Logistics Hubs as Drivers of Innovation

A European initiative aims to foster collaboration between companies in logistics clusters. Pictured is the Grupo Carreras facility in the PLAZA logistics park near Zaragoza, Spain.

A European initiative aims to foster collaboration between companies in logistics clusters. Pictured is the Grupo Carreras facility in the PLAZA logistics park near Zaragoza, Spain.

A European Commission (EC) initiative called Horizon 2020 – 2105 Smart, Green and Integrated Transport will facilitate collaboration between logistics clusters on developing supply chain solutions, particularly projects that promote environmental sustainability. In addition to helping companies bring new ideas to fruition, the initiative gives academic centers such as the Zaragoza Logistics Center (ZLC), Zaragoza, Spain, an important supporting role in unlocking the collaborative potential of these hubs.

Key players came together at the first European Logistics Clusters Forum, on October 14 -15, 2014, in Brussels, Belgium, to explore their possible involvement in the initiative. The bidding process is expected to begin early next year and run until the last quarter of 2015. The EC is providing some €18 million (about $23 million) of funding for a single large project on pan-European logistics applications.

Much effort has already gone into developing logistics clusters in Europe. For example, the Cluster Association of Innovative Logistics of Aragón (ALIA) in Spain was created by ZLC, the Aragón Institute of Technology, Aragón’s Council of Chambers of Commerce, and the Foreign Investment Office of the Government of Aragón. ALIA’s main purpose is to build on the success of PLAZA – Europe’s largest logistics park located near Zaragoza, Spain – by identifying and developing opportunities for logistics research and new alliances, and to promote the region of Aragón (for more on ALIA see the article How to Harness the Economic Power of Logistics Clusters, Frontiers fall 2013).

The creation of clusters such as ALIA involved academia, government and industry. The EC 2015 Cluster Excellence Program is driven by industry only, explains Carolina Ciprés, ZLC Director of Research Programs.

“The aim is to continue the collaboration but at a cluster level, with the participating companies developing their own action plans,” Ciprés says.

Specific plans will emerge during the bidding phase, but an example could be a project to improve the use of synchromodal transportation in Europe (where logistics service providers choose the transportation options for delivering products on behalf of shippers) says Ciprés. Countries such as the Netherlands have well developed options for road, rail, and waterway intermodal links. In Spain, however, there are relatively fewer rail options, and the challenge is to persuade rail operators to expand the number of services for shippers. It’s a chicken-and-egg problem; shippers will not provide the cargo until operators guarantee the rail capacity, and vice versa. Perhaps regional logistics clusters can collaborate on supplying the freight volumes that justify new rail services, and convince terminal operators to supply more origins and destinations. With the capacity in place, shippers and logistics service providers would be better able to make real-time decisions on the optimum intermodal routes for their cargoes.

The sharing of carrier space – called horizontal collaboration – represents another opportunity for improving the efficiency of freight operations while also reducing transportation’s carbon footprint. This type of collaboration is very difficult since it requires companies, including competitors, to pool cargoes and exchange information on relevant freight operations, thus requiring the involvement of a neutral party (or trustee). Cooperation between companies in logistics clusters could provide a collaborative platform for sharing carrier capacity over the last mile.

Although ZLC will not be directly involved in the 2015 Cluster Excellence Program, the Center will provide critical support for the participating clusters in the Aragón region.

“We will try to involve the clusters in our applied research and also in our proposals for research projects in Europe,” says Ciprés. ZLC can also offer advice on potential projects and help to demonstrate the impacts of projects that the clusters choose to pursue.

At the same time ZLC will benefit from its exposure to real-world logistics projects, and can incorporate the lessons learned into its educational and research programs. This two-way exchange will help ZLC to identify subjects for future research.

“This market-oriented approach to collaboration across logistics clusters will benefit companies as the main participants, and give academic centers such as ZLC more visibility in our regions,” says Ciprés.

