Autonomy is progressing at an impressive rate, but we are still at the start. There are still numerous challenges in the AV sector. This article...
Build a Resilient Supply Chain with Autonomy
As seen with the pandemic, supply chain disruptions can be unpredictable. In this article, we explore the three ways that autonomous technology can increase efficiency, help organizations remain competitive, and protect against current and future supply chain pressures.
The COVID-19 pandemic has led to a shift in the supply chain as companies were forced to face the unpredictable nature of our world. Consumer behaviors, workflow processes, and even the ability to socially interact, changed. With this, the production of goods and services drastically slowed as a result of clogged ports, labor shortages, spikes in demand, material shortages, and much more. In the second quarter of 2020 alone, US manufacturing production reduced by 20.2%. These disruptions accelerated the need for businesses to innovate and build a more resilient supply chain.
However, the urgency to strengthen access to mission-critical resources goes beyond the effects of the pandemic. In fact, supply chain disruptions are a common part of doing business. According to McKinsey & Company, companies can now expect that supply chain disruptions lasting more than a month will happen every 3.7 years. Additionally, a single prolonged shock to production can cause a drastic hit to a company’s profitability, lowering profits by 30 to 50%.
Today, not only do pandemic disruptions remain, but also businesses are operating in a time where supply chain shocks are common occurrences due to frequent changes in the environment and our global economy.
Phoenix Logistics, a supplier of engineering, IT, manufacturing, and logistics services, accurately summarizes the solution to resiliency in one word: more. This includes more technology, more flexibility, more agility, more visibility and insight, and more communication.
Among the many innovations that add supply chain resiliency, autonomous vehicle technology is one of those that make it easier for organizations to get way more. Implementing AMRs will help companies create more efficient operations. By fostering greater efficiency, your organization can better manage the unpredictable supply chain complexities of our modern world. Let’s explore how.
More Flexibility & Agility
Automated Guided Vehicles (AGVs) have traditionally been used as an automation solution to help businesses maintain a strong supply chain. AGVs help increase production by handling repetitive tasks and expanding supply chain capacity.
But in warehouses whose layouts keep changing to respond to demand fluctuations, AGVs lack adaptability. Simply put, it’s not easy to reroute an AGV. They do, after all, run in a fixed loop like a train, and changing that route can be capital intensive.
For instance, if a warehouse wanted to alter an AGV delivery task that used magnetic wire navigation, they would need to rip out and re-route the wires on the floor. These changes to its routes are capital intensive and disruptive, negatively affecting an organization’s operational efficiency.
READ MORE: WHAT ARE THE DIFFERENCE BETWEEN AGVs, AS/RS, and AMRs?
By contrast, autonomous vehicles can intelligently navigate or re-route to respond to both permanent and temporary changes to the operational design domains in which they operate.
Autonomous industrial vehicles offer a more intelligent solution that provides businesses with added flexibility and, in turn, agility. In the previous example, autonomous vehicles do not need to adhere to the fixed infrastructure of magnetic tape but instead, they can dynamically move in their given environment. This means that organizations can easily and quickly make alterations in real-time.
It’s not just shifting layouts or routes that autonomous vehicles can do easily — if a fulfillment workflow needed to add an additional step, for example, AVs can adapt seamlessly. In turn, an organization will receive more value while also spending less money on changes.
This flexibility is particularly powerful when a company faces disruptions in its supply chain. Consider a warehouse that has an efficient system for manufacturing its automobiles where materials flow from stops A-B-C. However, the warehouse experiences a delayed shipment of the inventory required at stop B. Using AGVs, the entire route would have to come to a stop.
In comparison, with autonomous vehicles, the warehouse can easily improve their supply chain responsiveness by re-routing their workflow. Step B could be moved to the end of the A-B-C workflow, essentially saved for when the inventory is finally delivered at a later time. This would allow the warehouse’s operations to continue on without being blocked by a temporary delay in supply.
At Cyngn, we customize autonomous vehicle deployments to the particular needs and specifications of a given business. These may be basic routes that go in a loop or complex routes where employees can send the vehicle to any number of stations.
A component of this technology is our Fleet Management System, where users can specifically plan a saved mission or create a new mission for the vehicles at their work site. This means that if disruptions to the supply chain occur, such as a material delay in the example above, changes to the vehicle’s mission can be easily made and operations can continue to run.
Not only does autonomy foster resilience through greater flexibility, but when paired with analytics, it also results in greater visibility. An Accenture report found that of the top supply chain companies, those with greater visibility were more resilient. As a result, past disruptions had no impact on their profitability.
