achieved when paired with the power of cloud computing. For example, algorithms in the cloud can be used to analyze and test data streams to optimize manufacturing production or inventory controls. The updated analytics can be delivered to the edge on a daily or hourly basis to modify operations. The same approach can be used to optimize vehicle traffic management or local weather forecasting.
Consumer experiences can also be modified with edge computing – in this case sometimes referred to as “ambient computing.” Suggestions for additional items or recipes can be served up to a shopper in a grocery store, a blouse suggestion for a shopper buying slacks, or athletic socks to someone purchasing running shoes. The suggestions are based on algorithms developed and enhanced in the cloud, with the application to specific shopping experiences enhanced at the edge.
Much of the impact of IoT and AI will be delivered through edge technology. Over the next several years, edge computing will quickly become ubiquitous, with tremendous impact over the decade.
Think big. Think fast. Really fast. 1018 fast. Quintillion calculations per second.
That’s 5 times faster than the world’s largest supercomputer can deliver today.
And the U.S. is on it.
The United States embarked on a 7-year project in 2016, known as the “Exascale Computing Project,” to develop the hardware, software and protocols to bring this capability to reality by 2021. The project promises to have a “profound impact on life in the coming decades.” 9
The project is being conducted as a collaborative effort of two US Department of Energy (DOE) organizations the Office of Science (DOE-SC) and the National Nuclear Security Administration (NNSA), to advance the country’s efforts in scientific discovery, energy assurance, economic competitiveness, and national security.
The mission of this strategic initiative is to deliver applications, system software, hardware technologies and architectures to establish “an enduring national HPC (High Performance Computing) ecosystem along with HPC workforce development.”
World-wide competition for development of exascale technologies pits the U.S. project against initiatives in China, Taiwan, European Union, Japan and India.
Along the way to reaching their end goal, Exascale Computing Project teams are developing capabilities that in and of themselves bring added value to improving current computing applications. Announcements are posted frequently on exascaleproject.org.
A 2020 Research and Markets report cites MindCommerce as seeing the advent of hybrid systems that will utilize both quantum and classical CPUs on the same computing platform. 10
Research and Markets is high on this technology, writing in their report, “These next generation computing systems will provide the best of both worlds – high speed general purpose computing combined with use case specific ultra-performance for certain tasks that will remain outside the range of binary computation for the foreseeable future.” 10
If only we could imagine…
Up until now, mankind has been constrained in using technology to solve problems by the limits of computing power, memory and speed of computers and machines. With advances in quantum computing, and growing opportunities for commercially available applications, the challenge becomes one of imagining the issues to solve.
Quantum computing is based on quantum bits referred to as qubits. Each qubit doubles the computing power of a linear bit. That increase in computing power represents enormous potential.
In a sense, quantum computing isn’t better than traditional methods – it’s different. The class of problems it can solve is different from those served well by approaches broadly embraced today.
The nature of quantum computing isn’t just about speed. Quantum computers enable complex modeling and simulation functions of large data sets. These capabilities are escalating AI, molecular modeling, cryptography, financial modeling, weather forecasting and particle physics.
On the flip side, cybersecurity experts warn that encryption strategies must be adapted to counter quantum-based attacks. 11
Already in use in well-funded scientific and technology design environments, quantum computing is being developed, tested and used by hundreds of organizations worldwide. 12
Implications for the material handling and logistics industry include escalation of development of autonomous vehicles and robotics, development of new materials for use in industrial environments, and advances in augmented reality and virtual reality applications.
Over the next decade, discovery and innovation in quantum computing, programming and problem solving will lead to novel creations and solutions for commercialization and impact.
If we can only imagine….
5G Broadband and Beyond
Coming into 2020, fewer than 30 cities in the United States have 5G broadband service, and even those do not have complete coverage across their city limits. Customers who do have the service will experience faster speeds and lower latency, translating to improved abilities for data capture and use.
Seemingly instant downloads and connections will improve manufacturing processes, business interactions, and customer experiences, whether virtual or real. Collaborative product design, freight transportation and delivery, Smart Cities, equipment maintenance, machine learning, virtual education and training tools, autonomous vehicle management, robotics execution and drone surveillance will become more powerful, customizable and effective.
While 5G is being rolled out, the next generation – 6G ,or by whatever name the next iteration is known – is already being researched and developed by engineers and labs around the world. This next generation network is predicted to be available by 2030, but may be a reality even sooner. 13, 14 The key expectations are for even greater bandwidth, and that any issues encountered with 5G will be addressed with this next network technology. During this decade, advances in other areas of technology may provide new avenues for communication technology that enhance 6G in ways not even imagined today.
An issue getting attention in the telecom industry today is the state of current fixed infrastructure – the cables, fibers and switches – and the gap between the fixed side and the quickly evolving mobile side. Most of the advancements in recent years have been on the mobile side. Fixed networks don’t have the capacity to handle the larger and faster data sets of 5G, much less what comes beyond that. The result will be delayed signals at switches and routers.
Work on future infrastructure capabilities is necessary, according to Richard Li, chief scientist of future networks at Huawei and the chairman of the United Nations’ International Telecommunication Union (ITU) 2030 focus group. He offered that assessment in, “Now’s the Time to Think About What Comes After 5G,” an article in the IEEE Signal Processing newsletter. 15
Article author, Yang Li, cites Li’s opinion that “The next generation, 6G, will likely bring applications with even higher throughput requirements. Li says autonomous vehicles, massive machine-type communications, tactile Internet, and holographic communications are all on the table for the coming years. But the current fixed side won’t be able to withstand the coming surge.”
“Fixed networks that will be able to support the 6G networks. That is the key,” says Li.
It’s all about truth and certainty – and having the information to certify that truth.
Blockchain is a distributed ledger technology that provides a way to create a secure and permanent digital record of an asset’s origin, characteristics, and ownership as well as its pathway across the supply chain.
The technology provides a digital framework through which information is documented, verified and shared.
This digital tool enables public information sharing in support of verifiable sourcing, security, safety, financial transactions and compliance. The benefits to individuals and businesses promise to drive a whole new standard for transactional relationships over this decade.
The benefits to individuals and businesses promise to drive a whole new standard for transactional relationships over this decade.
The potential is enormous and the benefits will accrue to companies of all sizes as well as consumers and members of the workforce.
Leanne Kemp, CEO and Founder, Everledger
Blockchain Fosters Greater Transparency and Stronger Worldwide RelationshipsRead More
Leanne Kemp, CEO and founder of Everledger, one of the world’s leaders in blockchain technology, says blockchain “fosters trust, transparency and accountability throughout the network.” She notes, “These are important factors in building relationships among businesses and their stakeholders, no matter their size or location.”
Kemp points to parallels with the growth of other technologies, including the evolution of the world wide web, now connecting businesses and people all over the world via the http protocol, and the emergence of a standard secure platform using the smtp protocol. She sees the adoption of blockchain as the next step in advancing technology protocols for transactions and relationships whether the participants are down the block or around the world from each other.
Kemp’s vision for blockchain is that the technology will become the global standard for securely sharing data. “This tool has the potential to become the worldwide distributed technology that brings value to every participant in the supply chain, from the origin of a raw material to the end consumer,” notes Kemp.
“This tool has the potential to become the worldwide distributed technology that brings value to every participant in the supply chain, from the origin of a raw material to the end consumer.”Leanne Kemp, CEO, Everledger
Others agree. A September 2019 Gartner publication reports the “business impact of blockchain will be transformational across most industries within five to ten years.” David Furlonger, distinguished research vice-president at Gartner, says “60% of CIOs expect some level of adoption of blockchain technologies in the next three years.” 16
A key to gaining full value from adoption of blockchain is to understand its components.
In an October 2019 article, “The Four Phases of the Gartner Blockchain Spectrum,” Gartner contributor Kasey Panetta describes blockchain as containing five elements: distribution, encryption, immutability, tokenization and decentralization. She writes, “When combined, these elements enable organizations to take advantage of the true benefit of blockchain, which is allowing two or more parties who don’t know each other to safely interact in a digital environment and exchange new forms of value and assets.” 17
Blockchain industry experts agree that convergence of advancements in multiple technologies such as AI, IoT and self-sovereign identity (SSI) will fuel blockchain adoption and expand its use exponentially over the next 10 years.
The strategic signals here point to something even bigger – to evolution in business models, not just technology adoption.
The strategic signals here point to something even bigger – to evolution in business models, not just technology adoption.
As Panetta notes, “Blockchain-enhanced solutions will lead to business model changes as autonomous agents gain the ability to commercially interact and operate independently of a human.”
The time is right to begin exploring and evaluating blockchain solutions. Adoption of key aspects now will prepare businesses for more widespread adoption and help identify future break-out opportunities for market success.
1 Gartner, Press Release: Gartner Survey Reveals Digital Twins Are Entering Mainstream Use, February 20, 2019
2 Keith Shaw and Josh Fruhlinger, Networkworld, “What is a Digital Twin and Why It’s Important to IoT,” January 31, 2019, networkworld.com
3 Apple, Press Release: Amazon, Apple, Google, Zigbee Alliance and Board Members Form Working Group to Develop Open Standard for Smart Home Devices, December 18, 2019, apple.com
4 Raymond Perrault, Yoav Shoham, Erik Brynjolfsson, Jack Clark, John Etchemendy, Barbara Grosz, Terah Lyons, James Manyika, Saurabh Mishra, and Juan Carlos Niebles, “The AI Index 2019 Annual Report”, AI Index Steering Committee, Human-Centered AI Institute, Stanford University, Stanford, CA, December 2019; (c) 2019 by Stanford University, “The AI Index 2019 Annual Report” is made available under a Creative Commons Attribution – NoDerivatives 4.0 License (International)
5 Pablos Holman, MHI Annual Industry Conference, “How AI will Change Supply Chain,” October 14, 2019
6 Helen Knight, MIT News, “New 3-D Chip Combines Computing and Data Storage,” July 5, 2017, news.mit.edu
7 Stephen McBride, Forbes, “These 3 Computing Technologies Will Beat Moore’s Law,” April 23, 2019, forbes.com
8 Luis Ceze, Jeff Nivala and Karin Strauss, Nature Reviews Genetics, “Molecular Digital Data Storage Using DNA,” May 8, 2019, nature.webvpn.ustc.edu.cn
9 Department of Energy, Exascale Computing Project, “About,” exascaleproject.org
10 Research and Markets, “High Performance Computing (HPC) Market by Component, Infrastructure, Services, Price Band, HPC Applications, Deployment Types, Industry Verticals, and Regions 2020-2025,” January 2020, researchandmarkets.com
11 Sophie Bushwick, “ New Encryption System Protects Data from Quantum Computers,” October 8, 2019, scientificamerican.com
12 IBM, Press Release: “IBM Working with over 100 Organizations to Advance Practical Quantum Computing,” January 8, 2020, ibm.com
13 Tim Fisher, Lifewire, “6G: What It Is an When to Expect It,” March 1, 2020, lifewire.com
14 Margaret Rouse, TechTarget, “What is 6G and When Will it Come Out,” techtarget.com
15 Yang Li, Inside Signal Processing Newsletter, “Now’s the Time to Think About What Come After 5G,” December 2018, IEEE Signal Processing Society, ieee.org
16 Gartner, Press Release: “Gartner 2019 Hype Cycle For Blockchain Business Shows Blockchain Will Have a Transformational Impact Across Industries in Five to Ten Years,” September 12, 2019, gartner.com
17 Kasey Panetta, Smarter With Gartner, “The 4 Phases of the Gartner Blockchain Spectrum,” October 14, 2019, gartner.com
President and Founder
Data is Great, but What You Do with it is Where The Value Lies
ANDREA COOPER: Today we’re exploring the future of data, decisioning tools and information strategy with Naras Eechambadi, president and founder of Quaero, a firm focused on providing enterprise organizations with customer data platforms.
Sitting in his North Carolina headquarters located in a chic business park on a cold winter afternoon, Naras Eechambadi checks his email from his office in India before settling down to talk with me about digital tools and their role in the modern economy.
Eechambadi leads Quaero, a digital technology company he founded in the 1990s and has built into a powerhouse on multiple continents.
I’m looking forward to the discussion about how he sees the role of technology in the coming years, and how company executives need to prepare themselves and their staffs to use this tool to be successful.
AC: Tell us a bit about technology as a business tool and how companies can use it to be successful.
Eechambadi: Technology is an important tool and it’s going to become even more important in business in the years to come – but what you do with it is where the true value lies.
A good place to start is to look back on the last 20 years and see how things have changed.
The impact has been dramatic. In terms of connectivity, in terms of data, in terms how people think about data and what uses they have for it.
We’ve seen the emergence of smart phones and apps and before that the whole advent of the internet and web services. The impact of technology has been to create a major shift in the way people do a lot of things.
AC: So you expect that type of change to keep occurring in the future?
Eechambadi: Absolutely, the changes will be dramatic. 5G is one of the next big ones that’s coming and bringing an enormous amount of bandwidth, an enormous amount of computation, right? And in a 20-year window you can probably expect three of these, or maybe four, of these evolutions to happen.
That’s just data quantities and velocity.
But what about the usage of that data? I mean, data has gotten to a point where it’s very hard for people to grapple with it. The emergence of tools like AI and machine learning will help us use the data in important ways – in making business decisions, in examining different scenarios. That’s where the value will lie.
AC: Tell me more about how that would look, how these tools would evolve.
Eechambadi: Today, AI and machine learning are in their infancy. There is so much more these things can do. For example I expect one of the major trends we’ll probably see is more automaton and more autonomous operation of all types of equipment.
If you think about it, air travel has already been automated, Most of the time, pilots don’t really fly the planes, it is all automated.
Just in the last six years, the advent of ride sharing has changed how people think about transportation. People just use their cell phone and the ride appears. But that service uses satellite-based mapping and AI algorithms to sort information to make that convenience happen.
I expect the same thing to happen with other applications in manufacturing and logistics. The technology interfaces with equipment will bring about significant changes in what businesses can accomplish. And the information businesses will have to use will allow them to operate and compete more effectively.
AC: Good points. But won’t this make business get more complicated?
Eechambadi: Actually I think operations get easier in many ways.
Let me give you an example. I own a Tesla. I’ve had it for awhile. It never needs servicing.
I bought it online, just talked to a dealer and ordered it, which made the whole experience a lot more pleasant.
And, once or twice when I’ve had problems, they diagnose it through the Wi-Fi. I mean, I don’t have to take the car in. And, they can just tell what’s wrong, and they actually send messages to me on my car.
They send me software downloads every month. The car is always up-to-date. I don’t have to take it anywhere, it just happens, while I’m sleeping, the car gets updated.
Once I ran into trouble, I called them remotely as I was driving and the car is giving me some signals. And the mechanic at the Tesla dealership said, “Yeah, I already checked your car out and this is what the issue is. Come in and I’ve got to do X-Y-Z. This is a known problem and I’ll take care of it.”
That was 6 o’clock on a weekday evening. The next morning at 9 o’clock, I’ve picked up my car, and it was all done.
So in the next 20 years we can expect that same type of purchase process, the same type of servicing to happen in manufacturing and business. It will save time and be less expensive to execute.
AC: So this whole sensors monitoring equipment approach will save time and money?