For more information on the European Commission 2015 Programs contact Carolina Ciprés at ccipres@zlc.edu.es.

This article was published in the fall 2014 issue of Supply Chain Frontiers. Subscribe for free to Frontiers here.

Wanted: Innovative Responses to a New Security Threat

It is now possible for cybercriminals to take control of a vessel's GPS system

It is now possible for cybercriminals to take control of a vessel’s GPS system

The recent cyber attacks and security breaches at Target and Home Depot drew executives’ attention to the vulnerability of their companies to this type of crime. The incidents exposed some 40 million and 56 million credit cards respectively, and in the case of Home Depot, occurred despite the company’s best efforts to protect the firm.

What has this to do with supply chain management? The answer is a great deal. One of the main types of supply chain innovations (SCI) entails challenging the dominant design. In this case, that means challenging the prevailing method for supply chain security in response to the cyber security threat.

High-profile breaches such as the ones cited above have spotlighted cyber security, but awareness of the actual risks involved is still relatively limited.

This is especially true with regard to the flow of information that parallels the flow of materials, and powers all supply chains. These information streams include product details, logistics data, and customer information, as well as facts and figures on factory and retail operations and financial management.

The signs are there if we look at recent incidents and imagine the potential implications for supply chains. Here are three examples to consider.

  • After being dismissed by his employer, a wastewater plant employee in Australia hacked into the organization’s plant operations remotely and altered fluids flows resulting in a sewage release into the public waterways.
  • Just a few months ago the Zombie-Zero malware attack was discovered in several logistics and robotics firms. It had been active inside the organizations for more than one year, and was being used to observe and track conveyances on their logistics journey. The malware was found in scanners that were used by each of the firms, and was apparently embedded in a Chinese supplier’s facility. Sadly, software updates provided by the manufacturer failed to rectify the vulnerability.
  • A study on ocean-going vessels showed that clever adversaries have already figured out how to take control of a vessel using the GPS system.

These examples illustrate how attackers are capable of gaining access to internal systems to not only steal operational information that drives the supply chain, but also to control the targeted operations.

Current defenses against attacks like these are based on dominant designs for security systems. What are these models?

The dominant design for protection in the supply chain domain involves physical site security for material flows and/or conveyances. But, physical measures are of little use where cyber crimes are involved. Many of the IT systems that underpin information flows are protected by password systems, but invariably these are not very robust

There is also a dominant design for responding to supply chain security breaches. This often entails a lengthy process that starts with chartering a committee to investigate, develop, and implement a solution. The process tends to proceed relatively slowly, however. For example, Home Depot responded speedily after learning of the Target breach, but their efforts to inspect, detect, and protect were not fast enough to outpace the attackers. Companies often lack the in-house tools and resources to properly evaluate their vulnerabilities, much less respond quickly.

There are also some perceptual barriers to more effective responses. Most supply chain organizations view cyber security as an IT concern. The assumption makes sense given supply chain’s traditional focus: efficiency and effectiveness in sourcing, producing, and delivering to demand, while collaborating with upstream and downstream partners.

Ironically, however, it is these activities – enabled by integrated IT systems – that make the supply chain prone to cyber attacks. But companies have not yet learned that the threat to our systems through IT is as great as any other potential disruption.

Today, cyber adversaries not only destroy information, they can commandeer systems and use them to distribute weapons and contraband. They can engage in human trafficking or turn your business into a conduit for malware and further cyber attacks. And they are in the business of aiding and abetting the theft of cargo and competitive intelligence, and doing damage by altering information on customers and shipments.

Cyber criminals include professional gangs, business competitors, ‘hackvitists’ and nationalists intent on disrupting commerce for profit and political gain. Moreover, for every $1 that a hacker spends attempting to break into your system, the firm must spend $100 to defend itself. As a result, most firms have already lost or are losing the battle to prevent illicit access to their systems; the bad guys are already inside.