By deploying autonomous vehicles, businesses will tap into a wealth of data that helps them achieve a deeper, real-time insight into their operations. Organizations can use these analytics to recognize areas of development and make informed decisions when disruptions occur. This is key to optimizing your operations and getting goods to your customers faster.
Autonomous vehicles specifically capture their given environment and use intelligent sensors to detect their surroundings. The data that they take in can be used to monitor picking accuracy, warehouse productivity, throughput, inventory, and more. If an organization uses forklifts to carry goods, then they can optimize their processes by using Cyngn’s analytics to observe any flaws in driving behavior, route patterns, or picking errors.
For instance, a facility may notice that there are unnecessary steps in travel time in their pick-and-pack process that are creating inefficiencies over time. By identifying this, the business can improve their routes to increase throughput and the number of products per hour that are getting to customers.
Here, our analytics suite is called Cyngn Insight. In addition to managing and monitoring your autonomous vehicle fleet, the platform aggregates data to extract business insights and give you information about the system’s status, vehicle telemetry, performance metrics, etc.
Moreover, not only does Cyngn Insight deliver primary data about how often you are delivering the given product or the material that you’re trying to deliver, but it also produces secondary insights. This includes data about the patterns that may be emerging at your facility, which helps you to make operational and efficiency gains. As explained by McKinsey, this visibility enables organizations to “connect the entire value chain with a seamless flow of data”.
By providing the data needed to optimize your operations, autonomous vehicles can also help predict supply chain issues.
To understand this, we can go back to the previous warehouse example where goods moved from A-B-C. Here, the organization can utilize the data collected from their AVs to detect that their workflow has become less efficient at stop B. Upon further investigation, they find that it’s because they are still waiting for the material to arrive at their warehouse.
By recognizing this slow-down, they can detect that their supplies are starting to be delivered at a slower and less regular rate. Even if it hasn’t created a crisis yet, AVs can help an organization see fluctuations in supply early on, allowing them to proactively respond.
In fact, companies with advanced analytics capabilities during the pandemic found it easier to understand the changing operational realities and generate useful insights to plan for short-term and long-term crisis responses. For instance, at the start of the pandemic, Nike used predictive analytics to understand patterns and reduce production early on. This minimized the impact on their operations and they had a smaller drop in sales than other competitors.
Greater visibility within the supply chain will also help companies gain an advantage against their competitors. In fact, MHI’s 2020 Annual Industry Report survey found that 67% of respondents believe that automation has the potential to create a competitive advantage.
In addition, autonomous vehicle technology can help businesses that are Tier 2 suppliers better communicate with their customers about their output using real-time data. Commonly, visibility into a supply chain stops at direct Tier-1 suppliers, and organizations know very little about their entire supply chain. This results in a lack of knowledge about disruptions that may be occurring to the suppliers that supply to your Tier 1. As seen with the pandemic, in order to foster resilience, companies must have optimal supplier collaboration.
For example, a Tier 2 supplier can use Cyngn Insight to collect data that will help them better and automatically communicate with their buyers about their output. If there is a delay in Tier 2 of rubber, for instance, it will be communicated to their buyers down the supply chain. This allows these companies to better predict and plan for their supplies, creating necessary end-to-end supply chain visibility.
“Accurate stock and location data can make the difference between winning and losing a customer”, says GS1 US, an organization facilitating collaboration to improve supply chain visibility. The more information that companies across the supply chain receive, the easier it is for them to recognize demand fluctuations, get their products to customers faster, and avoid any unseen disruptions.
As seen by the impacts of the pandemic, the ability of an organization to adapt is more important than ever. Implementing autonomous solutions allow businesses to build the supply chain resilience required to quickly and effectively react to any change that comes their way.
Podcast Episode Transcript:
Luke Renner: This is Advanced Autonomy. I'm Luke Renner. The COVID019 Pandemic has led to a shift in supply chain as companies were forced to face the unpredictable nature of our world. Consumer behaviors, workflow processes, and even the ability to socially interact, changed. As a result of clogged ports, labor shortages, spikes in demand, material shortages, and much more. These disruptions accelerated the need for businesses to innovate and build a more resilient supply chain.
My guest today is Melanie Stone. She recently wrote an article on the ways that autonomous vehicle technology can help us build supply chain resilience. And today we're going to dive into what she's discovered.
Hi, Melanie. Welcome to the show.
Melanie Stone: Hi Luke. Thanks for having me.
