Supply Chain Innovation

12_ Technological Innovations with

Big Impact on the Supply Chain

Prof. Nizar Abdelkafi

Supply Chain Management – Nizar Abdelkafi
 Outline of the Lecture

I. INTRODUCTION TO THE COURSE

II. THE WHY?
1. Supply Chain Innovation: what are we talking about?
2. Supply Chain Management: The Basics
3. Drivers of Supply Chain Innovation
III. Innovation and Innovation Management: An Introduction
1. Basics of Innovation
2. Innovation concepts
IV. THE “HOW”?
1. Supply Chains – Process perspective
2. Business Process Management for Supply Innovation
3. Tools and Techniques for Supply Chain Innovation
4. Business Model/Value Innovation and Supply Chain Innovation
V. THE “WHAT”?
1. (Selected) Supply Chain Innovation Concepts
2. (Selected) Technological Innovations for the Supply Chain
3. (Selected) Technological Innovations with Big Impact on the Supply Chain
VI. FORWARD-LOOKING TOPICS AND CASE STUDIES:
1. Standardization and Innovation for the Supply Chain
2. Next Generation Supply Chains
3. Case studies

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 Outline of the Lecture

I. INTRODUCTION TO THE COURSE

II. THE WHY?
1. Supply Chain Innovation: what are we talking about?
2. Supply Chain Management: The Basics
3. Drivers of Supply Chain Innovation
III. Innovation and Innovation Management: An Introduction
1. Basics of Innovation
2. Innovation concepts
IV. THE “HOW”?
1. Supply Chains – Process perspective
2. Business Process Management for Supply Innovation
3. Tools and Techniques for Supply Chain Innovation
4. Business Model/Value Innovation and Supply Chain Innovation
V. THE “WHAT”?
1. (Selected) Supply Chain Innovation Concepts
2. (Selected) Technological Innovations for the Supply Chain
3. (Selected) Technological Innovations with Big Impact on the Supply Chain
VI. FORWARD-LOOKING TOPICS AND CASE STUDIES:
1. Standardization and Innovation for the Supply Chain
2. Next Generation Supply Chains
3. Case studies

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 (Selected) Technologies with Big Impact
on the Supply Chain

• Robotic Process Automation (RPA)

• Artificial Intelligence
• Blockchain technology

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 (Selected) Technologies with Big Impact
on the Supply Chain

• Robotic Process Automation (RPA)

• Artificial Intelligence
• Blockchain technology

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 RPA

Watch the video and read the slides of the presentations

from industry!

Supply Chain Innovation

Management– –Nizar
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Abdelkafi
 Problem

• Initial situation: Since long time Management is trying to

structure work, to create routines, and to evaluate
performance in a standardized way.

• Question: Would it possible “to get the robots out of

humans”, while optimizing business processes?

(Lacity / Willcocks, 2016)

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 What is RPA? (1)

• RPA denotes a software system, which imitates the

steps that humans perform to carry out repetitive
activities.

• In this way, humans can focus on conducting tasks, in

which they are better than software.

(NICE RPA Team und Steve Kaelble, 2018)

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 What ist RPA? (2)

Before the introduction of RPA After the introduction of RPA

Application Application
1 1

Application Application
Software
2 2
robot

Application Application
3 3

(Chappell, 2017)

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
Selected Functions of Software Robots

• Data extraction from structured documents such

as Excel tables
• Data Scraping from the Web
• Merging data from different applications
• Opening emails and attachments and searching
by means of keywords
• Doing tasks while executing “If/Then”-rules
• …

(Lowes/Cannata, 2016)

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 Process/Task Characteristics

• Highly rule-based • Low-levels of exception

• High volume handling
• Mature • Highly repetitive
• Easy to achieve and show • Less complex processes
impact
• Well documented
• Has digitized structured data
• Interacts with many systems
input
• Highly manual
• Transactional
• Standardized

(Syed et al., 2020)

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 RPA Benefits

• Operational efficiency
• Quality of service
• Implementation and integration
• Risk management and compliance

(Syed et al., 2020)

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 Use Case PLAN: Active PO Updates

(UiPath)

Supply Chain Innovation

Management– –Nizar
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Abdelkafi
 Use Case SOURCE: Real-Time PO Shipment Updates

(UiPath)

Supply Chain Innovation

Management– –Nizar
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 Use Case DELIVER: Proactive Freight Carrier Shopping

(UiPath)

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 (Selected) Technologies with Big Impact
on the Supply Chain

• Robotic Process Automation (RPA)

• Artificial Intelligence
• Blockchain technology

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 Semiconductors

(Agrawal et al., 2018)

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 Expanding Range of Use of an Input

Accounting
Games
Mail
Music
Picture
(Agrawal et al., 2018)

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 Neural Networks

(Agrawal et al., 2018)

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 Artificial Intelligence

(Agrawal et al., 2018)

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 Prediction

Using information that you do have to generate information

that you don’t have

(Agrawal et al., 2018)

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 Expanding Range of Use as Input

(Agrawal et al., 2018)

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 Rising AI → Falling Cost of Prediction

• Converting problems that historically were not considered

to be AI problems into AI

(Agrawal et al., 2018)

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 Thinking about how to Redesign and Automate
Entire Processes

(Agrawal et al., 2018)

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 Computer Vision Inventory Management &
Execution
• Qopius computer vision AI can recognize insights about product and shelf attributes to
optimize inventory management.