The dominant design for supply chain security decision-making and response must change if organizations are to have a chance of keeping pace with the cyber security threat.

This post was written by Jim Rice, Deputy Director, MIT CTL (jrice@mit.edu), and based on his Innovation Strategies column in the November 2014 issue of Supply Chain Management Review  

 

When the Heavy Hand of Government is Not a Burden

Responding to large-scale crises such as the Ebola outbreak requires government resources

Responding to large-scale crises such as the Ebola outbreak requires government resources

I’m no fan of Big Government, but there are some cases where a system-wide view is much more efficient than a localized, distributed view. An example in the supply chain space is US maritime policy. A broader, and more topical example, is managing the Ebola crisis.

Americans have an almost visceral dislike for large, centralized government, and for good reason. Who wants to rely on the feds to provide local services such as trash collections or trust the authorities to spend local tax revenues wisely?

But like it or not, large-scale management challenges often require large-scale government.

In the maritime example I cited above, the lack of a centralized management strategy for our nation’s port system puts us at a competitive disadvantage. One manifestation of this problem is that multiple ports on the east coast are deepening their approach channels in order to attract bigger cargo ships. The widening of the Panama Canal to enable larger ships to pass through the trade artery will generate this traffic. However, not all US ports will benefit from the Canal’s expansion, and at this point deciding which east coast facilities will gain (if any) is something of a lottery. As a result, huge amounts of investment dollars that could be put to better use, such as funding urgently needed infrastructure projects, will be largely wasted.

There are many other areas where a centralized strategy is needed. Imagine the chaos that would ensue if every state in the US had its own air traffic regulations or currencies, for instance.

The Ebola outbreak is another case in point. Responding to a crisis on this scale requires the resources and system-wide scope of national government. The results of combating the virus via a patchwork of local responses can be disastrous.

We have a glimpse of such an outcome courtesy of the states of New Jersey and New York. These states imposed strict quarantine requirements for travelers arriving on US shores from West Africa, even when the individuals show no signs of contracting Ebola. Such hastily introduced local measures are ultimately counterproductive, and don’t work anyway. What is to stop individuals from using other gateways in the region such as Baltimore or Washington DC to enter the country? And by protecting their own citizens, are NJ and NY putting the populations of neighboring states at greater risk (as well the citizens of and NJ NY)?

My colleague Dr. Jarrod Goentzel, Director of the MIT Humanitarian Response Lab, has identified other, supply chain related, problems caused by local knee-jerk reactions to the crisis (for more on this read his Humanitarian@MIT blog post Travel Bans and Stockpiling Can Cripple the Ebola Response Supply Chain).

An issue he highlights is how the local hoarding of personal protective equipment (PPE) that is critical to health workers can seriously disrupt national and international relief programs.

As the demand for PPE has soared manufacturing capacity has become constrained, and some distributors are citing supply concerns. The situation is exacerbated by local stockpiling. The State of Ohio, for example, is buffering its PPE inventories, for example.

Fighting the Ebola outbreak requires coordinated planning and prioritization. Two international organizations took the early lead in matching PPE supply and demand. Médecins Sans Frontières has led Ebola treatment on the ground in West Africa from the beginning, determining the standards for care and health worker safety and quantifying needs. The UN agency UNICEF is coordinating with key suppliers. Manufacturers have responded to these efforts by stepping up the production of PPE.

However, a few more high-profile cases could rapidly escalate stockpiling efforts in the public and private sector and across geographies, points out Goentzel. With manufacturing already running at peak capacity, supplies may begin to fall short.

Supply chain professionals know that risk pooling – where vital global inventories are co-managed as a common resource – is critical in maximizing the impact of a scarce commodity. For example, if Ohio is stockpiling PPE and Arizona gets hit with Ebola infections, Arizona may not have enough resources to fight the virus, putting the state and all other states – including Ohio – at risk. Under risk pooling, resources from central inventories flow to the region most in need to nip the outbreak in the bud.