Luke Renner: Yeah, sure. So I'd like to start by setting the stage a bit. The supply chain disruptions that you talk about that we experienced during the Pandemic and continue to experience. What can you tell us about them? How serious are they compared to regular supply chain shortages?
Melanie Stone: Yeah, so in some ways, it's very different, and in other ways, not so much. So with the Pandemic, exactly like you just said, the world was faced with these unexpected changes that impacted supply chains. So labor shortages, shifting consumer demand, e-commerce booms, and so on.
In the second quarter of 2020 alone, US manufacturing production actually reduced by a little more than 20% - so a large amount.
Luke Renner: Wow.
Melanie Stone: Yeah. However, today supply chain disruptions have actually become a common part of doing business, so businesses are constantly experiencing frequent changes in their environment and really just in the global economy overall.
So I actually wanted to bring up a McKinsey & Company report that I mentioned in my article. And this report talked about how they found that companies can now expect that supply chain disruptions lasting more than a month will happen every 3.7 years, which, as we know, in the grand scheme of things, is really not that long.
Luke Renner: Yeah, it's not that long. It sounds like they're constantly having to deal with supply chain disruptions. And you can think about the speed that the technology is changing, that new products are coming off of the assembly line. I'm both not surprised that it happens this often and also sort of wondering why it doesn't happen even more often. Right? Because it just seems like so much can constantly be in flux.
Melanie Stone: Exactly.
Luke Renner: It does sound like, though, that there was a major drop in production due to the pandemic. What did you say? 20.2%?
Melanie Stone: Yeah, 20.2%
Luke Renner: That's huge. Right. So then, of course, that naturally leads to the main point of your article, which is this idea that given that supply chain is expected to disrupt every four years or so. Given the dramatic disruptions that happen during the pandemic, really the only solution is to build supply chain resiliency. And one of the things that you mentioned in your article is that the key to that is, quote, unquote, more. So what do you mean by that?
Melanie Stone: Yeah, so if you really consider the definition of resiliency, it really just means being able to properly prepare, adapt, and recover from these unexpected changes.
So in order to do this, in order to build a resilient supply chain, an organization needs more. This includes more technology, more flexibility, more agility and visibility and insight and more communication. So all of these things will help an organization remain robust throughout the supply chain disruptions.
Luke Renner: Okay, so it sounds like by defining resilience as “more”, basically you're making the case that companies can make investments in more visibility, more analytics, more technology in order to guard themselves against the supply chain disruption.
Melanie Stone: Yeah, exactly.
Luke Renner: Now one of the things that you mentioned in your article, of course, this is an autonomous vehicle company, are autonomous vehicles. And you propose that autonomous vehicles can be one of the technology investments that will help companies protect themselves against supply chain disruption.
Melanie Stone AVs really help companies increase their flexibility and agility, bring more visibility and insight through analytics, and foster greater communication up and down the entire supply chain. To summarize what you just said, technology is really one of the solutions that makes it easier for organizations to get more.
Luke Renner: Okay, so let's dive into those. The first one you mentioned was an increase in flexibility and agility and you particularly highlight how autonomous vehicles can increase flexibility and agility by comparing them to AGVs or automated guided vehicles. So what do you mean by that?
Melanie Stone: Yeah, so AGVs have traditionally been used as an automation solution to help businesses maintain a strong supply chain. So these vehicles help increase production by handling repetitive tasks and also helping an organization expand their supply chain capacity.
But in warehouses whose layouts need to respond to demand fluctuations, AGVs really lack this adaptability. So simply put, it's not really that easy to reroute an AGV. They run in a fixed loop like a train and are typically guided by magnetic tape or fixed wires. So changing that route isn't always a quick fix and can end up being very capital intensive.
So to better understand this, we can consider an example of a warehouse that wanted to alter an AGV delivery task, that let's say used magnetic wire navigation. So in this particular example, the warehouse would actually need to rip out and reroute the wires on the floor. So as you can imagine this is pretty disruptive and becomes capital intensive.
Luke Renner: Totally.
Melanie Stone: And then in turn this can negatively affect their operational efficiency.
Instead, autonomous vehicles can provide this added flexibility and adaptability that AGVs don't offer. So they're able to intelligently navigate or reroute in response to not only permanent, but also temporary changes to the route.
So no need to rip out any sort of magnetic wires or take with autonomous vehicles. So this really allows organizations to easily and quickly make alterations in real time, which in turn will help them build this resiliency that we're talking about.
