Robotics in Supply Chain

Robotics is now an emerging industry in providing production line and manufacturing in general. Robotics is not simply machinery. Its intelligence could help to handle more complex tasks that are used to be considered only possible to be conducted by human. "Thanks to the growth of 3D printing, intelligent robots, and open-source hardware, tomorrow’s supply chains will be faster, smaller, cheaper, and local" [1].

The introduction of more robotics and intelligent systems to supply chain is actually necessary because global supply chains are being pushed to the max to deliver ever faster from manufacturer to consumer. The recently released 25th Annual State of Logistics Report from the Council of Supply Chain Management Professionals (CSCMP) reveals that “total U.S. business logistics costs in 2013 rose to $1.39 trillion, a 2.3 percent increase from the previous year. Logistics as a percent of U.S. gross domestic product (GDP) declined for the second year in a row, indicating that the logistics sector is not keeping pace with the growth in the overall economy.” In 2012, it was $1.33 trillion or nearly 8.5 percent of GDP. In 2014, logistics has matched its 2007 peak, yet still lags behind the growth of the overall economy, according to the CSCMP. That, in effect, implies that Gartner’s Top 25 are all lagging the economy. So, if the Gartner Top 25 are lagging, where does that put all the others? The bottom-line concern is that no matter how hard present-day logistics’ systems work, they will never catch up [2].

The Boston Consulting Group reports that “by 2016, there will be 3 billion Internet users globally—almost half the world’s population. The Internet economy will reach $4.2 trillion in the G-20 economies. If it were a national economy, the Internet economy would rank in the world’s top five, behind only the U.S., China, Japan, and India, and ahead of Germany.” Mobile devices—Smartphones and tablets—will account for four out of five broadband connections by 2016, every one of which will be capable of making an online order. What will happen when a full 50 percent or 75 percent of the world’s population is dialing orders from a Smartphone or tablet? Online retail will comprise 10 percent of all retail sales by 2017, reports Forrester Research, up from about 8 percent today. That relatively small- sounding increase is actually a 9 percent compound annual growth rate (CAGR) from $231 billion in 2012 to $370 billion in 2013. Exponential growth is taking place and traditional supply chains cannot keep pace [1]. All of these reasons together construct a convincing argument that it is the time to let the robotics play an crucial role in the supply chain.

Historically, when supply chains began to play an important role in global commerce, IT wasn’t there for them as it is today. Consequently, business was not going to wait around for Moore’s Law to catch up. However, Moore’s Law has caught up now and making large scale production in the form of robots and 3D printers possible. Robotics will now take on the simplification of supply and demand, and the simplification of supply and demand will become the platform.

My question would be how to evaluate the balance between human labor and robots in production line? Since the labor in some Asia countries like China, India is very cheap, how do companies like Foxxcon decide between human labor and robotics? Is it going to be problem if more jobs are taken by robots from human?

Reference:

1.       Next-Gen Supply Chains: Decentralization, Digitization, and Robotics - Complex machines that “uncomplicate” supply chains, Robotics and the “New”  Supply Chain: 2015-2020.

2.    Getting Lean with Armless Robots. http://www.industryweek.com/lean-six-sigma/getting-lean-armless-robots