The COVID-19 impact will forever change the way companies structure and analyze their supply chains. Natalie Pierce and Mickey Chichester from Littler’s Robotics, Artificial Intelligence, and Automation examine how companies may turn to AI and robotics to mitigate disruption and some of the employment implications of such initiatives.
In the current global economy, supply chains are spread across complex networks around the globe with the expectation that materials will be easily accessible to the end producer. Long-gone are the days of warehouses full of widgets â€“ businesses today are dependent on just-in-time inventory.
However, the COVID-19 pandemic Opens a new window has laid bare acute vulnerabilities in the current global supply chain ecosystem and an increased need for resiliency. Make no mistake, COVID-19 is not the death knell to our current reliance on global supply chainsOpens a new window , but it has signaled the need for end-producers to gain visibility into their supply chains below their tier-one suppliers, and to build smarter, more responsive supply chains. And once again, necessity is the mother of invention.
In the midst of this global pandemic, businesses are focusing on critical and immediate needs, likely requiring their purchasing departments to spend long hours trying to shore-up supplies so that they can meet production requirements. Falling short, some organizations will look to 3D printing as a solution to fill the gap between supply and demand. 3D printing is not only highly programmable and adaptable, but it also requires very little change to existing infrastructures.
The COVID-19 pandemic has exposed several shortcomings in America’s supply chain processes, including a dependency on foreign suppliers. For example, healthcare workers across the U.S. have experienced shortages of facemasks and ventilators. The U.S. government leveraged the Defense Production Act to force suppliers to quickly meet the unexpected need for these critical supplies.
Other businesses are turning to artificial intelligenceOpens a new window (â€œAIâ€) models to help keep factories running and shelves stocked. When the acute crisis subsides, businesses will no doubt make preparations to better weather supply chain crises in the future. Populist sentiment may call for on-shoring suppliers Opens a new window and according to a recent survey 64% of manufacturers surveyed indicated interest in bringing operations back to North America. However, re-shoring manufacturers to the U.S. will likely continue to be the exception, not the rule.
As Jeff Burnstein, President of the Association for Advancing Automation (A3), explains, â€œit’s unlikely [global companies will] uproot everything and bring it here.â€¦ [W]hen one country is shut down, another one may not be, which is a reason not to rely on just one country for your supply chain.â€ In addition, global companies want to manufacture products near their customers to reduce shipping costs and time. This cuts against centralizing an entire supply chain in one geographic location. Given these global realities, it is likely that, at most, the U.S. may see some â€œnear shoringâ€ of manufacturing to North America. It is doubtful that an outcome of the global pandemic will be a massive relocation of supply chains to the U.S., and to the extent â€œre shoringâ€ or â€œnear shoringâ€ occurs, it will likely be supported by industrial automation.
In an A3 survey conducted in March and April of this year of its members and others in the automation industry, 16% of respondents are accelerating their onshoring to North America due to COVID-19 and 35% of respondents are still considering onshoring, but not changing their original timetable due to the pandemic. Another study found that since March the percentage of North American manufactures interested in onshoring operations grew from 10% to 64%.
What we will also see is businesses generally investing in making their supply chains smarter. To do so, businesses will look to advancements in AI to gain increased visibility into their supply chains, and the analytics and insights gained will allow them to be more agile in making data-driven decisions. Adopting AI into their supply chain processes will enable businesses to model various crises and make decisions based on data, insights, and perceived risk. In a crisis, AI will also help â€œproactively identify alternate sources wherever possible, test and contract multiple logistics routes, and maintain the flexibility to reposition inventory across [the business’s] supply chains.â€ In addition, adoption of AI could allow a business to gain greater visibility into its supply chain beyond its tier one suppliers. This visibility would aid businesses in assessingâ€”in real timeâ€”the impact of a crisis on its supply chainOpens a new window . Lastly, â€œAI enabled systems that continuously analyze structured and unstructured data to form hypotheses and support rapid planning can help supply chain professionals make more informed and timely decisions for their organizations.â€ While businesses will look to invest in AI in their supply chains to mitigate risk in the next crisis, they will undoubtedly also look to their, and their suppliers’, adoption of automation.
Automated processes that utilize robotics Opens a new window create the ability to increase social distancing which has become our new normal. While shoulder-to-shoulder assembly line work has likely diminished in the U.S., one needs to look only to the COVID-19-related shutdowns of major meat processing plants to see the risk that such processes can pose in a pandemic. Businesses will certainly evaluate similar working conditions throughout their supply chains and make assessments as to whether investing in automation will aid in mitigating against supply chain disruption.
As businesses make decisions to invest in smart supply chain technology and in robotics to automate processes, they will also need to consider the labor and employment law implications of those decisions. Such investments will inevitably require retraining and re-deploying portions of their workforces. In addition, if the labor force is unionized, there likely will be a duty to engage in collective bargaining with the organized workforce as additional automation is adopted. There are also work safety concerns to evaluate as additional robots are deployed on the shop floor.
The human, societal, and economic cost of the COVID-19 pandemiOpens a new window c is staggering, and its effects will remain with us forever. Looking ahead to a post-pandemic world, adoption of AI and automation will aid businesses in mitigating against supply chain limitations in the next crisis, whatever form it takes.
1See, â€œCOVID-19 and shattered supply chains: Reducing vulnerabilities through smarter supply chains,â€ Lee and Wright, available at https://www.ibm.com/downloads/cas/OVZ3GZRGOpens a new window
2See, â€œTrump Invokes A Cold War Relic, The Defense Production Act, For Coronavirus Shortages,â€ David Welna, available at https://www.npr.org/2020/03/18/818069722/trump-invokes-a-cold-war-relic-the-defense-production-act-for-coronavirus-shorta
3Cornavirus Disruption Puts Supply Chain Software to the Test: AI firms adjust data, algorithms to better respond to Covid-19 impact,â€ April 9, 2020, The Wall Street Journal, Council and Uberti.
4â€œPush for Supply Chain Resilience, Reshoring Likely to Boost Industrial CREâ€ Dean Boerner, bisnow.com, available at https://www.bisnow.com/national/news/industrial/manufacturers-looking-to-the-us-could-further-boost-industrial-cre-104369Opens a new window .
7â€œCOVID-19 and shattered supply chains: Reducing vulnerabilities through smarter supply chains,â€ Lee and Wright, available at https://www.ibm.com/downloads/cas/OVZ3GZRGOpens a new window