Luke Renner: Yeah, that makes sense. So with AGVs, there's all this infrastructure that you have to have in place, magnets on the ground or other wiring and things like that. But with autonomous vehicles, you can do all of those changes on the software side. So if there are supply chain disruptions, if there's fluctuations that companies need to react to, then they can just hit a couple of buttons and they can completely reorganize at least the routes that these vehicles are running.
Melanie Stone: Yeah, exactly.
Luke Renner: Okay, so the second way you mentioned to build supply chain resiliency is via more visibility. So what can you tell us about that?
Melanie Stone: In order to answer this question, I want to highlight an Accenture report that I discussed in my article. So this report was really interesting because it found that of the top supply chain companies, those with greater visibility were more resilient. And then as a result of this visibility, past disruptions to their businesses had no impact on their profitability, which I thought was really interesting.
Luke Renner: Wow.
Melanie Stone: Yeah. So with this in mind, by deploying autonomous vehicles, businesses can achieve the same level of visibility.
So AVs will specifically capture their environment and use intelligent sensors to detect their surroundings. So they are taking in this data that can be used to monitor picking accuracy, warehouse productivity, throughput, inventory, and the list goes on.
So as you can see, AVS really helps businesses tap into this wealth of data that allows them to achieve this real time insight into their operations, which is really important.
And then to provide another example, if we consider an organization that uses forklifts to carry goods, they can use AVs to optimize their operations by using these analytics to observe any flaws and driving behavior, route patterns, or even picking errors. So as we can see, businesses can use these analytics to not only recognize areas of improvement, but also make more informed decisions when these supply chain disruptions do occur.
So this is really key for an organization to optimize their operations and really just get goods to their customers faster.
Luke Renner: Got it. So autonomous vehicles provide analytics that allow organizations to get real time insight into their operations and that is what helps them become more resilient. You also mentioned how by providing the data necessary to optimize how these organizations are run, autonomous vehicles could also predict supply chain issues. Can you tell us a little bit more about this?
Melanie Stone: Yeah, so even if the crisis hasn't occurred yet, the analytics provided by AVs can really help organizations see fluctuations in supply early on, which will allow them to proactively respond.
So we can talk about this here through visibility, and then we will actually talk about it later in terms of communication, but with visibility, we can look at during the Pandemic as a good example.
So, during the Pandemic, it was reported that companies with advanced analytical capabilities found it easier to understand these changing operational realities and generate these useful insights needed to plan for the short term and long term crisis responses.
So an example would be of Nike, they use predictive analytics to understand patterns and they actually were able to see through these patterns that they needed to reduce their production. Early on through this data they were able to minimize impact on their operations and they actually had a smaller drop in sales than their competitors.
Luke Renner: Got it.
Melanie Stone: So as you can see, it can also help predict the supply chain issues which will in turn result in greater resiliency.
Luke Renner: So they're getting the tea leaves kind of early, they're getting early signals that things are changing. Yeah, and so of course, as you mentioned, that would necessarily bring us to the next thing which is communication. Because if there's tea leaves happening way down or way up the supply chain, communication is what's going to deliver that information across the chain.
Melanie Stone: Yeah, exactly. So autonomous vehicles provide supply chain resiliency by helping send information up and down stream within the supply chain.
So there are tier two suppliers and there are tier one suppliers. AV technology can help businesses that are tier two suppliers better communicate with their customers about the output, about their output using real time data.
So a lot of times visibility into the supply chain stops at these tier one suppliers. Organizations actually know very little about their entire supply chain, which as you can imagine, results in a lack of knowledge about disruptions that may be occurring to the suppliers that supply to your tier one.
Luke Renner: Totally.
Melanie Stone: So as seen with the Pandemic, in order to create this resilience, companies really need to have visibility into their entire supply chain, not just their tier one suppliers. So if you could imagine, let's say tier one, or your tier two supplier has a delay of rubber. So it can be communicated with this AV technology to their buyers down the supply chain. So this will allow the company to better predict and plan for this rubber, their supplies, which creates this necessary end to end supply chain visibility that a lot of businesses are actually lacking.
Luke Renner: Yeah, I think you've really hit on something here because when people imagine industrial autonomous vehicles, when they're sort of thinking through the impact that it's going to have on their business, I think they're really imagining just the car itself driving itself.
But it's a good point to remind everyone that you don't just get the car, you get all of this visibility, you get all of these analytics and all of this insight can be used to communicate up and down the supply chain, which of course is good for your customers, it's good for the people receiving your goods, but it's also good for your suppliers as well.
So yeah, I think all of this has been super interesting and really illuminating. So I really appreciate your time.
Thank you so much.
Melanie Stone: Yeah, thank you so much for having me.