As an alternative to stockpiling locally, decision makers in the public and private sectors should consider a pooled procurement process, says Goentzel. The effort should be led by the World Health Organization consulting with health departments in affected countries that allocate stocks to health workers most at risk.

Again, the message is clear: the Ebola outbreak is so wide-ranging that governmental organizations with the resources to combat the virus globally need to be in the front line.

That doesn’t mean we should give these organizations a blank check; there has to be accountability. And they need to be effective, a lesson that we learned recently in the US.

The United States Centers for Disease Control and Prevention (CDC) is spearheading the American response to the Ebola virus. But in the early days of the crisis the CDC’s credibility was damaged by an inept response and the lack of a well-defined strategy for dealing with the situation. The situation was exacerbated by conflicting messages from the White House.

The lesson is that while governments are indispensible in large-scale emergencies, they also have to be credible. If they are not, local authorities will take the initiative, and who can blame them?

Photo: U.S. DoD, Army Sgt. 1st Class Tyrone C. Marshall, Jr.

This article was originally published as a Yossi Sheffi Linkedin Influencer blog post

Visualizing Supply Chains in Distress

There is no better way to show the impact of major disruptions on supply chains than to convey the level of risk involved through a clear, impactful, visual device.

MIT CTL researchers Ranjana Mary Ninan and Christopher Sean Wang created such a device for their SCM Program thesis Visualizing and Quantifying Global Supply Chain Risk . They collaborated with two service providers, Sourcemap and AIR Worldwide, to develop an interactive mapping tool that evaluates operational risk, and flags the relative importance of key suppliers and manufacturers to the integrity of a supply chain.

A broader view

As the tsunami that devastated parts of Japan in 2011 and dislocated supply chains worldwide underlined, companies need to be better prepared to respond to a widening array of potential disruptions.

But persuading managers, and notably procurement professionals, to build supply chain risk into their decisions can be an uphill battle. Often procurers are so tightly focused on purchasing costs that they ignore how even low-spend components can incur high financial penalties if supplies are interrupted. A visual representation of the risks is a powerful way to educate procurement managers on the broader implications of their decisions.

Mapping the risks

The company that sponsored the research provides specialized diagnostic, measurement, and other industrial tools. The research team collected data on the bill of materials and suppliers for four products, and other information including the revenue associated with each tool and recovery times in the event of disruptions.

A world map of the supply chain for each tool was plotted, with colored nodes depicting suppliers, manufacturers, and distributors. Details such as parts numbers and the number of components sourced can be retrieved by clicking on a node.

Heat maps show the relative importance of each node in terms of two measurements. The Risk Exposure Index (REI) reflects the revenue to be lost during the recovery time to replace a disrupted supplier. Value at Risk (VAR) is the REI adjusted to account for the probability of a disruption caused by a weather event.

More informed decision-making

By aggregating internal supplier data and adding REI and VAR indices, the team created an interactive, global map of the company’s supply chain. A dynamic zoom-in feature yields more data about each node, and the data can be filtered in a number of ways, for example by component part number.

The tool enables procurement professionals to instantly assess the financial and operational costs involved when specific supply chain nodes are disabled. Also, since the risk profiles are ranked by color, it is easier to make decisions about risk mitigation strategies such as dual sourcing and introducing extra inventory. Each node shows the revenue at stake in the event of a disruption.

This visual representation of a supply chain’s vulnerabilities highlights hidden risks, and helps procurement professionals to build risk management into the supplier selection process. Also, with the benefit of the tool, purchasing departments can be more sensitive to warnings such as weather alerts, and better positioned to take preemptive action to mitigate the negative impacts of impending disruptions.

Importantly, the mapping tool is expected to yield significant financial benefits by making the supply chain more resilient and maintaining the organization’s revenue base in crises situations.