Eechambadi: Absolutely, and more than that. Companies will be able to use all sorts of data to drive business decisions.
AC: What does that information and decisioning process in the future look like?
Eechambadi: You have all this data that tells you what the pattens are. That causes you to ask, what should I be thinking about? What should I do differently? So, becoming smart in business, becoming a winner means being much more savvy about not only what data you collect, but how do you organize it, how do you leverage it, and how do you operationalize those insights and automate it.
Sometimes you don’t have time to think, you have to make sure that you’ve got the algorithms that are smart enough to figure things out and act on their own with proper safeguards.
And as we look to the future, these algorithms will not be hard coded. They are continuously self-improving learning algorithms. They get better over time. That’s already happening. Machine learning, as the name implies, it’s all about that.
Over time, the system figures out what works, what doesn’t work, what’s good, what’s not good. And, it self-corrects. That could have a huge impact.
AC: Will there need to be people? What about jobs?
Eechambadi: This has always been a concern that people have had about every major innovation over the last 150 years.
People will say its going to put people out of jobs. Eventually what happens is that technologies that create these innovations need people. It’s the kind of jobs, the kind of education you need, the kind of people you need, that will change.
And that’s a bigger societal problem. Retooling people within a generation so they keep up with all the changes.
AC: What would an ideal data platform look like in a successful manufacturing, material handling or logistics company in the future?
Eechambadi: I think an ideal platform has a few characteristics that are sort of universal, These are kind of almost axiomatic. They don’t change over time. First of all you want a platform that is interoperable. Something that can accept data from wherever it comes, from whatever source is appropriate.
The platform has to be an open data platform. Okay? A platform that is flexible enough to adapt itself organically to changing data requirements. And what I mean by data requirements in this context is your sources of data might change. You may have a new machine that gives you data in a new format, and you need to be able to accept it.
Or you may have data coming in the queue much faster than before. Huge pipes. For example, IoT data is high velocity, high volume and you need to be able to handle it. Think about in today’s age, Google maps and Waze, think about the amount of data those tools generate about every nook and cranny of the country. But Google actually gets that data almost automatically. My Tesla is constantly sending data to the mothership, constantly. And I consented to it.
Eechambadi: Tesla has enormous amounts of data, not only about my driving behavior, but every Tesla owner’s driving behavior as well. And that informs their design of cars. It informs how they design autonomous vehicles, from patterns of behavior. But they need to be able to handle that volume of data.
So, you need a platform that can do it. Tomorrow, the data source might change, the velocity might change and the kind of data might change.
So, for instance, when we think of data, very often we all think of data as being numbers.
AC: That’s right.
Eechambadi: Data can be images. And data can be videos, it can be movies, it can be audio voice messages, or human gestures.
And where the data is numbers, the formats are varied. It can be addresses, product codes, dimensions, or sales data.
In the future, and even today, some material handling equipment will be visual machines. You program the machines, you just tell them to “go pick up this box.” And, they have figured out what the box is. You don’t have to tell them the location. They are smart enough to know this particular thing is over here. Some of this is not even futuristic. A lot of this stuff is happening today at Amazon and material handling companies all over the place.
So, the visual data handling is where 5G, or later on we’ll probably have 6G or 7G, that’s where their strength is, it’s in handling that kind of data, visual data, not just numbers, but analog data.
These platforms have to be flexible enough. If you build a data platform that can only handle numbers, suddenly you have visual data, and you have all these pixels coming in, you have no idea what to do. That’s why the ideal data platform should have the flexibility to understand that data types may change. Not that it should be designed for it, but it should be designed to be adaptable to it.
AC: That seems like a big challenge.
Eechambadi: It is. And even today, companies have built systems or bought software over time that don’t talk to each other. That is why my company is in business. That is what we do. We bring it all together in one place.
In five or 10 or 20 years from now, companies may be trying to work with data that we may not even have thought about today. So having flexibility in the way we work with the data is critical.
AC: Let’s drill down further about using data to understand your customers. How will we develop customer profiles in the future?
Eechambadi: Think about ways people do their banking today. When you go to a particular app, you generate data about your usage. When you go to the website you generate a different kind of data.You watch a video, you create a different kind of data. Our clients are interested in knowing who you are – what you as a customer do on their properties, whatever their properties are. Their properties are a store, a bank branch, the phone and the teller machine which even has a camera that actually has your picture in it when you are withdrawing money.
AC: So, multiple sales or delivery channels.
Eechambadi: Yes. And these are things that could be collated to create a customer profile. But each of these data generating entities creates its own kind of data and in its own kind of format.
One of the things that will potentially happen in the future is much more standardization in the way data is generated and shared. I’ll give you a simple example. Think about 20 years ago, before USBs came out. We all carried different kinds of wires. Every PC, every laptop had its own kind of connection. If you wanted to connect the printer to a laptop you needed a specific thing. These days USBs have replaced all of that.
AC: I had forgotten about that.
Eechambadi: In fact the inventor of the USB is a very good friend of mine. It came about because Intel decided they would sponsor an industry project to increase cross connection between different devices. And they pioneered the invention of that USB. And then, they worked with a lot of companies to make that standard. And now, wherever you go in the world, you don’t have to worry about whether your phone plugs in or not because your phone goes into a USB connection.
But what we don’t have today is data standardization.
But we do have the opportunity to build platforms on open standards. And this will be critical going forward for competitive success.
AC: Will that impact the way companies buy equipment and software?
Eechambadi: Absolutely. More and more we are hearing from companies that they do not want to buy proprietary software – they want open source platforms that they can scale and expand as their needs change.
AC: Do you lose any competitive advantage by using that approach?
Eechambadi: No.You can still build your competitive advantage. It’s one thing to connect the pipes and make sure the data is flowing. It’s a whole different ballgame to make sure you are realizing value from that data and that you are operationalizing the insights. That’s where the competitive edge comes, not in the pipes.
AC: So how should companies use this data?
Eechambadi: Well, companies need to develop a data-centric mindset. What I mean by that is that their data becomes very central to the business strategy. And by data, I mean more than the raw data, I’m talking about the data and the broader area of analytics and insights.
The key is to develop an information strategy. That’s an old fashioned word, a dated word, but it’s really about how you go from data, to insight, to action. That information strategy needs to be very central.
AC: How will some of the new technologies help with building that strategy?
Eechambadi: One important thing is that companies will be able to innovate faster. They can test out concepts before committing to them – test and learn faster.
They will be able to test different scenarios and determine probability of results because they will have the data and the digital tools to work with.
In our business we used to call this the Champion Challenger approach. You have one way you do things which is the champion, but then you test that model to see if you can do better. Then you keep doing that and eventually a challenger will become the new champion. The original champion will fall away. It is a rapid learning cycle. You keep testing, testing, testing. You don’t settle for an approach just because you’ve been doing it that way. New data becomes available and gives you new insights. But you have to be ready to act when you get that information.
AC: You are saying all that work isn’t worth it if you don’t use it.
Eechambadi: And that’s a critical thing- organizational adaptability.
The learning, the ability to learn and change. You can have all the data in the world, you can have all the great analytics. But if your DNA is business as usual, all of this is just going to be an added burden and expense to you. It’s not going to be a solution for you to break through. So that learning mentality, that learning culture is very important.
And this is what makes companies like Google and Facebook so successful, because they are very data hungry and they change their models at the drop of a hat. Sometimes not necessarily to the benefit of their customers or the society at large, but at least you know in terms of their own internal cultures they are constantly trying to make themselves obsolete. And they’re doing that through informed data choice and they are constantly testing new things. That is a big part of their culture. And companies in other industries need to be able to emulate them.
AC: How do companies build in flexibility in their strategies so they can better manage shifts in market demands, competitive forces, and logistical issues like weather and supply shortages?
Eechambadi: You do that through scenario planning, often called scenario gaming. The systems that are emerging make it cheaper and easier to game different kinds of scenarios, to see what is the outcome.
For example, what happens with extreme climate events. How are we going to react? What are we going to do? This requires a tremendous amount of computing power, but you can simulate a lot of different conditions, a lot of different strategies and then evaluate different outcomes.
Another technology, quantum computing, will be a complete game changer. What we’ve seen so far is nothing compared to what’s going to happen with quantum. That tool is going to give us the ability to do game scenarios at a very, very complex level and much faster and much cheaper once it is commercially viable. It’s not quite there yet.
But quantum computing is going to be probably one of the biggest changes that we see in our lifetimes.
Quantum computing could be as big a life changer as the advent of computing itself. If you think about the different waves, you had the advent of computing and information, and then you had the internet and connectivity, and then you had mobility, and now 5G takes mobility to the next level. Quantum computing could be like all of those things put together, because it’s that big when it comes. We’re probably five, 10 years away from there.
AC: That’s fascinating.
Eechambadi: Yes, we are probably where microprocessors were in the 1960s. It’s in a very early stage.
But it is going to allow us to create simulations and model risk that will give you a lot of confidence to move forward with business ideas that you might not have pursued otherwise. And you can be guided as you execute with updated models.
But, again, the culture and the mindset has to be there. A willingness to learn. You have to try things, to be able to take risks and manage risks. This approach allows you the best trade-off between risk and reward.
AC: Let’s move to data security and resilience. How should you protect and prepare for those in the future?
Eeachambadi: What you have to do is develop a strategy that is balanced. One that addresses security but doesn’t stop your ability to innovate, to use new tools. Part of that is a cultural mindset thing.
For companies that are not data natives like Google or Microsoft, they have to have people who can bridge the business and technical sides of their company.
AC: So how do CEOs, CFOs, CMOs prepare for their roles to deal with all of this change?
Eechambadi: First and foremost they need to become technically savvy, digitally savvy, data savvy, analytical savvy. In the U.S. there is a culture with business executives, there is this fear of technology. Even in school, there is this idea that nerdy kids are not the cool kids. It’s not that way in other countries. In Asia, and to some extent in Europe, the STEM areas are not looked down upon. Recently in our work in India I’ve been struck by how much more Indian business executives tend to be savvy about technology.
They don’t just rely on the technologists to make decisions. They are comfortable engaging in those discussions. They don’t need to be experts, but they need to know enough to ask the right questions.
That’s something companies need to be managing. They need to identify digitally savvy executives who can make the transition to general management, who can deal with strategy that’s informed by where the world is going in the world of data and digital tools. And they need to determine to what extent can the more mainstream executives learn the technical side.
Companies have to seriously invest in this. They have to make sure that their leadership is competent and savvy around where the world is going in terms of data analytics, decision making, how it impacts business, how you can leverage these things.
And fundamentally, they have to stop being scared of this stuff, and embrace it and ask, “How can we make money off of this?”
CEO and Founder
Blockchain Fosters Greater Transparency and Stronger Worldwide Relationships
EMMY LOU J. BURCHETTE: An international conference call with Everledger CEO and Founder Leanne Kemp provides insights into the burgeoning blockchain technology. Kemp and her company are based in London, but she is speaking with me today from her home in Brisbane, Australia. Our conversation is edited for brevity and clarity.
ELB: I’ve been looking forward to talking with you since I first heard you speak at the MHI PROMAT show in Chicago last year. You made an impression as a visionary business leader- so I’m a fan.
Kemp: Thank you. It’s a pleasure to be talking with you.
ELB: I want to make sure I’m defining blockchain correctly. It’s a distributed technology that allows different parties to securely share information, correct?
Kemp: Yes, the technology allows sharing of data across a network of computers. It’s a secure environment that provides transparency to all parties in the supply chain.
ELB: Does blockchain interface with other technologies – either as a requirement or in a typical use scenario?
Kemp: Once companies have implemented blockchain they can create added value with other technologies such as AI and IoT applications. With IoT sensors, they can feed data into the blockchain network. With an AI interface, they will have the ability to use blockchain information in an autonomous decisioning process. The interfaces are seamless.
ELB: If I’m the CEO of a $50 million material handling business, or a $5 million dollar company for that matter, why would I want to consider this technology and what would my company have to do to get started?
Kemp: We expect blockchain to become the standard for a worldwide distributed technology – to become the standard way information will be shared throughout the supply chain.
Businesses will want to get involved now and identify ways they can reap value.
In terms of access, it’s fairly straight forward. Think about the way you view the internet. That is a global platform that anyone can use. It began with the use of the http protocol and then the smtp protocol emerged to provide secure transfer of information. Blockchain operates in the same way. It is a worldwide distributed technology that runs on an open source framework; you are not confined by proprietary software.
ELB: That helps paint the picture. What are some of the benefits?
Kemp: For one thing, companies gain insights that help them manage risk. With greater transparency around the origin of materials, the transfer of ownership rights, and the conditions along the supply chain, a business knows more about the inherent risks and has more confidence in their suppliers and the products they buy.
ELB: How widespread is adoption today?
Kemp: Adoption has been strong in some sectors such as luxury, wine and spirits, pharmaceuticals, art, digital currency and diamonds, These sectors share a high need for traceability of source materials throughout the supply chain journey.
Other sectors are beginning to understand the value of the technology and are adopting blockchain as part of their strategic initiatives to prepare for its widespread adoption. We have clients in many different sectors.
ELB: So there is value for all types of businesses?
Kemp: Yes, and for individuals as well.
ELB: We are hearing a lot about consumers and companies holding brands responsible for activities and actions along the broader supply chain. How will blockchain help address that issue?
Kemp: Transparency gives us information on factors such as workers’ rights and ethical
sourcing – important things people want to know about brands and products.
ELB: In your speech to the OECD – the Organization for Economic Cooperation and Development – you talk about the bigger societal role that we must all address and that you believe blockchain can play. Would you elaborate on that?
Kemp: As human beings we need to take care of each other and be fair in our dealings.
We only have one planet and we have a responsibility to each other to use our resources wisely.
I believe blockchain can make a profound difference in our world. That can happen in several ways.
One way is by bringing value to the small players in the supply chain who are not being rewarded fairly today. For example, colored gemstones are mined by small companies in Africa. The stones then make their way through the supply chain to retail outlets around the world. Retailers make huge profits from sales to consumers. The big question is how can we bring a fair share of that value to Tanzania? How do we enable those people to reap rewards from global markets for their products?
ELB: So the data record can transfer all types of information.
Kemp: Yes, any type of record can be included.
Kemp: Another opportunity relates to sustainability. All companies talk about their stakeholders – investors, customers, and employees. If you think about it, we all share another stakeholder and that is our planet. By bringing together parties around the globe we can collaborate and work together to make good things happen.
As part of that effort, we need to better connect consumers of end products with information about the origin of elements that go into their purchases as well as the processes and steps all along the supply chain. For example if someone buys a t-shirt, do they know that
manufacturing of that shirt consumed water, created dyes that are pollutants and caused high levels of emissions in transport to market?
Consumers want to know and they need to know more about these things if we are going to make strides in sustainability. Blockchain gives us the tool to share information in a transparent and meaningful way.
ELB: How will work around blockchain impact international business, international standards?
Kemp: Work needs to be done to establish government policies that foster fairness and prosperity for everyone. Blockchain helps with the transparency of dealings along the supply chain. And the good thing is that both businesses and individuals will be helped in the process.
ELB: It sounds as if this technology has the potential to make a big impact for businesses and people across the world in the coming decade. It will be interesting to follow the progress of this technology.
