Artificial intelligence will transform our supply chains — and it’s our fault
Today, consumers expect to get what they want, when they want, at the push of a button. Amazon’s meteoric rise as one of the top 5 North-American companies in market capitalization has been one of the primary drivers behind this trend. It’s interest in fast automated fulfillment, artificial assistant development and investments in automated delivery drone is a tremendous influence on the market. Competing companies Apple, Google, Microsoft and IBM are playing catch-up to the distribution giant in all these areas.
As consumers, we now expect recommendations tailored to our unique buying patterns when shopping online. We expect delivery of merchandise to occur within a day. We expect to have multiple payment options from smartphone payment systems, traditional plastic, online payment systems like PayPal and even crypto currency. We are spoiled brats when it comes to shopping. It is a buyer’s market.
Companies are constantly scrambling to make our experiences as unique as we are to please us in an increasingly sophisticated and accessible marketplace.
As we move forward, we can expect this trend to continue as artificial intelligence becomes better at anticipating our needs. AI gathers more information about us than ever through an increasing number of sensors deployed around us. AI engineers are competent at creating AI that can resolve complex issues and tackle increasingly complicated tasks.
The fewer human beings between the consumer and what it needs, the better. The company behind the technologies also benefits by eliminating employment-related costs. Consumers get their unique inexpensive customer experience while companies leveraging advanced technologies get more competitive in the market.
This is a win-win for both producers and consumers. This also means the traditional supply chain is losing parts. In a few years, we’ll be able to receive our products directly from manufacturers who would ship directly to our home.
Traditionally, there are multiple distribution centers and warehouses between the manufacturers and our homes. These were necessary to successfully distribute goods in a timely manner to satisfy demand. It was necessary because manufacturers of 100,000 widgets a month couldn’t possibly deliver all those products all over the world. After all, back in pre-Internet days, consumers made purchases only after physically going to a store to take the product home. So, a distribution system we created that delivered products to a proximal location to its intended consumers. Hence, we needed many supply chain businesses to handle all the geographical steps between the manufacturers and the consumer’s homes. This gave birth to a large international network we call the supply chain comprising of warehouses, distribution centers and transportation companies constantly moving products around.
Amazon, Alibaba and eBay among many others have shown us a way to bypass some of supply chain steps. They offered distribution and transportation options for individuals who wanted to sell directly to others without geographical concerns. This was part of the growth of the online purchasing phenomenon we are still in today.
Amazon is now thinking ahead by developing methods that would allow the delivery of product using automated drones and no human employees in the way.
Many modern companies have already done away with physical stores. Store closures in our neighborhood stands testament to this continuing trend. Amazon has also been hard at work to replace the transportation aspects of the supply chain though self-driving delivery vehicles and automated drones. The giant fulfillment company has also refined the concept of fully automated warehousing systems that can connect to a residential delivery system of its own design.
They’ve created a combination warehouse and distribution system eliminating many intermediaries. The cost savings to consumers are huge. We shouldn’t be surprised Amazon offers free delivery.
The next step after this will be additional deployment of artificial intelligence and a strong network of self-driving transportation systems. Companies like Amazon in the fulfilment business will integrate their well-oiled human-less warehouse-distribution centers with widget manufacturers. Then, manufactures could take end customer orders and ship product to them directly. Amazon could license out their fulfillment technology to manufacturers and allow them easy access to its well-established direct-to-consumer fulfillment system.
No need for the manufacture to have many employees (if any at all). The transportation system would be most efficient with no employees involved to slow things down. Who wants to deal with a delivery person at our door if a drone can do a better job without the chit-chat? Manufacturing companies win because they cut cost and middlemen. Fulfillment companies are happy to use their automated systems to deliver goods to homes with fewer steps along the way. The consumer is happy to cut costs too.
You know what? This sounds alarming to many because I’m describing the elimination of many jobs in this process. But just remember what the main driver behind it is: we the consumer.
If this happens — and it will — it will be our fault for demanding fast, cheap, efficient delivery of whatever would satisfy our unique needs.
In another article, I could talk about how advanced 3D printing technologies in the home will disrupt the future fulfilment model I described, making me a liar! But that would have to wait for another time.
Suffice to say, consumers are in the process of trading our supply chain and transportation jobs for convenience and a lower cost of products. Our desire to purchase cheaper goods is inexorably eroding our means of taking part in the buyer’s market. How ironic!
Give it about 10 years and we’ll see a collapse of manufacturing companies and all of what I’ve been describing as a way to distribute goods from faraway places. With advanced 3D printers capable of using multiple material types, we’ll be able to build whatever product we need at home from files downloaded from the Internet and raw materials. The raw materials will be produced by manufacturing companies of a certain type, of course, so the supply chain won’t collapse completely, but it’ll be transformed by these events.
As consumers, the costs of purchasing a widget will be limited to the cost of the raw materials needed by weight, and the energy needed to produce the item.
It’ll be exciting, but a drastic change of economy goes hand in hand with these very nice supply chain disruptions. Are you ready for it?