(Gesing et al., 2018)

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 Anatomy of a Task

(Agrawal et al., 2018)

Supply Chain Innovation

Management– –Nizar
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 Tool: The AI Canvas – Guiding Questions

(Agrawal et al., 2018)

Supply Chain Innovation

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 The AI Canvas

(Agrawal et al., 2018)

Supply Chain Innovation

Management– –Nizar
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Abdelkafi
 Example

• Probability of rain • Carrying an • Your • But it rained and

today afternoon umbrella with you decision is you got wet.
(let us say 50%) and be sure to to not take
not get wet vs. an
not carrying one umbrella
and getting wet if
it rains.

• Current weather • Weather-related data • The information is

data (today) (Temperature, fed back to the AI;
pressure, etc.) probability 50% of
rain leds to rain…
• Rain data

(According to Agrawal et al., 2018)

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 Engineering & Manufacturing:
AI Shapes the Physical World

Cognitive maintenance
• With a deep learning-enabled camera application on their
mobile device, a plant worker can photograph machinery
at the workstation.
• Watson uses an AI image recognition algorithm to
determine the cause of any fault. The worker receives an
explanation from Watson about how to fix the fault.

(Gesing et al., 2018)

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 Cognitive Maintenance

• Probability of • Providing • Plant worker is • The

what could have instructions to the guided through AI equipment is
caused the plant worker or to replace the perfectly
problem (e.g., recommending to electronic card functional
80% of the cause consult service containing the again
is due to technician defective
integrated circuit) (expensive) integrated circuit

• Current pictures of the • Pictures of different • Picture XYZ

system taken by the systems in the corresponds to an
plant worker equipment integrated circuit
problem
• Defect/no defect and
type of defect
(According to Agrawal et al., 2018)

Supply Chain Innovation

Management– –Nizar
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Abdelkafi
 Anticipatory Logistics

• Goods delivery to customers before customers have even

ordered them or realized they needed them.
• Data required: browsing behavior, purchase history as
well as seemingly unrelated data sources such as
weather data, social media, and news reports.
• Result: Effective prediction of demand and shorter
delivery times by moving inventory closer to customer
locations and allocating resources and capacity to allow
for previously unforeseen demand.

(Gesing et al., 2018)

Supply Chain Innovation

Management– –Nizar
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Abdelkafi
 Methodology to Determine which Tasks
are Most Suitable for AI

Break workflows down into tasks.

Fill out the AI canvas for each task

Estimate the benefit of enhanced prediction

and the cost of generating that prediction

Estimate the ROI for building or buying an AI

to perform each task

Rank-order the AIs in terms of ROI

(According to Agrawal et al., 2018)

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 (Selected) Technologies with Big Impact
on the Supply Chain

• Robotic Process Automation (RPA)

• Artificial Intelligence
• Blockchain technology

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 What is a Blockchain?

• The Blockchain is a permanent

digital record (or ledger) of
transactions that is stored
across a distributed or
decentralized network of
computers.
• The ‘Blocks’ that are chained
together are cryptographically
sealed records of transactions.
• The computers supporting the
Blockchain confirm, verify and
record the transactions
independently.

Supply Chain Management – Nizar Abdelkafi

 Six Distinctives of Blockchain

• It’s decentralized… and centralized.

• It’s distributed.
• The transactions in the ledger are validated
• Every user has a unique digital key.
• The information recorded is immutable.
• The ledger is governed by programmed logic.

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 Blockchain in the Farmer
Supply Chain

STORE 1

FARM PROCESSOR PROCESSOR STORE 2

STORE 3

Block 6:
Received at
store 1
B12
6/1/22, 18:55
Block 1: Block 2: Block 3: Block 4: Block 5:
Shipform to Received at Output at Shipped at Shipped from Block 7:
Processor processor Processor distributor distributor Received at
A123 A123 B12 B12 B12 store 2
A124 A124 B13 B13 B13
B13 6/1/22, 18:55
A125 A125 B14 B14 B14
6/1/22, 12:55 6/1/22, 13:55 6/1/22, 15:55 6/1/22, 16:55 6/1/22, 17:55 Block 8:
Received at
store 3
B14
6/1/22, 18:55

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 Potential Advantages of Blockchain Technology in
Logistics and Supply Chain

• Asset Tracking
• Total visibility across and down into multiple tiers of the
supply chain
• Accountability
• Process conformance
• Improved collaboration across the supply chain.

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi
 Examples
• Maersk and IBM joint venture
Maersk and IBM entered a joint
venture to provide more efficient
and secure methods for
conducting global trade using
Blockchain technology. The new
company offers a jointly developed
global trade digitization platform
built on open standards and
designed for use by the entire
global shipping ecosystem.
Supply Chain Innovation
Management– –Nizar
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• DHL trials Blockchain in pharma
supply chain to cut out
counterfeit drugs
DHL is trialling Blockchain
technologies to try to address the
distribution of counterfeit drugs in
the pharmaceutical industry. The
project enables DHL to track the
pharma supply chain, from the point
of origin, right through to the
consumer.
 Blockchain Problems

• Scalability
• Cost and energy usage
• Lack of regulation
• Data quality
• Lack of knowledge

Supply Chain Innovation

Management– –Nizar
NizarAbdelkafi
Abdelkafi