Thank you for your time and your leadership.
Kemp: My pleasure.
Packaging & Labeling
Over the last decade, packaging and labeling have shifted from being commodity elements to value-added products and solutions that serve key expectations from industrial, commercial and consumer customers.
The experience of package shipping, unloading, opening and disposal are now differentiators in product and service delivery.
Innovation and growth in these solutions will escalate over the next 10 years. This growth will come with added pressures to meet demands related to shipping characteristics, smart automation, competitive costs, customer preferences and product value.
A number of factors are driving this growth and shaping sector innovation, including e-commerce, digitization, sustainability, margin pressures and customer preferences for convenience, customization, safety and security.
Packaging and labeling have the potential to provide value to customers in many ways, especially cost savings, preventing waste and adding value.
New technologies in automation, AI and blockchain are creating opportunities for the packaging sector, which in turn are serving myriad needs of customers and logistics partners.
Whether you are in the packaging business or a user of packaging and labeling, these solutions can be leveraged for brand building, customer satisfaction and loyalty, safety, security, logistics, tracking, sustainability and convenience.
In an interview with McKinsey consultant Shekhar Varanasi, Ted Doheny, CEO of Sealed Air, describes packaging as being at the convergence of disruptive technologies. 1
“That’s because everything is put in a package,” Doheny says. How does a package communicate with people who want to know what is inside, when it was filled, how much it weighs, whether it was stolen, and whether the contents are nearing their expiration.”
He encourages companies to think about the interface between packaging and technologies such as blockchain. “Packaging companies can use digital tools that note exactly when something went into a package. We can own that information and share it with customers, so they can trace the inputs and track the package. By providing that information, blockchain helps us add value.”
Smart automation dictates the need for packaging to be addressed in different ways than those used in the past with a human workforce. Donheny says, “A robot hand might not be as soft as a human hand. So what packaging is required? We may have to design for both robots and humans.”
More retail packaged goods brands will emerge as leaders in sustainability, responding to customer demands and driving packaging and labeling innovations. Greater integration of this philosophy into design, sourcing, production, shipping and merchandising practices will mark this decade for significant progress in positive supply chain value.
One such brand, General Mills, published their strategic imperative in 2019, pledging to reduce greenhouse gas emissions, sustainably source fiber packaging, utilize 100% recyclable packaging by design and achieve zero waste landfill impact, all before or by 2030. 2
Their efforts include active research, sourcing, development, and use of new materials that are from renewable sources and are recyclable. Both in-house and collaborative initiatives contribute to this ongoing commitment.
These types of efforts, whether pursued in-house or collaboratively with industry partners, represent significant corporate focus, resources and commitment, and a shift from a project mentality to a long-term strategic business model.
General Mills Sustainability Pledge
As responsible stewards of natural resources, we aim to reduce our environmental impact across each product’s full life cycle. Several key strategies drive our work to reduce the impact of packaging production and waste.Read More
Future Trends in Packaging and Labeling
A broad variety of market demands, material innovations and business factors will impact and enable packaging and labeling over the coming decade.
Graphic: Burchette & Associates
General Mills Sustainability Pledge
As responsible stewards of natural resources, we aim to reduce our environmental impact across each product’s full life cycle. Several key strategies drive our work to reduce the impact of packaging production and waste.
• The first is our climate ambition, through which we are working to reduce the greenhouse gas emissions occurring within our packaging supply chain, which represents 7 percent of our total value chain emissions.
• The second is our commitment to sustainably source 100 percent of our fiber packaging by 2020.
• The third is our ambition that 100 percent of our packaging be recyclable by design by 2030, a critical driver in our quest to create a more sustainable value chain.
• Finally, our target to achieve zero waste to landfill at 30 percent of our owned production facilities by 2020 and 100 percent by 2025 will reduce impacts from making and packaging our products.
Transportation & Freight Delivery
Movement of materials is one of the key aspects of logistics, and one that represents a significant cost factor. Significant shifts in transportation and freight delivery occurred in the first decade of this century, paving the road for further progress in the future. From electric delivery trucks to warehouse drones and many modes in between, transport will be transformed through technology and engineering to optimize capabilities throughout the supply chain.
In looking ahead to 2030, transportation experts believe 4 factors will drive changes in commercial transportation and freight delivery:
The first is a tipping point for electric vehicles (EVs), with improved battery capabilities and expanded domestic charging infrastructure.
Second is the use of drones to facilitate short-distance ferrying of light-weight goods in and around manufacturing, warehouse and distribution facilities and for specialized freight delivery to consumers and businesses.
Third is the emergence of new, integrated urban freight delivery strategies to execute the last mile with special focus on the last fifty feet of delivery.
Fourth is technology and material advances in marine vessels and associated freight handling and storage capabilities.
A look at each of these factors reveals the potential impact of each as well as some opportunities for multi-modal approaches.
Electric Vehicles (EVs)
Industry leaders and transportation experts forecast strong adoption of EVs in multiple commercial classes over this decade, paralleling growth in consumer-driven EVs. 1 Adoption timeframes and cost impacts will differ among light, medium and heavy-weight commercial vehicles.
Municipal and private bus fleets will continue EV adoption as part of cost savings and sustainability initiatives.
Electric van and truck sales are expected to accelerate over the decade with growth continuing out to 2040.
Long-haul heavy-duty trucks will be more difficult to electrify, thereby utilizing more natural gas and hydrogen fuel cells.
The move to smaller freight vehicles will accommodate growing urbanization, e-commerce and city restrictions, further fueling the rapid rise in EVs.
EVs with autonomous capabilities will grow in adoption for on-premise use during this decade. Expect to see them shuttling people and cargo around large facilities, such as manufacturing plants, distribution centers and office parks. Important strides are being made in autonomous vehicles, but wide-spread use of this technology for freight delivery on public roads is not expected before the 2030s. 2
Improvements in battery capabilities and domestic charging infrastructure will allow vehicles to cover longer distances and improve safety and longevity of equipment. But costs will be an important factor in the switch from internal combustion vehicles, impacting the level and pace of adoption rates over the decade.
Lithium-ion battery costs are expected to drop as demand for EVs rises. Global forecasts call for lithium supplies to become strained by the mid 2020s, creating new demand for batteries utilizing nickel, cobalt and other minerals. 3
Much greater charging infrastructure will be needed across the U.S. to support the growing demand in EVs for both commercial and consumer use. Companies and consumers will need to evaluate private facility and home charging capabilities versus public infrastructure for cost and convenience. Opportunity exists now for oil and gas companies, private providers, utilities and automakers to build out this infrastructure, with the 2030s being the timeframe when mass adoption will be realized.
Package Delivery and Cargo Drones
Unmanned aerial vehicles ( UAVs) are defined as remotely piloted aerial vehicles. Operating over land and sea and inside facilities, drones are becoming familiar assets in the material handling and logistics sectors.
Research on drones by Research and Markets forecasts the drone logistics and transportation market to grow from USD 11.20 billion in 2022 to USD 29.06 billion by 2027 at a compound annual growth rate of 21.01%. 4
For commercial freight, UAVs are typically segmented into delivery drones (<10kg) and cargo drones (>10kg). Research and Markets expects increasing investments by large retail companies such as Amazon, Google, Wal-Mart, FedEx and UPS to grow the delivery drone sector at a higher rate than cargo drones. 4
Research and Markets notes that trends driving drone package delivery include demands for faster delivery to consumers and businesses, amended regulatory frameworks to allow and facilitate drone package delivery, and increased use of low-cost and light payload drones for product delivery by start-ups. 5 The short duration (< 30 minutes) segment is estimated to account for a larger share of the overall market in 2023, however the longer duration segment is projected to grow at a higher rate through 2030 due to demand for immediate, low cost package delivery.
Drones Industry Insights sees the adoption of Remote ID planned for 2020 in the United States as an important milestone in Unmanned Traffic Management (UTM). 6 The proposal requires all drones over 250 kg in weight to provide identification information that can be received by requesting parties. A key question remains about how other nations’ remote ID standards will compare.
Increased adoption of drones will be driven by advances in automation for data processing and mission execution, reports Millie Radovic, industry analyst at Drone Industry Insights. 6 Radovic notes, “Actionable data is next to a powerful and reliable drone probably the most important driver of the drone industry…the faster, the more accurate, and the easier the images can be evaluated, the better.” Additionally, she notes AI technologies will allow processing of thousands of images without a human in the loop.
Key trends in packaging, such as eliminating secondary packaging, and use of lower-weight materials will converge with advances in drone equipment and standards and further facilitate innovation in deliveries. Sensors will add capabilities and useful information as well.
Today, commercial drone deliveries are handled by both outsourced specialty firms and in-house staff. Drone Industry Insights expects the use of full service end-to-end solution providers to grow, providing rapid competition to non-drone approaches. 7
Urban Freight Delivery
Much academic and private research is underway to address the realities of freight delivery. The questions are not easy to answer; new technologies and capabilities, converging with an explosion in delivery demand, require new thinking and approaches to optimize freight delivery strategies and leverage innovations in industry equipment.
In the U.S., as in much of the world, progress in material handling and logistics finds itself at odds with current infrastructure settings in urban areas. Throughout the last century, cities have removed alleys meant as delivery corridors; most remaining alleys are limited by narrow space dimensions. Developers have built out commercial districts and work-stay-play venues without adequate delivery parking and dock access. Skyscrapers, condos and apartment buildings have added miles of floors for deliveries.
Research by the University of Washington’s Urban Freight Lab (UFL), an innovative partnership of private industry, academic researchers and public transportation practitioners, indicates “if cities do not redesign the way they manage increasing numbers of commercial vehicles unloading goods in streets and alleys and into buildings, we will reach total gridlock.” 8
This “final 50 feet,” a term coined by UFL researchers and described by the lab as a key to customer satisfaction, is “both the most expensive and most time-consuming part of the delivery process,” they say. 8
Anne Goodchild, director of the UW Supply Chain, Transportation & Logistics Center and founder of the UFL, cites 4 areas of great potential for optimizing the final 50 feet. She stresses the need for public-private collaboration to effectively address these urban freight delivery needs:
Industry professionals and city staffs need to work together to address delivery-related parking. For example digital platforms can provide delivery trucks with an automated way to locate parking spots for designated times, and one day even reserve spaces as needed.
Public policy can impact new development, ensuring curb parking space and transportation lanes are not hijacked for delivery activities, and delivery and loading docks are located where delivery vehicles will not obstruct other traffic.
Multi-tenant buildings can include innovative delivery mechanisms such as commercial and personal locker systems so deliveries can be made and picked up from a central location. While this is easier to implement in new construction, existing facilities can be modified to support this strategy.
Utilization of emerging technologies for robots and drones can provide new avenues for time and cost-efficient delivery strategies while also providing methods that reduce the toll on human labor.
Goodchild notes that, historically, the transportation and freight industry used to think of transport approaches as common solutions that needed to be implemented in the same or similar manner across the board. “Not so today,” she says. “We are increasingly seeing that we must have highly differentiated approaches that match specific environments, especially in the last mile.” She adds, “What works in New York City doesn’t work in Kansas City, and what works in dense urban spaces isn’t applicable in rural areas.”
In addition to geographic differences, various delivery sectors have specific needs as well. Goodchild says, “Think of delivery vehicles for small packages versus vans with heavier cargo that require equipment like a hand truck or jack to assist the delivery person. How does that cargo get lifted up a flight of stairs? That is the type of question we have to solve for the last mile and the last fifty feet of delivery.
“In solving for these different environments, we will see a lot of experimentation with different types of solutions from electric cargo bikes to bots like the Amazon Scout that moves along sidewalks at a walking pace,” notes Goodchild. “We will also see more mixed mode approaches such as a truck delivery using a drone to transport goods to a landing area on top of a building.”
Delivery services are also growing in type and complexity for suburban residential settings. Food and gift delivery tops the list of what comes to mind for most people, but a growing affinity for home delivery of everything from toothpaste to dog food is occurring across all age groups.
Michael Kay, associate professor of industrial engineering at North Carolina State University, believes consumer trends favoring home delivery services for food as well as house and garden supplies will drive adoption of new delivery equipment systems.
“Home delivery stations will provide secure receipt and pick-up of everything from dinner to garden mulch.”Michael Kay, Associate Professor of Industrial Engineering, North Carolina State University
“Home delivery stations will provide secure receipt and pick-up of everything from dinner to garden mulch,” says Kay. He expects these systems will create new demand in the coming decade for innovative new construction as well as home renovations. “Consumer garage space, less relevant as consumers reduce vehicle ownership, will be prime locations for home locker systems,” says Kay.
Anne Goodchild, Director, UW Supply Chain, Transportation & Logistics Center, Founder, UFL
University of Washington, Urban Freight Lab
The University of Washington’s Supply Chain, Transportation & Logistics Center houses the vibrant Urban Freight Lab (UFL), an innovative partnership that brings together private industry, academic researchers and public transportation practitioners to solve freight problems common to private and public spaces.Read More
Urban Freight Lab Members
Maritime shipping is experiencing significant transformation, driven principally by the expansion of world trade, changing customer needs, the pursuit of operational efficiencies and a desire to protect the environment. Advancements in technology, engineering and business solutions are rapidly enhancing and enabling commerce at sea.
Over the last decade, significant investments have been made to upgrade ports on every coast of the United States. These enhancements are continuing and will provide greater channel depth, improved navigability and enhanced freight management.
Automation of loading and cargo discharge processes, channel deepening, widening of port access, expansion of berth slots, and improvements to drayage will allow American ports to receive larger ships and speed processing times and length of stays in port.
These investments appear to be paying off. Gary Frantz reports in DC Velocity that “many U.S. ports processed record or near-record freight volumes through the first part of 2019, building on a 2018 that set a high-water mark for import and export ocean cargo.” 9
Competition for bigger vessels and larger cargo discharges ia fueling hundreds of millions of dollars in investments by multiple ports, especially those on the East Coast. These improvements will enable simultaneous entry by multiple big vessels and faster cargo handling between ships and trucks or rail. That’s good new for supply chain players everywhere.
Enhancements in related infrastructure will include road and rail line improvements and construction of inter-modal facilities to support extended supply chain transport and logistics. Container yard expansions, construction of specialized storage facilities, smart automation, digital capabilities, and upgrades in cranes and robotic equipment are planned as well.
Significant economic development opportunities are tied to these enhancements, promising lucrative benefits to port states and other markets along connecting transportation corridors.
A subsequent report, Global Marine Technology Trends 2030 (GMTT 2030) by Lloyd’s Register, QinetiQ and the University of Southampton, examines how technologies will impact maritime shipping, naval operations and the ocean space sector out to 2030. 10 For the commercial shipping sector, the report identifies two technology arenas that will shape operations in 2030.
The stage is set for continued growth and modernization of U.S. ports out to 2030. But is the vision for these improvements transformational and setting the stage for use of future smart technologies?
And what about capabilities to interface with new and planned maritime communication networks and smart ship systems?
Will the U.S. workforce be prepared for the new digital capabilities required for port operations in the future?
The Global Marine Trends 2030 report places maritime shipping in a global supply chain context: “The ocean is the highway for international trade, with 90% being seaborne.” 10 This statistic underscores the importance of vision, strategy and investment in the future of this critical pathway in the supply chain.
