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  First Thoughts

    Dan Gilmore


    Supply Chain Digest

Aug. 2, 2019

Review of MHI's Report on Supply Chain Digitization

Organization Continues to Move from Materials Handling to Broader Supply Chain


MHI is an interesting organization.

Once known as MHIA - the Material Handling Institute of America - as the name suggests it is a professional organization that represents providers of solutions related to materials handling, from fork truck and conveyor makers to Warehouse Management software and everything in between.

Membership in MHI is at a company level, versus personal memberships at for example CSCMP or WERC (though both offer membership packages for companies).

Gilmore Says....

I think 3D printing actually provides a incredible opportunity to disrupt current manufacturing paradigms, with potentially a seismic impact in some areas on logistics.

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In recent years under CEO George Prest, MHI has been making efforts to expand beyond the materials handling domain into supply chain, and/or have materials handling more considered as a core element of supply chain.

It has been doing this with what I assume are fairly full coffers. The materials handling sector has remained robust for a number of years now, fueled by ecommerce and a growing shortage of distribution labor generally, defying its traditional cyclical nature. That I assume means membership levels are high.

And its trade shows - ProMat and Modex, which each run every other year - have been packed with exhibitors the last few years, generally sold of out space.

In fact, MHI has been trying to position Modex - held in even number years in Atlanta - as more of a full supply chain show than one focused on materials handling, I will say with mixed results (though attendance remains high).

Also part of the campaign to raise MHI's supply chain profile for several years now is the revamped MHI annual report. Historically, the report summarized the state of the materials handling sector in terms of revenues overall and by product category and other industry minutia.

Under Prest, MHI has now for several years partnered under some arrangement with consultants from Deloitte to produce a totally different annual report, which covers broad supply chain issues, far beyond just materials handling.

That includes the 2019 report, released a few months ago, which I just had room on my editorial calendar to get to this week.

Not surprisingly, the theme of the 2019 report is supply chain digitization, clearly the dominant technology concept for now (for example, the main theme at the Gartner conference in May), even if what it really means is vague and in my opinion not well understood.

The report is actually titled "Elevating Supply Chain Digital Consciousness," putting an almost transcendent touch to opportunities from digitization. It is based in part on survey results from some 1000 supply chain professionals.

The report says it is launching the concept of "Supply Chain Digital Consciousness" to describe the escalating levels of digital awareness and maturity in supply chain operations.

I think that may be taking things a bit too far, but let's see where it goes.

To support the notion of digital consciousness, the report introduces the following framework, which is suggests should be used by companies to assess themselves across five digital categories and four levels of awareness covered in this report.

The report really kicks off with a series of charts representing survey results. As I have opined many times in the past, the overwhelming tendency is to define supply chain digitization as a sum of a laundry list of new technologies, from drones to artificial intelligence.

So among the many charts I will grab this one, which shows the percent of respondents that believe the impact of different technologies to either create competitive advantage or disrupt supply chains.

Robotics and related automation tops the list, and I think that is probably right - as I have written many times, we have entered the robotic era.

I am somewhat obsessed with interpreting this kind of data correctly, and to that end will note that of the listed technologies, 3D printing ranked at the bottom of the list. But you have to put that in context.

Does the average retailer or wholesaler likely see much opportunity in 3D printing? Probably not. So across all respondents, it scores relatively low.

But I think 3D printing actually provides a incredible opportunity to disrupt current manufacturing paradigms, with potentially a seismic impact in some areas on logistics.

The report then looks at the amount of real money respondents that say their companies are going to invest in each of these technologies over the next two years.

Those plans are somehow summarized in the chart below, which I will include as another example in my on-going call-outs of what I refer to as "incomprehensible charts." If you can find some real takeaways from this graphic, please let me know.


Finally for this week, below is a chart representing what the report says is a " pyramid of digital adoption". It suggest there are four technology stages, starting with the collection of data through digital connectivity, and then moving up the pyramid to generate increasing supply chain value and insights from that base data through automation, advanced analytics, and ultimately artificial intelligence.

I think this is a reasonable progression, at one level. But how does it synch with all the other technologies such as drones and robots?

Next week, I'll be back with a look at the report's deep dive on supply chain digitization in more detail - and whether this report really clarifies what it really means.

Any reaction to this part 1 review of the MHI annual report? Let us know your thoughts at the Feedback section below.

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