This article is part of a series of SCM Program thesis summaries published by Supply Chain Management Review

Travel Bans and Stockpiling Can Cripple the Ebola Response Supply Chain

Originally posted on Humanitarian@MIT:

By Jarrod Goentzel

Fear of an Ebola outbreak in the United States has spurred two key proposals for preventing the spread of this deadly disease: travel bans from West Africa and stockpiling Personal Protective Equipment (PPE).

These measures have merit, but they could also severely disrupt the supply chains that deliver the workers and supplies that are critical to fighting the Ebola virus.

PPE stockpile in Ohio (Photo: Ohio Department of Health)

Stockpile of personal protective equipment in Ohio (Photo: Ohio Department of Health)

Travel Bans

Many public officials are calling for travel bans from countries most affected by the disease: Guinea, Sierra Leone and Liberia. Some countries and individual airlines have already implemented such measures.

Flight restrictions are fairly easy to implement, but have broad implications. Mid-August cancellations implemented in Senegal provide a good illustration. Brussels Air – one of two airlines continuing flights into Liberia – had to suddenly halt flights because it was using the airport in…

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Reshoring: New Day, False Dawn, or Something Else?

How many manufacuring jobs are genuinely returning to the US?

How many manufacuring jobs are genuinely returning to the US?

We’ve been hearing a lot lately about the return of industry from foreign shores to the US – commonly known as reshoring – and how prodigal companies are driving a manufacturing renaissance in America.

It’s an enticing idea that resonates both politically and socially, but is it a trend as its proponents and various surveys claim?

Research underway at the MIT Center for Transportation & Logistics confirms that over recent years many companies have indeed established new manufacturing capacity in the US. However, the initial findings suggest that this is far from the trend that has attracted so much interest, and could have more to do with broader supply chain changes than the rebirth of American manufacturing.

The case for reshoring

Modern reshoring practices took off a few decades ago when US companies started building factories in other parts of the world to take advantage of lower costs. Fewer regulations and the growth of IT-enabled management infrastructures added to the momentum.

Many argue that the flight to low-cost countries is now being thrown into reverse by a number of changes, such as the ones listed below.

  • Increasing wage levels in Asia are eroding the region’s cost advantage over the US
  • Asian labor is less complaint than in the early days of reshoring, leading to high turnover rates and, in extreme cases, business disruptions and increasing rates of suicide.
  • Unpredictable transportation costs and increased complexity in cross-border transfers, both of which add complexity to the management of goods moving across great distances and many borders.
  • The Chinese Yuan has appreciated and in combination with a weak dollar makes domestic production in the US more attractive.
  • The challenges of outsourcing production to far-flung places have become visible. Cultural differences, unfamiliar supply bases, longer distances, and skills gaps all have to be managed.
  • Similarly, there is a greater awareness of the risks associated with offshore manufacturing, such as the hazards of lax labor laws, and the increased vulnerability of international supply chains to disruptions.
  • Emerging manufacturing methods such as 3D printing promise to make US-based production even more cost-effective.
  • The increasing need to tailor products to consumer demand, which is driving the late-stage, near-market customization movement.

These changes offer some compelling reasons for bringing production back to the home country, and for the US this is especially appealing at a time when Americans yearn for a return to the heyday of homegrown manufacturing when jobs were seemingly plentiful. Moreover, vested interests are eager to provide evidence of a national manufacturing base that is being rejuvenated by its believed newfound competitiveness.

What is reshoring?

Is the US actually experiencing such a renaissance? Before exploring this question, let’s try to clarify exactly what we mean by reshoring.

Other terms such as nearshoring and backshoring are used to describe the concept. Our colleague at MIT Professor Charlie Fine uses the term ‘intelli-sourcing’ to connote the complex dynamics that surround this manufacturing location decision. Using Fine’s description, firms are challenged to balance firm economics with business reputation in this complex decision. Such a deeper understanding of the strategy tends to go unrecognized, however, so we often fall back on the term reshoring (regrettably).