As in other areas of the supply chain, avenues for progress stem from advances in smart automation, technology, digital tools, new materials, communication systems and sustainable processes. Innovation in marine environments, logistics and operations will contribute to improvements of shore-based activities, and the combination of advances in both realms will lead to transformative change that will benefit life around the globe. Positive impacts on the new space economy are possible as well.
Challenges and Opportunities
The commercial shipping industry has hurdles to clear in navigating this evolutionary phase.
A report focused on marine technologies, The Global Marine Technology Trends Report 2030 (GMTT 2030), 11 paints a picture of great need and opportunity in maritime shipping around the world. The report points out that today the shipping industry is in its infancy in technology applications compared with automotive, aerospace and consumer electronics industries – so the scope of the opportunity is huge.
The report examines how technologies will impact maritime shipping, naval operations and the ocean space sector out to 2030.
For the commercial shipping sector, the report identifies two technology arenas that will shape operations in 2030.
- The first arena includes technologies for propulsion and powering, ship building and smart ship – their term for ships with enhanced digital technology
- The second includes sensors, robotics, big data analytics, advanced materials and communications.
The researchers point out these technologies are not isolated, but rather are connected to each other to create advanced capabilities and benefits.
Ships incorporating these technologies will be known as TechnoMax Ships. Others that have only some improvements will be known as Pre-TechnoMax Ships. These two classes of ships will be important distinctions in the marine industry for chartering, contracting, bonuses and cargo handling.
Beyond operational advancements, perhaps the greatest value gains from TechnoMax Ships will come from enhancements to communications networks and the actionable data that will be available on a real-time basis.
TechnoMax Ship graphic source: Categories from GMTT 2030. Summaries and graphic by Burchette & Associates.
The challenges involved in successful implementation of these technologies are not small. Success depends on a favorable regulatory framework, technical standardization on a worldwide scale, cooperation among marine stakeholders and significant re-skilling and training of crew and management.
As with much of the material handling industry, a shortage of skilled workers is a continuing challenge. The GMTT 2030 report sizes the hurdle: “There are over 104,000 ocean-going merchant ships. The shortage of highly-qualified sea-going staff is an increasing concern, especially as ships become more complex due to environmental requirements.”
The report casts a long-term vision for the man + machine relationship in maritime shipping that is centered around critical thinking and technical skills: “Smart shipping is not necessarily about removing people from ships, but about better connecting ships and their crews with specialized onshore resources.”
“Smart shipping is not necessarily about removing people from ships, but about better connecting ships and their crews with specialized onshore resources.”
Commercial shipping and the workforce that powers the industry will change significantly and benefit greatly over the decade as technology, digital tools and innovative processes are embraced and incorporated into many aspects of the sector.
“These ships will be smarter, data driven, greener, with flexible powering options, fully connected wirelessly onboard, digitally connected through global satellites.” GMTT 2030
2030 and Beyond
Overall, marine shipping will look very different in 2030 than it does today. Operations will be smarter, digitally enabled and data-driven. Ships and their processes will be greener and more flexible to accommodate dynamic conditions. Onshore resources and onboard management will be transparent and improved for the safety of crew, cargo and the environment.
Tools for the Future
The future is bright.
The material handling, logistics and supply chain industry will gain tremendous opportunity in the coming decade with the realization and commercialization of innovations in smart automation, technology, digital decisioning tools, packaging and transportation solutions.
1 BloombergNEF, Electric Vehicle Outlook 2019, ”Key Findings,” 2019, bnef.com; Kristoffer Tigue, Inside Climate News, “U.S. Electric Bus Demand Outpaces Production as Cities Add to Their Fleets,” November 14, 2019, insideclimatenews.org
2 Mary (Missy) Cummings, MHI Annual Conference 2019, “Man vs. Machine or Man + Machine,” October 2019
3 Center for Strategic & International Studies, “Critical Minerals and the role of U.S. Mining in a Low-Carbon Future,” December 18, 2019
4 Research and Markets, The Drone Logistics and Transportation Market by Solution, Sector, Types and Region – Global Forecast to 2027, May 2018, researchandmarkets.com
5 Research and Markets, Drone Package Delivery Market by Solution, Duration, Range, Package Size, Region Global Forecast to 2030, December 2019, researchandmarkets.com
6 Millie Radovic, Global Drone Outlook 2020: What’s on the Agenda, January 7, 2020, “Unmanned Traffic Management (UTM),” droneii.com
7 Kay Wackwitz, Drone Industry Insights, “Views from the Industry: The Drone Industry Barometer 2019,” June 11, 2019, droneii.com
8 Urban Freight Lab, Final 50 Feet Research Program, “The Final 50 Feet Research Program: Optimizing the Last Leg of the Urban Goods Delivery System,” depts.washington.edu
9 Gary Frantz, DC Velocity, “U.S. Ports Underpin Hot Economy with Record Volumes, Rapid Growth,” August 12, 2019, dcvelocity.com
10 Lloyds Register, Qinetiq and the University of Strathclyde Glasgow, The Global Marine Trends 2030 (GMT 2030), 2013, 51
11 Lloyd’s Register and QinetQ and the University of Southampton, Global Marine Technology Trends 2030 (GMTT 2030) 2015
University of Washington
Urban Freight Lab
The University of Washington’s Supply Chain, Transportation & Logistics Center houses the vibrant Urban Freight Lab (UFL), an innovative partnership that brings together private industry, academic researchers and public transportation practitioners to solve freight problems common to private and public spaces.
Senior executives from retail and wholesale companies, logistics and goods delivery firms act to improve the management of both public and private operations of urban goods delivery systems by engaging in strategic applied research and identifying priority problems for future research projects.
Many factors will fuel the emergence, growth and impact of trends in the coming decade. Some will gain singular attention while others will attain only subtle note as part of a larger sweep of change.
In recent interviews with industry leaders, trend experts and practitioners, these ten factors stand out as those that will make a significant mark during this decade and impact our lives, our work and our planet in lasting fashion.
The convergence of technology trends with consumer and industrial customer preferences, interest in human betterment and a new sense of individual empowerment will shape the world significantly over the next forty years.
Being Better: Health, Wellness, Fitness and Nutrition
Everyone from Baby Boomers to Gen Alpha will be focused on “being better” with health, wellness, fitness and nutrition for themselves and their families. 1
This notion will extend to a wide array of applications from fitness equipment and digital apps for tracking personal activities to food purchasing habits.
New scientific discovery and commercial applications will redefine availability of fresh produce. Fabrics that protect people from temperature and sunlight as well as those that promote wellness by warning wearers of environmental hazards such as air contaminants will be incorporated into personal fashion and home furnishings. Fitness and wellness will be incorporated into institutional, commercial, industrial and home architecture and design.
While each of the health, wellness, fitness and nutrition categories has been growing in recent years, the convergence and focus will increase and create powerful influences on personal and business choices in brands, products and services.
The convergence and focus on wellness, fitness, and nutrition will impact everything from personal choices in healthcare services to business facility environments and home design, employee benefit programs, restaurant and grocery offerings, home fitness equipment and personal digital tracking services.
Convenience: Time, Usage and Access
A perennial driver of consumer trends since WWII, the concept of time convenience will be measured in seconds and minutes rather than hours or days. This trend will apply broadly, from online purchases and package delivery to time required for food preparation and work commuting. 2
The desire for ease of operation and use will drive design of commercial, industrial and home equipment, vehicles, packaging of foods and beverages, lawn and gardening tools and personal digital devices. Want to sell baby food? Those single servings better come in pourable containers that can be opened and sealed with one hand.
Convenience will drive the growth and expansion of easy access concepts such as transportation services, ride sharing and vehicle sharing for cars and bikes. The concept of “one stop” will expand to blended service offerings such as co-working facilities that also provide daycare and yoga in the same building, and nursery schools with hair cuts and laundry pick-up services.
The desire for personal convenience is being driven by two factors: (1) the world is moving faster, so people feel as if commodity tasks are leeching time from their day, and convenience factors allow them to recover some small slivers of time for work or play; and (2) because we can – life is difficult, so if in some small measure we can make things easier for ourselves or others, why not?
A growing belief in one’s personal worth, empowerment and responsibility will blossom and reward the efforts of decades of diversity debates and struggles. Women, Men, African Americans, American Indians, Gay and Straight, Transgender, Youth, Elderly, Citizens and Immigrants will live, work and collaborate with acceptance of one another to a higher degree than in past decades. 3
This trend does not mean the end of discourse, but rather a move toward individual confidence in unique or minority characteristics and a growing acceptance of diversity.
Gender neutrality will be visible in new ways such as the design of children’s toys and adults’ clothing. Toys will reflect greater ethnic diversity and encourage boys and girls to pursue all kinds of career interests. Tailoring and clothing designs will be driven by personal size, shape and preference more than by gender. 4
Personal profiles will be viewed based on skills and personal contributions rather than on positions of power or rank. Traditional barriers to diversity will ease and acceptance broaden. The resulting human landscape will change in neighborhoods, workplaces, schools, places of worship, shopping venues, entertainment casts, and social organizations.
The growing sense of individual responsibility will mean that individuals will be more prone to take action on behalf of themselves, their families, their jobs, and their beliefs and causes.
A better label will probably emerge in common parlance for continual learning throughout human life and work stages. This need will become an imperative as well as an empowering choice in the new decade. 5
The rate and scope of change in the world will be such that individuals must continue to learn and adapt in order to successfully pursue their lives, their work and even their entertainment. Coupled with a rising interest in pursuing new ideas, new hobbies and new job skills, this trend aligns with the Being Better trend.
A large impact will be felt in the 2020-2025 timeframe by the existing labor force as individuals work to adjust to smart automation and technology and digital tools. Adaptation around these capabilities will continue as new advances emerge.
As part of this trend, credentials will shift to reflect the importance of both academic degrees and skills attainment. In the workplace, progression through a series of technical skills levels will be an important career component.
Education institutions will broaden and shift their offerings to support this trend. Skills certifications will take on greater recognition alongside academic credentialing. 6
Companies and industries will invest in training programs to meet a growing need for workforce skills in specific technical areas. Opportunities for industry collaboration in these efforts will abound.
John Goodman, Vice Chairman, CCMC
“Don’t underestimate the role of customer experience in B2B.”Read More
Personalization and Customization
McDonald’s was way ahead of its time with the “have it my way” campaign. The slogan serves this decade well in describing the ways consumers will make transactional, work and lifestyle decisions in the future.
Since the beginning of the 21st century, we’ve seen a rising desire for personalization. The coming decade will see a tippling point of influence emanating from that trend. Personal choice will become ubiquitous, not only among consumers but in the labor force as well.
This perspective will drive consumer and workforce choices in the ways people want to get information, what services they use, and how they approach their daily schedules. Impacts will be felt in personal decisions about what time of day they want to work and play, what entertainment programming they prefer, and how they want to interact with health care providers, schools, employers and retailers.
Personal preferences will drive transaction decisions in far-flung ways, from selection of purchase channels to decisions on how and when package deliveries will be received. 7
Human life will be lengthened and the quality of life improved in this decade. 8 Advances in biotechnology will bring new meaning to cliches of “70 is the new 50,” and other claims to youth.
Older generations will hope to work longer while also adapting schedules and lifestyles to mature preferences.
Pressures will mount on families and healthcare facilities to care for older members of the population. Legacy wealth will be consumed as healthcare costs escalate to cover needs and longer timeframes.
Technological advances will support physical frailties in new ways, enabling longer work lives, independent living, and safer mobility and physical activities.
Privacy and Retreat
A clarion call for information privacy and protection rises over the decade, forcing brands to implement greater measures to respond to this demand. Blockchain usage increases as an information security measure for commercial and industrial customers. 9
As the pace of life increases in work and personal environments, people want greater personal privacy, including spaces and experiences that offer retreat. 10 Office environments built around open space concepts will need to add privacy areas for focused, quiet work or periodic personal escape.
The home and hospitality design industries will reflect these preferences, offering retreat environments to complement fitness, sports and adventure activities at the opposite end of the spectrum.
Smart automation and digital tools will be pervasive and will enable improvements in quality of life, industry, science and commerce. 11
Man + Machine: The man + machine relationship will become accepted in work and life environments. Practical applications will multiply, coming to bear with appreciable value after a decade of trials, resistance and doomsday predictions.
Convergence: A tipping point of engineering and digital capabilities, consumer preferences, industrial needs and scientific interests will spur use, adoption, and further advancement of technology.
Artificial Intelligence, IoT and Advanced Computing: These three technologies will rule the decade, fueling equipment development, product design, smart automation, telecommunications, robotics, transportation innovations, and environmental design.
Satellite Communications and Broadband: Enablers in the best of senses, these two technologies will open markets, speed innovation and connect people in new ways around the globe.
Moving from single structures to constellations, while shrinking in size and cost, satellites will provide increasing value in a variety of fields, from climate monitoring, communications, and digital network capabilities to vehicle navigation services and medical collaboration.
Broadband will continue to progress over the decade, both in coverage and capability. The emergence of true 5G offerings in a handful of cities at the beginning of the decade will spread to national coverage of large and medium-sized urban markets. The hope for greater rural access to broadband capabilities will be realized, at least for locations able to support some commercial and industrial activities.
Robotics: The field of robotics will achieve new levels of acceptance with the advance of commercial capabilities, greater flexibility in installation parameters, and improved knowledge and training of the workforce.
Augmented Reality, Virtual Reality and Neurotechnology: Advances in AR, VR and neurotechnology will create significant changes in communication among people at work and in the world at large. These emerging technologies have the potential for significant impact in collaborative processes in manufacturing and logistics by the end of the decade.
Emerging today in industries such as healthcare, entertainment, education and transportation, these capabilities will enable collaboration, learning and training, navigation and digital competition among people in close proximity as well as those separated by global geography.
Devices: Connectivity will rise over the decade through new and innovative wearables, surfaces, screens, textiles and other materials. Device costs will drop as sales increase. Portable devices will enable rapid adoption of technology in emerging economies.
Stress on natural resources will increase, especially on water, critical minerals, forested lands and green space.
Growth and Migration: Global population growth will bring new demands for water filtration, land development, water, sewer, road and power infrastructure, and transportation systems, all of which impact natural resources. 12
Urban migration will require added housing and commercial infrastructure, further reducing green space and forested lands. Water resources and energy sources will be further taxed as a result. 12
Critical Minerals: Critical minerals are needed for core technologies for solar and wind energy generations, energy storage and batteries for electric vehicles (EVs). 13
Minerals Used by Technology Type
Source: Data from CSIS, Graphic by Burchette & Associates
Demand for these minerals is expected to increase sharply during this decade. The Center for Strategic & International Studies (CSIS) predicts that under a 2-degree climate warming scenario, demand for all of the relevant minerals in electric storage batteries is expected to increase by over 1,000 percent.
The CSIS also notes that in 2020 the United States is absent from many of the global supply chains for these critical minerals, making it imperative for the country to identify new ways to secure needed domestic supply to fuel needs of the future.
Recycling: Recycling can contribute to resource availability in the U.S. but critical mass hurdles must be resolved. As new technologies reach scale such as lithium-ion batteries for EVs, end-use processes will be developed to leverage the components and materials. 14
Trends surrounding energy will have profound effects on life in the coming decade. Progression from age-old generation capabilities coupled with advances in newer technologies will transform energy usage and create positive impacts on world climate and sustainability in a variety of ways. 15
“In the future electricity system, having to buy fuel will be a disadvantage.”New Energy Outlook 2019, BloombergNEF
Wind and Solar: Decarbonization of world economies is progressing at a promising rate. Solar, wind and batteries will be the new drivers of the electricity sector over the next 30 years.
America will have continued growth in renewables and gas over the decade with these becoming the country’s primary source of power generation. (Bloomberg NEF)
Batteries and Photovoltaic Systems: Growth in adoption of electric vehicles (EVs) for consumer, commercial and government use will lead to a rapid rise in battery usage and advancement of battery technologies over the decade. Demand for batteries for EVs will drive down the costs of batteries for other applications.
Businesses and households will invest significantly in behind-the-meter photovoltaic (PV) and battery systems. BloombergNEF estimates the payback period for a PV plus battery system will halve over the next twenty years, from 13 years today to 6 years in 2040.
Electricity: Population growth coupled with development of emerging economies will increase demands for air conditioning. Electric vehicles (EVs) will add significant electric demand in the U.S. by 2050.
Technology: Sensors and improved machine efficiencies from AI will drive down commercial energy usage and improve costs.
Infrastructure: Construction of infrastructure for solar and wind generation and storage will increase, bringing new hardscape to urban and rural areas.
BloombergNEF predicts: “By 2032 there is more wind and solar electricity in the world than coal-fired electricity.”
BloombergNEF: New Energy Outlook 2019
Already in transition, the transportation industry will undergo massive transformation and restructuring over the next twenty years. 16
Consumer Vehicles: Personal vehicles will reduce in number, due to the rise in passenger transportation services overall and improvements in public transit systems in urban areas.
Electric Vehicles: Expect to see a dramatic rise in EVs in all sectors. Households, businesses and public transit systems will transition to EVs with a rapid adoption curve between 2020 and 2040. Charging station infrastructure will multiply to support longer distance travel and convenience. 17
Delivery Services: Delivery of retail packages and commercial freight will continue by road vehicles, but a rise in use of delivery drones in some sectors will segment the market. 18 A significant rise in food delivery services will come from supermarkets as well as food preparation companies. 19
Drones: Urban Air Mobility (UAM) comes of age in this decade with a dramatic increase in use of drones. Delivery and surveillance drones will have the greatest growth. Passenger drones, sometime referred to as “flying cars,” will gain acceptance but will be limited for some time by weight, energy sources and distance barriers. 20
The Last Fifty Feet: Much research, trial and effort will continue over the decade to determine the best approaches and develop the most effective technologies to support the last fifty feet of freight delivery. Autonomous vehicles, robotics, public and private parcel systems, digital and dynamic delivery scheduling and other tools will be honed in the process.
Infrastructure: Many roads, bridges and tunnels in the U.S. need attention and will require public investment over the decade.
Maritime Shipping: Port authorities on all U.S. coasts will continue investing in deeper channels, robotic stevedoring and specialized warehousing facilities to expand capabilities for global and domestic trade. The move toward automation will continue the reduction in manual labor at ports that began with the shift to containerization in the 1960s. 21
Spaceports: Spaceport development will increase in support of the rise in launch, recovery and related space industry activities. 22
Rail: Investments in rail infrastructure in the U.S. will support growing passenger and freight needs as well as address increased interest in lowering CO2 emissions. 23
The evolving positioning of the United States on the global stage will both propel and limit the domestic economy. 24
A return to domestic manufacturing in some sectors warrants close tracking as reduced costs and shorter supply chains to domestic customers promises increases in profitability and greater control over supply chain logistics.
Made in the USA will always be popular at home, but the acceptance of products manufactured around the globe will continue to grow as those products fuel demand, improve in quality and provide unique benefits.
Increased economic strength across Asia represents a potential for loss of U.S. market share and profitability in international trade.
A polarized media will continue to fuel domestic conflicts over race, religion and ethnicity. The impact of this diversity of opinion will be mitigated in part by more inclusive Gen Alpha youth emerging into adulthood toward the end of the decade.
Art, Fashion and Design
Art is the reflection of life. In that realm the world will see itself in an age of rapid change, with a dichotomy of old and new opinions and approaches.
As art and design are age-old mediums for engaging discussion and creating debate, artists and designers will bring a clarion call for thinking about the present and the future via various mediums. The evolving environment will be well suited for those so talented to take on roles as instigators, mediators and facilitators of change.
Fashion design will reflect a greater adoption of gender-neutrality and diversity. New materials and protective finishes will appeal to consumers’ interest in health and well-being.
Clothing will incorporate technology with accommodations for wearables and embedded smart fibers.
Industrial wearables for technologies such as AR and neurotechnology will become lighter weight, more comfortable, less obtrusive and allow greater integration with other processes.
Convergence of art and technology will bring exciting new experiences through new applications of augmented reality, virtual reality and digital surfaces.
Architecture and home and office design will reflect a global influence, with a local focus. Preferences for personal privacy and retreat will dictate new layouts in space usage and materials that convey quiet ambiance.
Gudy Herder, founder of Eclectic Trends and an international trend expert, says “Silence has become the new luxury in many cities.” She expects noise-reduction pods/booths for offices to be implemented in public spaces. Herder believes future design preferences will include a focus on acoustic collections. “3D woven fabrics absorb and reflect sound waves much better than flat textiles contributing to a more muted environment,” she says. 25
Technology will be a driver of design in many settings. 26 Richard Petersheim, partner and landscape architect at LandDesign says, “By 2030, a lot of technology will be incorporated into designed spaces. Augmented reality, advanced conferencing, digital walls, embedded sensors and other types of communication devices will be in use. New materials will allow walls to display information. AR will let you overlay information on real settings and new types of small wearable devices will facilitate communication.” 27
Petersheim advises firms to think strategically about their technology plans and how changes may require adaptation of the work environment. “A big part of the job in designing industrial spaces in the future will be to map out the technology and the communications.”
Across all design topics, trend experts are aligned on the concept of greater integration of technology into life and work spaces. A futuristic example is the “woven city” project announced by Toyota and Bjarke Ingels (BIG) that imagines new forms of urban life. Bjarke Ingels, founder and creative director at BIG says, “A swarm of different technologies are beginning to radically change how we inhabit and navigate our cities.” He views this as an exciting design opportunity. “Connected, autonomous, emission-free and shared mobility solutions are bound to unleash a world of opportunities for new forms of urban life,” he says. 28
Richard Petersheim, Partner and Landscape Architect, LandDesign
“Design is driven by how people want to live and work…. We have to design for today and the future…. It is important for design professionals and their clients to be looking at future trends and how people will want to use spaces for the long-term.”Read More
No longer viewed as optional, proactive efforts to use sustainable practices in business will be a powerful driver of choice in this decade. Brands that fail at sustainability will not survive.
Consumers’ participation in supporting sustainability will increase, demanding similar practices by public entities and businesses.
Consumers and companies will consider the level of sustainable materials in products when making purchasing decisions. The environmental impact of using products and services will also be important. Brands will be held responsible for their extended supply chain impacts, not simply end-product features.
Gen Alpha children will grow up with sustainability practices such as recycling and use of biodegradable materials being a part of everyday life at home, school and even on the playground. This engrained perspective will fuel this generation’s focus on sustainability as they enter the workforce at the end of the decade.
Recent research indicates an increase in the number of major global and U.S. companies that are more aware, engaged, and committed to addressing sustainability throughout their business processes. 29 So says Richard Mattison, CEO of Trucost, a research and publication partner with Green Biz Group for the State of Green Business 2020 report.
“These companies have never been more focused on sustainable business,”Mattison says. He finds an increasing number of senior executives are engaged around this issue and more companies are making their commitment goals public.
Financial markets are paying attention as well. Mattison notes that $30.7 trillion in assets under management are run according to sustainability objectives and financial market regulators are showing significant interest in aligning capital flows with sustainability outcomes.
In the report, Jerry Makowitz, chairman and executive editor at Green Biz Group also casts a positive light on business trends for addressing sustainability in the future. He writes that “nature’s feedback loops and other indicators are worrisome….What gives us hope is that companies around the world are moving more quickly than ever to reduce the business risk that comes with these threats to natural capital and human well-being.”
Manufacturing Process as a Brand
Smart automation brings a new twist to the manufacturing process.
Today, a growing number of consumers view “made by” processes as more important than the geography of origin or the brand that manufactures the goods. A component made by a specific smart automated process is becoming a commodity in the eyes of the buyer. 30
How will brands compete when “Made By RoboticBlue” supersedes “Made by the Acme brand”? The combination of the manufacturing process with other factors such as sustainability, packaging, convenience and cost will be key differentiators.
Joel Makower, Chairman and Executive Editor, GreenBiz Group
“The trends reflect the potential of sustainable business: to create value for all society, balancing people, profits and the planet.”
Race to Space
Renewed interest, investment and commercialization of the race to space will fuel significant progress in a myriad of space-related activities. Life on earth will benefit from new knowledge, new processes, new materials and new capabilities.
Commercial and government-funded initiatives in space will increase throughout the decade, attracting participation from countries around the globe in launch, recovery and associated manufacturing, mining, research and support activities.
Maybe we’ll even get something as fun as Tang and space blankets this go around.
For more on this topic, go to New Space Economy.
The convergence of market forces, trends and innovations will drive progress over the next two decades.
Business trends, consumer preferences and global needs will impact life and commerce.
Our connected world will allow material handling, logistics and supply chain players to rapidly address challenges and opportunities and learn from one another to achieve sector success.
1 Global Consumer Trends 2030, Mintel, mintel.com Rina Raphael, Fast Company, “The Most Promising Health Trends of 2019,” December 26, 2018, fastcompany.com
2 Burchette & Associates, Inc., and MHI, Transformation Age Trend Research, 2020; Shep Hyken, The Convenience Revolution, 2018, Sound Wisdom, Shippensburg. P.A. ; Burchette & Associates, Inc. Consumer Research, 2000-2020
3 The National Intelligence Council, Global Trends, Paradox of Progress, 2017; Burchette & Associates, Inc., and MHI, Transformation Age Trend Research, 2020
4 Commetric, Gender-Neutral Fashion, A Millennial Whim or a Trend to Stay?, August 26, 2019, commetric.com
5 Burchette & Associates, Inc., and MHI, Transformation Age Trend Research, 2020
6 Cheryl Richards, WE Talks, “Where Will the Value Lie in the Workforce of the Future?”, February 2019
7 McKinsey & Company, The Future of Personalization – and How to Get Ready for It, June 2019, mckinsey.com
8 The National Intelligence Council, Global Trends, Paradox of Progress, 2017; Burchette & Associates, Inc., and MHI, Transformation Age Trend Research, 2020
9 Burchette & Associates, Inc., and MHI, Transformation Age Trend Research, 2020
10 Gudy Herder, Eclectic Trends, 5 HEIMTEXTIL Trends 2020/2021, January 15, 2020, eclectictrends.com
11 Burchette & Associates, Inc., and MHI, Transformation Age Trend Research, 2020
12 The National Intelligence Council, Global Trends, Paradox of Progress, 2017
13 Center for Strategic & International Studies, “Critical Minerals and the role of U.S. Mining in a Low-Carbon Future, December 18, 2019
14 Center for Strategic & International Studies, “Critical Minerals and the role of U.S. Mining in a Low-Carbon Future, December 18, 2019
15 BloombergNEF, “New Energy Outlook 2019,” bnef.com; The National Intelligence Council, Global Trends, Paradox of Progress, 2017; MIT, “The Future of Solar Energy,” Executive Summary, 2015, energy.mit.edu
16 Burchette & Associates, Inc., and MHI, Transformation Age Trend Research, 2020
17 Burchette & Associates, Inc., and MHI, Transformation Age Trend Research, 2020; BloombergNEF, “Electric Vehicle Outlook 2019,” bnef.com
18 Drone Industry Insights, “Urban Air Mobility 101,” 2019, droneii.com; Research and Markets, “Drone Package Delivery Market by Solution,” December 2019, researchandmarkets.com
19 Michael Kay, “Home Delivery Trends,” An Interview with Burchette & Associates, Inc., 2019
20 Mary (Missy) Cummings, MHI Annual Conference 2019, “Man vs. Machine or Man + Machine,” October 2019; Drone Industry Insights, 2019, droneii.com
21 Lloyd’s Register, and QinetiQ, and University of Southampton, Global Marine Technology Trends 2030, August 2015
22 The Space Report Q4, Space Foundation, 2019
23 The International Energy Agency, “The Future of Rail,” January 2019, iea.org
24 Burchette & Associates, Inc., and MHI, Transformation Age Trend Research, 2020
25 Gudy Herder, Eclectic Trends, “Our Top Findings, “ 2019, electictrends.com
26 Andrew Lipsman, The Future of Retail 2020,” Executive Summary,” Dec 19, 2019; Burchette & Associates and MHI, Transformation Age: Shaping Your Future, Richard Petersheim, “Design and Placemaking in the Transformation Age,” 2020
27 Burchette & Associates and MHI, Transformation Age: Shaping Your Future, Richard Petersheim, “Design and Placemaking in the Transformation Age,” 2020
28 DesignBoom, Toyota to Build Bjarke Ingels-Designed “City of the Future” at the Base of Mount Fuji, 2020, designboom.com
29 Green Biz Group and Trucost, The State of Green Business 2020, 2020, GreenBiz Group, Inc., greenbiz.com Ⓒ2020GreenBiz Group Inc.
30 Consumer Techniques, Consumer Trend Research, 2019
Boost Revenue and Profits with Customer Experience Improvements
Goodman is a national leader in customer experience research. His company has worked with half of the Fortune 100. Goodman’s latest book, Customer Service 3.0, looks at how to use technology to improve the customer experience.
Andrea Cooper talked with Goodman about the rewards of improving the customer experience for B2B companies, and what will be at stake when they don’t.
How can manufacturing, logistics and material handling companies create the best customer experience possible, now and into the future?
First, don’t underestimate the role of customer experience in B2B, Goodman says. “In every case, if you give better service for commodities, you can charge a few percent more. A one percent improvement in margin is going to give you a 12 percent improvement in profits, as a general rule.”
A great customer experience stimulates the positive word of mouth that’s as essential for B2B businesses as for B2C. Harley-Davison may get more than 70 percent of its new customers through word of mouth, Goodman says, but in many B2B environments, that figure is “north of 90 percent.” Engineers at different plants might talk to each other about their success with a certain part, and suddenly, sales start soaring.
Customers acquired through word of mouth are much less price sensitive than those acquired through advertising or a sales rep’s visit, Goodman has found. A prospect will think, “Joe told me they’re good. I trust Joe. I’m not going to quibble about price.”
Don’t assume your customers are happy if they don’t complain. They may just go to your competitor next time. “Everyone says, ‘This client is giving me $100,000 a month. Naturally, they’ll complain if they’re unhappy.’ It’s not true,” Goodman says. The complaint rates are lower in B2B environments than B2C, but the ramifications of an unhappy customer are much worse in B2B, because the size of each account is much larger.