Ambiguities like these are indicative of the confusion that surrounds the concept. For simplicity in this article, we adhere to the term reshoring, while acknowledging that it is inadequate and somewhat misleading.

There is also some confusion over the definition of reshoring. Several academics have examined the topic with some useful clarifying distinctions, but the work is not easily understood. And again, there are some general ambiguities that need to be resolved. For example, does the concept apply when a US-based company that locates its primary sources of production overseas decides to open a facility on home soil? Or is it only applicable when the enterprise terminates its offshore operation before relocating production capacity to the US? In other words, is it necessary for the overseas facility to be shuttered before the strategy can be called reshoring?

For simplicity we describe reshoring as a manufacturing location decision that is a change in policy from a previous decision to locate manufacturing offshore from the firm’s home location. A definition that complements this description is: “moving manufacturing back to the country of its parent company,” coined by Professor of Supply Chain at Miami University, Lisa Ellram.

Realities of reshoring

If this is our accepted definition of the concept, to what extent is it actually happening?

We scoured the literature in search of published reports on companies that have reshored and our initial findings show that the generally-accepted belief that there is a major trend is flawed.

Over the last 5 to 7 years just over 50 companies are reported as having reshored, including major employers such as GE, Apple, Whirlpool, and Caterpillar. Many of these cases are actual movements, however, in the majority of cases the companies involved plan to invest in US-based production capacity; they have not actually made the move. The data indicate that there are relatively few published instances of reshoring. The number of companies that have actually executed a reshoring strategy is limited, and their activities could be part of strategic changes that take place over the course of a five-plus year period.

Also, the published cases tend to lack certain key details. For example, there is seldom mention of whether the offshore operation has been closed, which means that the company could be adding domestic capacity while continuing to support offshore production.

We mapped the locations of new production facilities in the US that are part of reshoring investment programs, and found that they are concentrated in a small number of areas and industries. Also, the reshoring strategies vary according to the industry. For example, consumer appliance manufacturers have reshored largely to serve US markets, and have not necessarily closed plants in the Far East. Consumer electronics companies such as Apple and Google have invested in some domestic capacity, but their core businesses remain outside of the US. Also, this industry has the highest number of planned (rather than executed) moves. The most reshored industry is machine/plastics, and this seems to be concentrated in the mid-western region of the US. There are few examples of chemical companies that have reshored, and only one case in the apparel/fashion business.

Our research also raises questions about the argument that rising costs in countries such as China is fuelling the reshoring bandwagon. We believe that is only one part of the equation. For example, rising energy costs have made transportation more expensive. But the impact of these costs differs greatly from industry to industry.

What’s really going on?

Our analysis suggests that there is no clear reshoring trend in the US. Companies do not appear to be abandoning overseas operations in droves; some are building new capacity in the US and other countries to meet domestic demand. And the level of reshoring activity varies widely depending on the industry involved.

Thirty-plus years ago when US manufacturers started to relocate production capacity overseas, there were producer countries and consumer countries. This is no longer the case – today, countries tend to fall in both camps. China is expected to become the world’s largest economy later this year. Reaching this milestone underscores how the world order is changing, forcing companies to adjust their global distribution strategies in concert with this realignment.

What we are seeing are probably a few different manufacturing location decisions. These include diversifying production locations to reduce geographic concentration risk, locating manufacturing facilities closer to end markets to enable customized and rapid-response service, and capturing the cost advantages of serving markets locally. But they all relate to the manufacturing location decision for each firm, the calculus for which will continue to change with changing labor rates, trade policies, energy costs, material sources and costs, and transportation and logistics costs.

Our research continues, and we believe that more work is needed to understand the global shifts that are reshaping manufacturing networks, before we can jump to the conclusion that a manufacturing renaissance via the perceived reshoring revolution is underway.

Gaining such an understanding is important. If the reshoring revolution turns out to be a false dawn, it could distract us from the policies and investments that need to be put in place in order to make supply chains more competitive and effective, or even identify a different phenomenon that will affect supply chains in the future.