Can you suggest a surprising or counter-intuitive step that will improve the customer experience?
Goodman’s advice: Educate customers about the importance of forecasting their needs correctly and the effect of forecasts on the supply chain. Let them know in advance if they change the forecast, they have to expect to be charged higher prices.
He cites an example from the least glamorous product imaginable: quilted bath tissue, otherwise known as toilet paper.
There’s been a shortage of it in the U.S. Only a limited number of paper mills can produce it. Let’s say a major supermarket chain decides it wants 300 truckloads of quilted bath tissue when it ordered only 150 in its forecast. The paper mills are fully committed for the year.
One paper mill wants to keep the supermarket client happy. It reduces its promised delivery to a major drugstore corporation and redirects to the supermarket client. But the drugstore executives were counting on a full delivery and have already started a national promotion. They’re furious.
That scenario illustrates how bad forecasting “just completely screws up the supply chain,” Goodman says.
Help customers understand the ramifications of forecasting problems ahead of time and customer dissatisfaction will very likely drop.
What are the top areas for return on investment in customer experience?
Goodman sees four areas of opportunity:
– Be proactive regarding delivery. Let customers know what’s happening with their orders.
– Be transparent and prevent problems by using “just in time” education for customers.
Make it easy for the customer to learn. One online mortgage service created an easy-to-follow tracking system so the customer sees if she needs to return documents before the process can move forward.
FedEx has educated sellers on how products can break during shipping because of poor packaging. Vibration in the belly of an airplane, for example, can cause jar lids to unscrew by themselves!
– When problems occur, empower the front line to fix them. Empowering staff means giving them access to all the information they need and the authority to act on it. Use technology that allows the staff to tell a customer, “I’ve re-routed the shipment” or “I’ve expedited your order.”
– Systematically fix problems. Along with customer surveys and analysis of complaints, Goodman points to operational failures as another set of data to consider. When the supply chain has a failure such as a quality problem, that’s a signal of a possible systemic issue.
How will increasing automation provide opportunities for companies to enhance customer experience?
“The front line needs to be much more empowered,” Goodman emphasizes. Automation can handle the “simple stuff,” but complex issues need to go to an actual human being.
Think of automated phone response systems, and how many times the automated voice replies, “I didn’t get that.” The customer repeats his need, sometimes again and again, to the point of rage.
Goodman says a good approach is starting the phone conversation with automation, but if the automated voice recognition cannot understand the customer twice, it should automatically forward to a live person.
Over the coming decade, trend forecasts describe an environment that will include an increase in technological interfaces between business and consumers. Examples include robotic freight delivery to businesses and consumers, and use of sensors in manufacturing plants that will use data to predict maintenance needs and send replacement parts to customers. How should manufacturers and logistics and material handling companies address the customer experience while implementing these changes?
Now and in the future, there should always be an escape to a human. “Our research shows that seven times as many people want to talk to a human when they are angry than are willing to use another technological channel,” Goodman says. “Even millennials are five times as likely to want to use the phone and talk to a human.”
He adds that one possible exception would be if a transaction fails, present the customer with the top three automated options which will lead to a quick resolution. “Most people will be willing to try the alternative (automated) channel if it appears to be specifically germane to the issue they have,” he says.
How can companies quantify the impact of transformative change as part of their ROI business cases?
Goodman says that serious customer problems damage loyalty by about 20 percent. For each five customers who have a problem, a company will likely lose one of them next time. Or they’ll be more sensitive to price and ask for a discount on the next sale.
He offers this formula for quantifying impact:
Take the number of customers with recent serious problems – let’s say 500 – then multiply by 20 percent to estimate 100 customers at risk. If each customer is worth $100,000 in revenue, then 500 problems are putting 100 customers and $10 million in revenue at risk.
Smaller problems may only put 4 percent of customers at risk but the math works the same way.
And in B2B environments, Goodman says, customers with problems usually tell an average of at least six of their associates negative things about their experience.
The problems solved don’t have to be earth-shattering. Goodman says the average sales rep in B2B is spending 20 to 30 percent of his or her time fixing issues like errors on invoices. Prevent some of those mistakes from taking place, and “all of a sudden your profit margins go up.”
Those figures help make the case for transformative change when it’s needed in the customer experience. The first step is to look squarely at the problems your customers experience and fix the issues rather than look away or make excuses. Customers also want to know why a problem occurred and hear what has changed so the problem won’t happen again
Companies that keep customer experience in the forefront of their decision-making will have a competitive advantage over their competitors, now and in the future.
To learn about customer experience from John Goodman, visit:
Partner and Landscape Architect
Design and Placemaking for the Coming Decade
Richard Petersheim is partner and landscape architect at LandDesign, a design firm focused on urban design, landscape architecture, civil engineering, planning and place branding.
Andrea Cooper talked with him about his vision for design in the coming decade and how the convergence of market trends will drive placemaking, infrastructure and design.
Let’s start with your vision for design from the perspective of creating work and living spaces and public infrastructure for the coming decade.
Design is driven by how people want to live and work. What types of work they need to do and how they need to interact with other people. This is true whether you are helping re-envision a downtown district, planning a new office structure or building a home.
We have to design for today and the future. Most office buildings, public spaces and homes are designed with an eye toward long-term use, not just today. So it is important for design professionals and their clients to be looking at future trends and how people will want to use spaces for the long-term.
Infrastructure is key. From an urban design standpoint we are not short on ideas. What we’re short on are political decisions being made for infrastructure and funding sources that can support those ideas – and that often takes forever.
What key trends do you see driving design in the U.S. in the next 10 to 20 years?
How people connect is evolving. The distance that people have to go from work to home becomes irrelevant when we can pretty much work anywhere. Currently, most people are still enslaved by the process of getting in a car and going to a place of employment and then driving back again. Often times that commute impacts your economics or your lifestyle in some way. You make decisions around that.
When you no longer have to commute, that is no longer an issue. The way people can inhabit a place becomes a bit more free. So now you don’t have to worry about the commute time. You can pretty much get everything done from where you live.
And how people are working is changing as well. You basically don’t need a desk anymore. All of the data, the communication interface happens wherever you are. We’re kind of in that now – the divorcing of place of work from your employer’s facility, at least for office workers. I can pull up a screen virtually in front of me with Google Glass or whatever new interface and conduct my work right in my den if I want to.
There are risks with this trend. You begin to not be able to rejuvenate your mind because everything is happening all at once. You can’t separate life at home from work with colleagues because everything is intermingled. We already see more homes designed with designated work spaces. I expect the workplace will continue to transform over time with hybrid spaces at offices and in homes.
How will consumer trends and preferences impact design?
The phenomenon of social media is having a significant impact, as are our fast-paced digital lives. I expect we will have a backlash. I think there is going to be a tipping point that will impact urban design and how people relate to one another. We are trying to compress time, make decisions faster and get things done faster. I think social interaction of people has suffered because communications are down to 10 characters or an emoji.
People will want to interact on a personal level. But at the same time they will crave privacy and retreat.
They will want personalization and customization in all facets of their lives.
Technology will become cheaper and we will see more of that in homes and offices much like people have smart phones and large screen TVs. We would never have imagined that 40 years ago.
In urban areas, as population increases, living and work spaces will tighten in size. Technology will also continue to help us better connect with people who live outside of the core urban areas.
Smart tools like 3D printing will get better and enable individuals and small businesses to design and build all sorts of things that they used to have to buy from a vendor. They will either design it themselves or buy plans and print the components.
What factors will be imperatives for industry leaders as they plan their workplace environments for the next 10-20 years?
Creative class office workers want to be in an experience-rich environment. High on their wish list are things like having places where they can go grab a bite or a coffee. Outdoor recreation is an integral part of their desired work environment. Greenways and bikeways interconnected to the office to decompress throughout the day are and will continue to be imperative. That ranks the highest. It doesn’t matter whether they are located in an urban setting or a suburban area that has a village or mixed-use environment, visibility of the outdoors and easy access are key.
The preferred settings blur lines between indoors and outdoors. People don’t like sitting in cubicles anymore – if they ever did. They want to be moving around and having nature in their lives. This is true whether the setting is a commercial office or a retail store. There’s a strong desire to get the natural environment back in our lives and for that to happen throughout the day rather than just packing that into the day after work or on the weekend.
Hybrid work spaces will be the norm. Flexible work spaces and meeting spaces will grow in popularity. The big corner office will disappear and smaller offices will be ubiquitous.
Private spaces for employees who do not have offices to use for private conversations or quiet work will be utilized as needed. We see a good bit of that design in use today.
A lot of work spaces will reflect and encourage collaborative work. Ideas and solutions are best generated in that type of environment because you get sharing of ideas and perspectives. That design can be in the form of a large project room. You will also see people working or meeting in spaces like office cafeterias and break rooms. The definition of a work area will change – you don’t have to be in an office to be productive.
You don’t want people staying in their offices or cubicles, with headphones on, working by themselves on screens all day. If they are not collaborating they are probably not coming up with the best solutions, the best work. College dorms are tiny for a reason- to get everybody out of them, learning, socializing and collaborating.
Some of these things like work outside of a traditional office will increase as beliefs by senior leaders change. In ten years, you will see that impact as these changes become new standards.
At the same time, we expect a lot of design for work and life spaces to reflect a desire for personalization and customization. That will be an increasing demand in every realm. People already have and use the ability to select the features of their car and design the cut of their clothes. I expect the desire for that type of customization of work spaces to grow over the decade.
Work environment aesthetics and furniture will reflect a variety of styles such as standing desks, sitting desks, large rubber balls to sit on – whatever works best for each person. The ability to manage environmental controls like lighting, sound, temperature and humidity in separate spaces will be important. People want that control.
The power of this personal style trend will also impact work schedules, which will require attention to design issues related to parking, transit access and schedules, outdoor lighting, and security.
How will technology be incorporated into designed space in the future?
By 2030 a lot of technology will be incorporated into designed spaces. Augmented reality, advanced conferencing, digital walls, embedded sensors and other types of communication devices will be in use. New materials will allow walls to display information. AR will let you overlay information on real settings and new types of small wearable devices will facilitate communication.
Some things like that exist today, but as technologies become less expensive and increases in bandwidth enable new capabilities, you will see new and novel uses in more spaces.
For industrial spaces in 2030 and beyond, I envision highly automated facilities that have fewer people than is typical today. Whether it is a warehouse, a manufacturing facility or a distribution center there will be more automation, more robotics for making things and moving things. Humans will be creating the programs and overseeing quality control. Humans will be doing the customization and support roles.
A big part of the job in designing industrial spaces in the future will be to map out the technology and the communications.
How will retail space look by the end of this decade?
There will not be one-size-fits-all in this category. Retail is not dead. It’s changing in size and what it does.
Commodity retail will be gone. If I need something like toothpaste and milk
I won’t need to go anywhere to get them. They can come to me. At the other end of the spectrum are those items where I want to go somewhere either virtually or physically and have an experience and oh by the way I might buy something. For clothiers or purchases of things that make you feel good to be part of a process and an experience, those will continue to happen.
Everything in between will be a hybrid. I might want to buy a white shirt and try it on. I will go to a retailer like Nordstrom that is currently testing a 2,000 square foot retail “experience,” where I have a personal shopper or concierge. While sipping a nice Chianti and probably enjoying some aromatherapy to get me in the mood, I can browse the latest fashions digitally. I can get a scan of my body measurements and have the shirt custom tailored and shipped directly to my home. The “store” does not store anything, It is experience driven.
In that case, do you look up something online that you want, then they might take your measurements and later you get a customized product sent to you?
Yes or you might print it at your home or office depending on the item.
We’ve focused on single-use spaces so far. What do you foresee for multi-use buildings in urban areas?
At a recent meeting of the ULI Council I met a gentleman who is an architect who is working overseas and his niche is industrial manufacturing. He is studying towers, building 30-story and 50-story buildings that will have office, residential and manufacturing all in the same building. The manufacturing or printing of goods is integrated into the building. It’s live, work, play and create.
What about modernizing of public infrastructure for roads and public utilities?
In America we need to retool our infrastructure. We really need to rethink it through first.
China spends 8.3% of its GDP on infrastructure and we spend 2.3. They spend more than 3 times their GDP on infrastructure than we do. And they do it quickly. They’re expanding into many areas that don’t have modern infrastructure so they don’t have to retool. America has to re-tool.
We have to fix power grids. In a lot of urban core areas and in peripheral areas we need to fix power problems that exist today and prepare for needs of the future.
As a country we need to talk about the transformation of the U.S.’s existing infrastructure systems to smart infrastructure, smart roads. Creating that takes time. Things have to be conceived, designed, permitted, awarded, contracted and built. Our infrastructure needs to incorporate smart technology and to have feedback loops that provide useful information and have self-healing traits that go into action when something goes awry.
The repairs needed to just maintain our systems are very important too.
There will be a growing expectation for better, more reliable and self-healing infrastructure so there are fewer or no disruptions. People and financial markets have no tolerance for delays. Consumer mentality will be real time on demand. I don’t want to wait two days for my power to be restored. As technology becomes a bigger part of our lives, that issue will rise as a priority.
That transformation in the U.S. Is going to be a very difficult thing to do with the amount of existing infrastructure we have today.
If I look at China in 2040 – how far they might be versus where we’re going to be – I think they are going to be light years ahead of us. Because they have the ability to do it.
Why is that?
It’s political. We have federal, state and regional economies and they don’t have to deal with that. If Beijing wants to make a dynamic shift in the grid system in Eastern China, they just have to make the decision. We have to go through multiple regions, because all of our infrastructure crosses political boundaries.
I’ve done a lot of work in Asia and China. In 2005 they announced a massive elevated high-speed rail initiative that would go from Shanghai up through Suzhou and to Beijing. At 819 miles, it was the longest single-phase rail project in history. They started building it in ’07 or ’08 and it was operational by 2011. That would take forever in the United States due to the policy, funding, interstate or regional debates, and environmental approval processes. So usually the deciding factor for infrastructure is the speed with which the government can implement – unless you privatize.
So getting everybody – all the constituents – on board is what takes time. It really isn’t so much about design and construction. I mean we have the means to do it. Politically it’s hard to shift.
Will the private sector be involved in this infrastructure transformation?
Absolutely. You will see industry partnering with the public sector and partnerships of privatized companies like Panasonic, Ford and Toyota. For example, we recently met with Ford. They don’t call themselves a car company, they are a mobility company. It is not about a passenger or a freight vehicle any more. For them, it’s about moving things. I think that kind of thinking in the industry helps them come to the table to help solve bigger infrastructure issues.
Another example is what is taking place in Japan. A firm called BIG (Bjarke Ingels Group) out of Copenhagen is working with Toyota. They are beginning to transform the public realm. They are looking at where goods and services interface and how they can use automation and underground systems to improve their infrastructure. Subterranean trash and water filtration – those types of things will help them improve their services and be more sustainable.
In January 2020, Toyota and BIG revealed plans to build a prototype city of the future on a 175-acre site at the base of Mt. Fuji in Japan. In DesignBoom, Kieron Marchese describes this “woven city” as having a “fully connected ecosystem powered by hydrogen fuel cells. Toyota plans to use the city as a laboratory for autonomous cars, smart homes, artificial intelligence and other technologies developed by the Japanese automaker.” Of note is the fact that Toyota is providing access to this city to anyone in the world who is interested in learning from the project.