This article was written by Jim Rice, Deputy Director, MIT CTL, and Francesco Stefanelli, Visiting Researcher, MIT CTL, and was originally published in Industry Week

 Photo: Wikimedia

How Will Apple’s Future-Facing Watch Change Your Business?

Will devices like the Apple Watch shape future supply chains?

Will devices like the Apple Watch shape future supply chains?

Since the launch of the Apple Watch with much fanfare this month, there’s been a lot of talk about how the device will carve out a viable niche in the consumer electronics market.

Another, potentially bigger picture talking point is how Apple’s latest gizmo has the potential to spur significant growth in the ecosystem of apps that surrounds mobile devices. The growth of this technology has major implications for product supply chains.

Innovations such as the Apple Watch change the way consumers interact with products and services markets. Companies will have to respond to these changes, and be ready to take advantage of new business opportunities.

In addition to connecting users to their iPhones, Apple’s innovation offers a number of features including a fitness monitor, the ability to make mobile payments, and a facility for linking with home automation devices such as smart thermostats.

But the number of apps is expected to explode over the next few years as developers focus their creative energies on the device. Also, Apple has become more amenable to external partnerships. The company is “hoping to entice other firms to contribute to its ecosystem and make it more attractive,” said The Economist recently[1]. Apple has partnered with IBM and made it easier for outside developers to create apps for its iPhone, points out The Economist.

The possibilities for the Apple Watch and its competitors could be limitless, so let’s take just one example: richer health monitoring features. More sophisticated sensors could track the wearer’s vital signs and transmit the data to physicians and other designated support services. Significant changes in the person’s health regime might trigger the delivery of new medications, or in extreme cases alert emergency responders.

Supply chains will have to be responsive to these demand signals. If the personal monitor indicates that new medications are urgently required, for instance, then after being validated by a qualified health care professional the drugs can be automatically ordered and delivered to a home location. Alternatively, the alert can go to a care giver who will order the medication while at work or in another part of the globe.

These events create opportunities for companies that are able to provide the right type of support services, and not necessarily ones that are already in the business. Perhaps third-party logistics companies such as FedEx or UPS could compete for a share of the market.

If this seems like a stretch think about what is required: an efficient, far-reaching distribution network, a fleet of conveyances, quick response fulfillment systems, a dedicated work force, and a high level of customer trust. The latter is particularly important because it can’t simply be bought off the shelf. These enterprises already possess other, less obvious HR resources. For example, it is not widely known that UPS employs pharmacists in its primary logistics hubs where pharmaceuticals are distributed (a future post will look at the varied skills sets that reside in logistics clusters, meanwhile, there is more information in my book Logistics Clusters: Delivering Value and Driving Growth).

Of course FedEx and UPS would need to tweak their business models. And this might fly in the face of existing strategies to eliminate as much manual work as possible and increase automation. In order to offer these healthcare support services, the companies would need to employ drivers with the appropriate interpersonal and trust-building skills.

Looking further ahead, technological advances could change the mix of skills needed to serve the market. Consider, for example the possible introduction of driverless package vans and robot-assisted deliveries from the package car to the home. These developments would require UPS and FedEx to hire and train a driver based on her ability to interact with the customer/patient, rather than her driving performance and the speed at which she can get the package to the customer’s door.

The broader point is that devices such as the Apple Watch accelerate the development of apps that push the technology into areas that we can only imagine today. In addition, they also change communications and social interactions protocols. Twenty years ago only an exceptional visionary could picture people constantly peering into a small, handheld screen to communicate with their friends and peers.

The Apple Watch is the latest in a line of ground-breaking gizmos that are redefining the competitive and social landscape. These devices are more than fashion accessories or toys for geeks; they represent the future shape of businesses and their supporting supply chains.

The is article was first published as a Linkedin Influencer post

 

[1] Reluctant Reformation, The Economist, September 13th, 2014

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