A lot of companies are involved in community projects right now. Look at Amazon. Their ability to partner with cities and communities on projects to create an economy that other things benefit from is pretty amazing.
Other companies like Google and FedEx are working with communities to expand their facilities. Uber is looking at creating Uber Lyft pads on top of office buildings in Dallas. So they are partnering to get that infrastructure built.They figure out the infrastructure design and the technology to facilitate getting the physical project constructed.
So it’s really a rethinking by private industry of what their role is and their purpose.
And rethinking the funding sources and the approval processes.
With the whole blockchain phenomenon of authentication, the process of getting from idea to built can be streamlined. When blockchain is used In a contract award, there’s no middleman. There doesn’t have to be this whole quagmire of getting to a signed contract. It all becomes compressed and efficient. That’s how you cut time out of it.
I think the humans continue to get in the way. So if we’re trying to convince each other that the expense for an infrastructure improvement is for the best benefit of a region, that’s going to take time. If we compress time for everything else from how we conceive the idea, how we award the construction and how we build it, then maybe we get a bit of advantage.
I also think there will be more of an open source and cross-platform environment for industries. The co-locating of like industries that can share technology and special equipment.
It will be like the North Carolina Research Campus in Kannapolis. It is not a manufacturing facility, it’s biotech. They built a core lab that has one-of-a kind facilities for plant-based bio-technical research. The idea is to provide leading-edge research equipment in a collaborative environment so these research institutions can advance our understanding of health and nutrition and do so at a lower total cost. All of the labs and entities located there share this expensive equipment.
From a manufacturing standpoint, there could be a lot of that open sourcing and cross-pollination between one industry and another with common facilities. If we add those types of shared facilities in business parks and business districts there could be a lot of savings and faster access to new technologies.
It sounds futuristic, but we’re hearing a good bit about a renewed interest in space travel and discovery. How do you expect that to impact design on Earth?
One area that will be interesting to watch is the growth of communities surrounding spaceports and other space-related facilities.
Think about how the grand train stations in Europe have all been the huge hub of life. With the advent of train travel that was the center of the world for people. Union Station, Victoria Station, everything happened there. People lived there, commerce was done there, markets thrived. There was a regalness to it. Like how some people felt when they first experienced air travel.
I think the same things will happen for space travel. People will be attracted by the excitement of it. It’s going to be a lot cleaner and quieter technology than earlier aeronautics, you can live around it. You will have captive audiences for commerce.
Wherever these hubs are located, there will be a gravitational pull to those cities. They will be “space hubs.” Space Hub One. Space City One. I think what will deployed there will be the highest of technology to create new things. The industry attractiveness to companies like Panasonic, Samsung, and Boeing will be huge. Everybody is going to want a piece of that and to be a part of inventing the next level infrastructure or whatever is needed.
There will be manufacturing and research and logistics. Passenger travel, freight shipping. They’ll be shipping smaller increments of things they will create at the space station.
It will be exciting.
The world enters 2020 with the greatest promise and the greatest uncertainty of our time.
Mega trends and game-changing events will converge to create a pathway for opportunity, molded by choices made by individuals, organizations and nations.
Technology has already made the world a smaller place and altered the pace of life to one of dizzying change.
The return to a focus on space reminds us that there is much beyond our world to explore, discover and learn.
Citizens of all countries share needs and battles for natural resources, individual rights and freedom.
What’s next is largely dependent on how humankind chooses to use technology, innovation and discovery, and how to relate and to care for one another.
It’s a small small world
Disney had it right, many years ago. The world is small and…“there is just one moon and one golden sun.” 1
People around the globe share responsibility for progress. How we utilize our strengths, our resources, our gifts and our knowledge will tip the scales of impact that mega trends bring our way.
The National Intelligence Council’s latest Global Trends report, “Paradox of Progress,” provides a view of the world out to 2035 where “The achievements of the industrial and information ages are shaping a world to come that is both more dangerous and richer with opportunity than ever before.” 2
The report makes the case that, “Although material strength will remain essential to geopolitical and state power, the most powerful actors of the future will draw on networks, relationships, and information to compete and cooperate.”
People and nations are interconnected as never before. With that bond comes responsibility for international cooperation and collaboration. A critical question for the future is how well that cooperation materializes and enables positive progress.
“Look again at that dot. That’s here. That’s home. That’s us.”
The Pale Blue Dot, 1994 17
Interviews with supply chain industry leaders reveal general agreement with the NIC’s view: within the world context, the United States’ dominance draws to a close in the next five years and is replaced by emerging networks of nations, organizations and individuals. 2 The U.S. will wield significant power and be viewed as a leader of progress in many fields, but must learn to navigate in a different role in the coming decade.
This shift has implications for the entire planet, as the world enters 2020 with the greatest upheaval in international relationships since WWII.
This rebalancing brings opportunity for material handling and logistics as market trends generate increased demand for both domestic and international supply chain enhancements and innovative, new materials, processes and technology. A key driver will be the replacement of market share loss to emerging capabilities in Asia.
The wars of domestic and international politics will become increasingly important to the pace and impact of regulations, tariffs, and legislation in the U.S. and abroad.
Most economists agree that with the pain of the recession in 2018 still on the minds of industry leaders, investments are expected to be moderate throughout the first half of the decade. Sales driven by consumer demand and returns yielded from smart automation will be key drivers of investment.
Industry leaders point to a number of factors that need to be addressed to enable American companies to compete successfully in global markets. Foremost in their minds is the protection of intellectual capital, equitable treatment of imports and exports, and legal protections for business structures and funding. 3
Workforce preparation is a priority for global competition. Strengthening education and training resources in the United States will be vital to competing effectively in the global market. Investments at federal, state and local levels are needed to prepare the workforce for 2030 as well as 2040 and beyond. More private company investments in these fields will be required to serve industry and company needs.
The United States is strongly positioned to become energy independent, which would represent an historic shift and provide critical leverage with other nations. Already the world’s largest natural gas producer, the U.S. has the potential to dramatically increase crude oil production as well. 4 Outcomes from debates over the environmental impacts of drilling may stall or derail progress in this field.
The Rise of Asia
Bryan Jensen, Chairman & EVP, St. Onge Company
“Supply chain infrastructure and market conditions are changing around the globe. It is important to monitor these dynamics and adjust plans as changes occur.”
The rise of Asia is driving a significant shift in economic power and prowess across the globe.
In many Asian countries, China in particular, government policies and growing infrastructure are driving domestic manufacturing and logistics to serve an increasing number of people and domestic markets. Less dependence on the West for goods and services will increasingly dampen imports from the U.S. and other countries.
The McKinsey Global Institute adds perspective; “The question is no longer how quickly Asia will rise; it is how Asia will lead.” 5
The institute portrays Asia as “increasingly the center of the world economy. By 2040, the region could account for more than half of global GDP and about 40 percent of global consumption.” 6
McKinsey’s research groups regions of Asia into four economic categories, based on scale, economic development, interactions with one another and connectedness to the world. 7
“The Asian Century has begun. Asia is the world’s largest regional economy and, as its economies integrate further, it has the potential to fuel and shape the next phase of globalization.” 18
Source: Category groups from McKinsey Global Institute. Graphic by Burchette & Associates.
The World of Politics
Shifts in political leadership will have a tremendous impact on the coming decade. The combination of ruling party beliefs and personal leadership styles will color international relationships and the progress toward peace, health and prosperity for all nations.
The decade is beginning with a rough start.
Trade tariffs being used as political weapons in 2020 will further strain relationships among nations. Boundary disputes, weapons development and economic sanctions will heighten tensions.
Social and religious beliefs and differences will drive elections and either increase discourse or lead to greater harmony among political allies and enemies, which in turn will impact global commerce and supply chains.
Business strategies for dealing with uncertainty and change will be critical for managing successfully in the global market during the Transformation Age.
Dr. Suzanne Fry, a political analyst at the Central Intelligence Agency and former director, NIC Strategic Futures Group, says the key factor for a positive future is “resilience – in infrastructure, knowledge and relationships – for managing surprise and discontinuity.” 8
The NIC draws a key conclusion about the importance of resilience to success in the future in the “Global Trends, Parodox of Progress,” report:
“…The very same trends heightening risks in the near term can enable better outcomes over the longer term if the proliferation of power and players builds resilience to manage greater disruptions and uncertainty. In a world where surprises hit harder and more frequently, the most successful actors will be those that are resilient, enabling them to better adapt to changing conditions, persevere in the face of adversity, and act quickly to recover after mistakes.” 8
“…the most successful actors will be those that are resilient, enabling them to better adapt to changing conditions, persevere in the face of adversity, and act quickly to recover after mistakes.”NIC, Global Trends, Paradox of Progress
Global Demographic Trends
Humankind. There will be more of us. We will be older as a group and more diverse.
The United Nations predicts the world’s population will increase by 2 billion people in the next 30 years. 9 Population trends will be varied around the world, but a number of key themes prevail: 10
Graphic by Burchette & Associates
The Renewed Space Race
Growing interest and investment in space exploration and related industries will create opportunities for collaboration, competition, innovation and discovery across the globe.
Could this be the field that fuels common interests and helps countries act in concert?
Early initiatives show good progress in collaboration, with engineers, astronauts and other experts from different countries working together on initiatives related to the International Space Station. NASA reports the space station program “brings together international flight crews, multiple launch vehicles, globally distributed launch, operations, training, engineering, and development facilities; communications networks, and the international scientific research community.” 12
Development of new materials and processes in the pursuit of interstellar travel and commerce will enable technological advances in other fields such as satellite manufacturing, broadband technology, mining, textile fabrication and healthcare – all of which have impacts on Earth and create benefits for the material handling and logistics industry.
Growth in demand for technologies such as GPS in vehicles and drones, weather forecasts delivered to customized online maps, and low latency augmented reality (AR) healthcare procedures will fuel proliferation of stronger and better satellites. The supply chain will benefit from these advances as well.
There are limits to the space we have to utilize for satellites in orbit around Earth, and those spots are filling up. More and more space debris is accumulating from man-made sources. Different nations will reach various planets and asteroids independently and collaboratively, gaining first looks and discoveries. How will nations work together to define space law and space policy around such issues? How will supply chain companies access new technologies and processes from various international sources? These and other questions reflect new frontiers in this field.
For more information on this topic, go to the section on the New Space Economy.
Every nation stands to benefit from advancements in satellite systems, remote sensors, broadband capabilities, drones, AI and other technologies. Opportunities for collaboration – across a greater number of faster and increasingly less expensive platforms – will grow. Manufacturing and associated logistics will be optimized across markets, cities, countries and global supply chains as never before.
Industry leaders voice optimism at the opportunities technology will afford for entering new markets and improving supply chain logistics in territories where they operate today. Expectations run high for the progress to come in emerging economies that may skip over legacy approaches and jump to newer technologies as they become commercial realities over the decade. 13
Industry leaders also expect privacy and data security concerns to be dominant topics in discussions and initiatives involving global partners. Information sharing technologies, surveillance techniques, satellite tracking capabilities, and industrial and personal information sensors will all bring valuable information to companies, governments and their partners, while at the same time, creating doubts and conflicts over privacy, security and data ownership. 13
The pursuit of ways to generate and harness energy is a common goal of all nations. The fuel of life, energy drives our factories, our homes, our businesses and our supply chains.
Vaclav Smil reminds us in his examination of energy and its impact on the world in Energy and Civilization, A History that “Energy is the only universal currency: one of its many forms must be transformed to get anything done.” 14
But the energy supply on Earth is not unlimited. Different forms of generation come with various consequences and trade-offs, limiting the realization of improved quality of life as energy sources and processes fuel progress.
To that point, Smil also reminds us, “Life’s two cardinal characteristics have been expansion and increasing complexity,” and asks, “Can we revise these trends by adopting the technically feasible and environmentally desirable shift to moderated energy use?” 15
Answers to that question will emerge over the decade.
Multiple direct and indirect factors will drive energy trends for the future. Increasing global demand to meet population, commercial and industrial needs comes at a time when planetary aspirations to meet a 2 degree climate goal bring pressure on sustainability impacts.
Advances in wind and solar generation will propel usage of those sources and battery technology will be widely used to support extended storage capacity and peak demands. The convergence of these factors will drive significant global changes in the way energy is generated, transmitted, stored and used. The resulting mega trend will create a rapid increase in the use of renewable sources that provide both cost effective energy solutions and a decline in carbon emissions.
Supply chain leaders expect battery technology improvements to enhance factory and transportation equipment such as forklifts, electric delivery vehicles and drones. Expectations for future lower energy costs driven by solar and wind generation are moderated by concerns about expensive infrastructure requirements for both public and private sources over the decade.
Vaclav Smil, Author and Distinguished Professor Emeritus, University of Manitoba
MIT Press, 2017
Projections by BloombergNEF call for wind and solar to make up almost 50% of world electricity in 2050, with Europe “decarbonizing furthest, fastest.” The United States and China are predicted to follow this trend as well. 16
New energy technologies bring the need for domestic and international standards to ensure safety and compatibility of approaches. For example, common standards are needed for public infrastructure such as EV charging stations to support long-distance deployment of consumer and commercial electric vehicles.
The availability of minerals and Earth elements used in the manufacture of batteries and other energy technologies will be an important factor to all nations in the pursuit of enhanced energy infrastructure. The scarcity of some minerals will spur innovations in technology to utilize new, more plentiful sources.
The great promise of this decade is for global players and small town businesses and citizens alike to collaborate where possible and act independently when called to achieve life on our planet that is peaceful, prosperous and sustainable.
1 Richard M. Sherman; Robert B. Sherman, (songwriters), 1963, The Walt Disney Company
2 The National Intelligence Council, Global Trends, Paradox of Progress, 2017, ix
3 Burchette & Associates, Inc., and MHI, Transformation Age Trend Research, 2020
4 National Intelligence Council, Global Tends: Alternative Worlds 2030, 2012, “Mega Trend 4: Growing Food, Water, Energy Nexus,” iv, v
5 McKinsey Global Institute, McKinsey & Company, 2019, Future of Asia, 1, mckinsey.com
6 McKinsey Global Institute, McKinsey & Company, July 2019, Asia’s Future is Now, mckinsey.com
7 McKinsey Global Institute, McKinsey & Company, “The Future of Asia: Asian Flows and Networks are Defining the next Phase of Globalization, 30, mckinsey.com
8 The National Intelligence Council, Global Trends, Paradox of Progress, 2017
9 United Nations, The World Population Prospects 2019: Highlights, 1, un.org
10 The National Intelligence Council: Global Trends 2030: Alternative Worlds; The National Intelligence Council, Global Trends, Paradox of Progress, 2017, United Nations, The World Population Prospects 2019: Highlights, un.org
11 Dudley L. Poston, Jr., “3 Ways the U.S. Population will Change Over the Next Decade,” pbs.org
12 NASA, “International Cooperation,” Space Station, nasa.gov
13 Burchette & Associates, Inc., and MHI, Transformation Age Trend Research, 2020
14 Vaclav Smil, Energy and Civilization, A History, 2017, First MIT Press paperback edition 2018, 1. The MIT Press, Cambridge, M.A.
15 Vaclav Smil, Energy and Civilization, A History, 2017, 440. The MIT Press, Cambridge, M.A.
16 BloombergNEF, New Energy Outlook 2019, “Executive Summary,” 2019
17 Carl Sagan, Ann Druyan, Carol Sagan, The Pale Blue Dot: A Vision of the Human Future in Space, 1994, Random House Publishing Group, New York, New York.
18 McKinsey Global Institute, McKinsey & Company, “The Future of Asia: Asian flows and networks are defining the next phase of globalization, mckinsey.com
19 NASA, “International Partners and Participants,” Space Station, nasa.gov
New Space Economy
The 21st century is starting off with activity, hope and promise of a rebirth – more so an evolutionary leap – into space.
Fifty years after the Apollo 11 mission put man on the moon, there is renewed interest and investment in a variety of space-related activities. That interest is spurred by recent advances in technology that were lacking following the progress made in the last century.
Those who believe the space race is too much in its infancy to impact manufacturing, logistics and commerce in the coming decade, or even the next twenty years, may be missing signals that tell the story of more immediate impact and opportunity.
Two decades of early trials, failures and successes have positioned the space industry to make significant strides in not only the return to the moon and exploration of Mars, but the development of new capabilities in everything from telecommunications to manufacturing and healthcare. The potential impact is broad, impacting sustainability and the advancement of civilization and technology beyond incremental efforts in any other field.
The new space economy brings excitement and vision to the Transformation Age. The pursuit of space brings a unique perspective to the environment of rapid change and challenge. Somehow humans of all ages find space interesting and even fun, rather than daunting and frightening.
The year 2018 reflects a renewed appetite for progress and economic growth for the space industry. During those twelve months, the world learned from 114 space launches from 25 sites involving 13 countries. 1
A significant shift for the space industry is the move away from concentrated public funding as private investment has grown significantly. The world is benefitting from the wealth of a handful of billionaires who view space as new ground for creating fundamental change on Earth.
Adam Jonas, managing director of Equity Research at Morgan Stanley and a clarion voice in research into the impact of this industry, sized the new space economy at $350 billion in 2019 with a forecast for the market to grow to between $1.1 and $1.7 trillion by 2040. 2 That growth represents a tremendous amount of capital investment and an unprecedented opportunity for discovery and knowledge transfer in the years to come.
Noting the expansive opportunity in the new space economy, Jonas says, “A number of developments have increased the economic capacity and viability of the space economy. The biggest is satellite broadband, which improves access to the internet that otherwise would not be there. It can essentially turn on a continent.” 2
“In our lifetimes we’ll see significant advancements in space as a domain for exploration, commerce, internet, and scientific study that can make the earth something our children and grandchildren can inherit.” 2
Many of the trends impacting the material handling and logistics industry play an important role in the rise of space activities. Shelli Brunswick, Chief Operating Officer for the Space Foundation notes, “That upward climb coincides with the explosive use of smartphones, the creation of the app economy, the evolution of small sats (satellites), the unfolding data revolution, the development of smaller, cheaper, and more reliable sensors as well as an array of launch vehicles and payload specializations that have delivered growing choice and lower costs. Add to those technology revolutions the rise of a new generation of space entrepreneurs willing to put capital and reputations into one of the world’s most disruptive marketplaces, and you have the ideal environment for expanding economic growth and opportunity.” 3
More than 500,000 pieces of space debris are currently tracked as they orbit the Earth, some traveling as fast as 17,500 mph. Many millions of pieces are too small to be tracked but could be hazardous to critical satellites or other spacecraft. International action may soon be necessary to identify and fund the removal of debris most threatening to an expanding global space presence.
Source: “Global Trends, Paradox of Progress” National Intelligence Council, January 2017
The potential for discovery, innovation and information transfer will benefit the material handling and logistics industry as well as other aspects of commerce and life on Earth.
Access to new markets will be enabled through expanded telecommunication capabilities. Announcements in 2019 for new satellite constellations promise the first of many such investments over the coming decade. 4
New materials and processes will be discovered and developed, leading to improved design and manufacturing capabilities. 4
Sustainable energy generation, storage and usage technologies for space travel and space station activities will enable transportation and infrastructure innovations on Earth. 4
Mining technologies developed for asteroids will be translated to exploration and use of Earth’s resources. 4
Advances in digital hardware and software will translate to a myriad of commercial, industrial and consumer uses. Edge computing coupled with the power of the Cloud will be further leveraged, and in turn, will provide industrial solutions not yet imagined. 4
Quantum computing will be used to tackle problems encountered in space discovery, netting improvements on Earth in everything from business solutions to healthcare and education. 4
Surveillance and sousveillance capabilities will be improved, empowering individuals and nations alike to record, protect and predict experiential moments-in-time for life-improving purposes. 4
Technology transfer and tech insertion will occur, yielding singular and collaborative benefits among industries, entrepreneurs, scientists, engineers and universities. 4
Shelli Brunswick says, “Health care, transportation, public safety, environmental protection, machine learning, manufacturing, energy production, and many other business sectors will be first-tier benefactors of ongoing space technology innovations. Every consumer in this country and around the planet will find their lives improved by space-enabled breakthroughs in these and other areas.“ 5
Drivers of the New Space Economy
It is important to note the breadth of activities in this sector. Definitions differ among industry experts, but all forecast growth for the decade. 6
Graphic by Burchette & Associates
Spaceports – sites for launching or receiving spacecraft – represent a new opportunity in domestic infrastructure that has a broadening interest by industrial players in aerospace and related fields.
Spaceport development is expanding, led by efforts in the United States. The 2020 decade began with 40 active launch sites around the world with 10 more in development in the United States, Sweden, Australia and Canada, and 13 more proposed in eight countries. 7
Development is occurring by both private sector and government entities. The Space Report cites lower spacecraft and launch vehicle manufacturing costs as spurring the building boom. “As launch costs have lowered, satellites have shrunk in size and cost and grown in capabilities, making it possible for more countries and more businesses to take their place in space. The turnaround time for lightweight rockets with small satellite launch capacity also is decreasing. Smaller rocket launches can be conducted at lower costs and launched more frequently.”
Spaceport characteristics will evolve over the decade, with some including primarily launch facilities and others incorporating business hubs of office buildings and labs for related businesses and scientific discovery. Areas that are home to these facilities will enjoy population growth and economic benefits. Tourism dollars can also be accrued.
Space Review, in conjunction with SpaceNews, reports that Houston Spaceport is putting in roads and other infrastructure to support companies such as Flight Safety International which plans to set up an aviation safety training center there, as well as Intuitive Machines, a commercial lunar lander developer. Other locations identified in the report include Colorado Air and Space Port, which is attracting companies such as Reaction Engines, a British company testing their SABRE engine at the former Front Range Airport. 8
These facilities can’t be located just anywhere.
Spaceports are best located in areas close to the equator to take advantage of the spin of the Earth as an accelerant, saving significant fuel costs. Location is relative, and doesn’t rule out areas further north or south as evidenced by many existing sites, but the fact remains – the closer to the equator the better.
Characteristics of surrounding areas are important too. Drop zone locations, technically known as Azimuth limitations, are measured in degrees and describe the limit of direction and width of airspace a rocket has available to reach orbit. These drop zone locations are important in site selection for the safety and environmental protection of surrounding areas.
Weather patterns is a third factor in site selection. Cloud cover, high altitude winds, lightning and thunderstorms are key environmental considerations.
Evolution in design of spaceports will continue throughout the decade, leveraging new technologies to meet the needs of growing space initiatives in the United States and around the globe.
New Mexico Spaceport Authority
Images: Spaceport America
The United States Space Force
In December 2019, President Trump authorized the formation of the U.S. Space Force as a military branch under the Department of the Air Force, operating alongside of the United States Air Force.
The mission of the U.S. Space Force is to “organize, train, and equip space forces in order to protect U.S. and allied interests in space and to provide space capabilities to the joint force.
Its responsibilities include developing military space professionals, acquiring military space systems, maturing the military doctrine for space power, and organizing space forces to present to the Combatant Commands.”
Over the coming decade, this new military service branch will need to determine new strategies and protocols for national security and warfare in the Space domain. Innovation of technologies and processes will evolve as part of this process. Opportunities will increase for private sector participation in design and implementation of these new and enhanced capabilities.
Technologies such as IoT, robotics, drones, satellite telecommunications, augmented reality and virtual reality, as well as myriad digital capabilities from AI to quantum computing will be part of the military solution set.
Intellectual capital and expertise in areas of manufacturing, distribution, packaging, product design, engineering, research telecommunications, transportation, and computing will be in demand to help serve the needs of this promising new branch of the military.
Innovation and Growth
TechCrunch author, Devin Coldewey, describes innovation and growth in the industry in the context of four key components: launch, craft, ground infrastructure and data.
In the launch category, Coldewey distinguishes between what he refers to as “brute force” initiatives from those with “smart positioning” and “novelty” approaches. He puts the current efforts of companies such as SpaceX and Blue Origin in the brute force bucket where he views the billions in investments by billionaires as a unique proposition from which we all reap benefits.
Noting the newness of smart positioning efforts, he points to the work by Rocket Lab on small payloads delivered with short turnaround time. The company’s founder, Peter Beck, is betting big on the ongoing need for maintenance and replacement of satellites.
Coldewey quotes Beck as a harbinger of future trends.
“Responsive space, or launch on demand, is going to be increasingly important,” Beck said. “All satellites are vulnerable, be it from natural, accidental, or deliberate actions. As we see the growth and aging of small sat constellations, the need for replenishment will increase, leading to demand for single spacecraft to unique orbits. The ability to deploy new satellites to precise orbits in a matter of hours, not months or years, is critical to government and commercial satellite operators alike.”
Coldewey describes a number of trends in manufacturing of space craft, from miniaturization to flexibility of operation. Citing parallels to the smartphone revolution, he paints spacecraft design as a field enabled by advances in miniaturization of electronics and falling costs.
He also notes Beck’s belief that spacecraft hardware expertise will become a speciality niche, allowing businesses like satellite operators to focus on their operations and research rather than building their own spacecraft.
Construction of base station infrastructure, automation of operations, and development of supporting telecommunication capabilities are essential to the advancement of the space industry.
Coldewey points out that means construction of new infrastructure as well as merging legacy systems with newer, advanced ones. Cloud-based technologies, artificial intelligence applications, IoT sensors, cybersecurity systems and other digital tools will all be in the mix.
Enormous amounts of data and information are being captured and transmitted from satellites and other spacecraft. What is done to process this information and how it is used are the keys to value in this sector.
Entry into this sector is open to data and digital tool companies with a myriad of opportunities for analysis and application to scientific research and business.
Advances in the new space economy are creating value for life on Earth, and promise to escalate innovation in manufacturing, technology, digital tools, and telecommunications. Science, education, business and human life will benefit. Supply chain industries will garner both direct and indirect value from space-related endeavors.
A Decade of Promise
The convergence of advances in technology, need, and human interest promises to propel the growth of the new space economy over this decade.
Many of the sectors in this economy provide opportunities for world leaders, scientists and industry professionals to work together and collaborate on discovery and execution of new ideas, processes and technologies.
The new space economy represents a hopeful industry model, one with a positive bent, the embodiment of imagination, and a predisposition to evolve and collaborate that will serve mankind well as we move through the Transformation Age.
1 Space Launch Report, 2018 Space Launch Report, updated December 29, 2018, spacelaunchreport.com
2 Adam Jonas, “This is the New Space Economy in 60,” The Morgan Stanley Minute, Morgan Stanley, 2019, morganstanley.com
3 Shelli Brunswick, Op-ed: Growth is Great but Innovation is the Real Investment, spacefoundation.org, (originally appeared in the Nov 11, 2019 issue of SpaceNews magazine)
4 Space Foundation, Space Report Q1, Q2, Q3, Q4 2019, Space Foundation, 2019; National Intelligence Council, Global Trends, Paradox of Progress 2017, Annex: Key Global Trends, 2017, dni.gov
5 Shelli Brunswick, Op-ed: Growth is Great but Innovation is the Real Investment, spacefoundation.org, (originally appeared in the Nov 11, 2019 issue of SpaceNews magazine)
6 OECD (2014), The Space Economy at a Glance 2014, OECD Publishing. http://dx.doi.org/10.1787/9789264217294-en; Tina Highfill, Patrick Georgi, Dominique Dubai, “Measuring the Value of the U.S. Space Economy,” Survey of Current Business, The Journal of the U.S. Bureau of Economic Analysis, U.S. Department of Commerce, December 2019, Volume 99, Number 12.(apps.bea.gov); Morgan Stanley, “A New Space Economy on the Verge of Liftoff,” The New Space Economy, July 12, 2019, morganstanley.com
7 Space Foundation, Space Report Q4 2019
8 Jeff Foust, “How Many Spaceports are Too Many?” The Space Review in association with SpaceNews, December 9, 2019, thespacereview.com
The “Transformation Age, Shaping Your Future” report site offers information and dialogue on long-term industry trends for the material handling and logistics industry. As such, the information contained within serves as an invitation to engage in thought and discussion about key factors that are expected to drive, fuel and impact various aspects of life, commerce and industry in the coming decade.
Much of this information was gleaned from in-depth interviews with industry leaders and trend experts. Other data was obtained from secondary research of published material on specific topics. The combination provides insights into those forces that will impact the industry and, more importantly, the implications for action needed now and in the future by company leaders and their teams.
We wish to express thanks to all who gave their time and shared their experience, expertise and opinions for this report.
The report and website were developed by Burchette & Associates, Inc. for MHI.
For more information about this report, contact:
George Prest, CEO, MHI
Research Design & Report Author: Emmy Lou J. Burchette
Research Specialist: Joe Coon
Copy Editor: Andrea Cooper
Website Project Manager: Karen Gafney
Website Design: Eric van den Brulle
Website Development: Geoffrey Atkin
Board of Directors
President and CEO
Toyota Material Handling, NA
President Steele Solutions, Inc.
MHI Vice President
Chairman & Executive Vice President
St. Onge Company
G.W. Becker, Inc.
FOX IV Technologies
Gregg E. Goodner
Member, Board of Directors
Hytrol Conveyor Company, Inc.
Owner / President
SpaceGuard Products, Inc.
George W. Prest
President & CEO
E. Larry Strayhorn
Hyster-Yale Group, Inc.
EGA Products, Inc.
Arthur H. Stroyd, Jr.
MHI General Counsel
Del Sole Cavanaugh Stroyd
MHI Roundtable Members
Chief Executive Officer
VP and General Manager
East Penn Manufacturing
Bill Ferrell, Ph.D.
Fluor Professor of Industrial Engineering
John M. Hill
St. Onge Company
Hamilton Caster & Mfg. Co.
Southworth International Group, Inc.
Vice President of Sales
viastore SYSTEMS Inc.
Brian C. Neuwirth
UNEX Manufacturing, Inc.
President & COO
American Crane & Equipment
Director, Business Development & Marketing
Bill Schneider, Jr.
Sissco Material Handling
Business Development & Marketing Manager
R&M Materials Handling, Inc.