Should We Fear Losing Jobs, Which Will Be Unavoidable During Technological Revolution, And How It Will Transform Companies Operating in the Supply Chain?
The world rapidly changes, influenced by innovations and technologies which are about to alter our life irreversibly. One thing is clear: innovations will allow us working more efficiently; some jobs will be automated or robotised; some will seize existing. New technologies are changing the business world beyond recognition: some businesses go down, others transform and adapt to the technologies and move towards prosperity. How will those changes affect the global labour market? There is no need to worry – everything ought to become simplified, as the work will be performed faster; the business day will become shorter; new opportunities will emerge, which will allow prolonging human work capacity; the problems of ageing employees will be solved more effectively. On the other hand, many jobs will disappear, which is rather an intimidating prospect, and it will mostly affect non-qualified and elder employees. Thus, new technologies are great and necessary; from another angle, they are a threat and uncertainty. However, it is characteristic of the human nature to fear novelty and change; but then all technologies are created by people to their benefit; therefore, the global politicians will have to find a solution to this problem, which will eliminate the uncertainty. Yet it is sometimes obvious that politicians, influenced by various stakeholders, not necessarily always look for solutions for the benefit of ordinary people or states worldwide. In this article, I will specify potential scenarios of technological development and discuss the ways each of them could impact modern jobs; I will distinguish the importance of a manager in this new, more efficient world of technology, paying special attention to the supply chain and companies providing related services.
Will Technological Innovations Replace Most Jobs Within the Following 5-15 Years?
There is a lot of uncertainty while technological innovations are not yet implemented, i.e. while the major ones are still tested and are not massively spread. A number of articles state that within the following 5-15 years the majority of jobs in logistics, manufacturing, sales and other areas will be gone, and modern technologies will replace them; consequently, the said changes will cause unemployment. To better understand the impact of technologies and how fast these changes will reach us, one ought to distinguish and analyse each of the below scenarios of technological development:
- Fast and complete engagement. New technologies will enter human environment very fast; they will encompass all areas of life and will rapidly develop in all countries of the world. The majority of jobs will be robotised and computerised; at the initial stage, it will instigate a fast increase of unemployment.
- Slow engagement. Will initially take place in developed countries. People will be replaced gradually, as the most technology-receptive areas will be the first to be automated; but technologies will develop and with time will encompass most areas.
- Partial engagement. Certain technology-receptive areas will engage at once; in some areas technologies will assist people; in the areas where the labour force is still cheap, technologies will come much later.
For the first scenario to come true, investments to development, favourable economic, political and social environments are necessary, i.e. companies would need to willingly invest in technologies and should be capable to do so; politicians would need to timely adopt legislation and not stand in the way of technological development; all this would encourage rapid technological development and technologies becoming cheaper. Considering all three scenarios, it seems today that partial engagement is the most promising, slowly expanding to other areas and showing a tendency to become faster. As globally there still are major disparities in the development and economic capacity, in some areas and in certain countries human labour will be less costly compared to investments in technology. In fact, we already see those scenarios evolving; however, there is much hesitation as to whether they will gain momentum and become similar to the first scenario, when technologies will expand and within the following 5-15 years the majority of jobs will be lost. Moreover, as I have mentioned before, political decisions will have significant impact; considering that fast shift to technologies would increase the level of unemployment, there is a slim chance politicians would ignore this prospect and light-heartedly adopt painful decisions. Ageing population is another major factor – to the elder generation, technology-based world is a novelty, which is why the transition period will take some time. One should also consider the fact that when a human will be replaced by a robot or another technology, new job search might take time as it will not be possible to change qualification fast enough; governmental budgets will be financially pressured due to the need of various compensations. Discussions about compensation measures currently take place, the possibility of paying base salaries receiving special attention. But one should bear in mind that to pay compensations, it is crucial to accumulate additional funds to the budget, which could originate from increased taxes or cutting off other budget lines. One should not be too optimistic and think that states will easily reduce or reallocate assignations – it is a very complicated and lengthy process, as it impacts numerous stakeholders. Therefore, the most likely solution is increasing taxes for companies which will profit from new technologies. Yet again, we come to a break-even point, when we will need to assess whether technologies will free up enough funds to be used for compensations, investments etc. From the historical point of view (think industrial revolution and the development of capitalism) and in practical terms, again everything depends on the cheapness of technologies and the receptivity of each area to new technologies. At the initial stage, they will certainly not be cheap and affordable for each business and each area, but over time, they will become cheaper; technologies will complement each other, and so we will be drawn into a technological spiral which will bring great benefits to all market players – I believe it will bring a lot of benefit to people, too, redeeming the transitional difficulties. Moreover, one must keep in mind that every market player is very important for the economy and its prosperity. If we fail to control this transformation, i.e. if we do not create a mechanism to compensate for lost jobs, to return back into the economy areas that will be destroyed by technologies, and to balance this whole technology-based economy, we really could expect both an economic and social crash that would neither be beneficial to business, nor to the society. It is certainly hard to predict when this new revolution will reach its peak, but given the political, social and economic conditions, in my opinion, mass automation and systematisation will reach us within the next 15 years and is expected to last for about 60 years.
How Technological Innovations Will Affect Logistics and the Supply Chain?
Logistics is an integral part of each company; it plays an important role in the supply chain and throughout the whole value chain. Currently, due to online commerce it is becoming more and more important and, undoubtedly, it will be one of the first areas irreversibly transformed by new technologies. What are the grounds for my opinion? Firstly, logistics companies are currently faced with major workforce shortages, beginning with lower-level staff, like truck drivers, warehouse staff, and ending with mid-level and top-level executives. Secondly, it is the area (not just logistics itself, but the entire supply chain) very sensitive to human-factor-based errors that occur due to non-observance, inappropriate communication etc. Thirdly, optimising all actors in the supply chain would quickly allow for saving, as human-factor-based errors would be eliminated due to the shorter delivery times and the accelerated turnover of raw materials. Fourth, logistics is a very environment-polluting activity. In the light of the current situation with CO2 emissions, they will be forced to transition to greener, environment-friendly technologies. Fifth, we have a number of large and powerful logistics companies that have the financial capacity to make the necessary investments. Even more so, since we see the first signs already: companies invest in automated warehouse management and loading systems, to handle which only few operators are required; more and more technological companies emerge that connect the consignor with the consignee, thus eliminating intermediaries and cargo brokers who do not create added value but work only communicating via the phone. Of course, there are more examples, but I think these two illustrate best what happens right now and gains momentum.
The most important technological innovations that will affect the supply chain are the following: autopilot trucks, ships and airplanes; Big Data and its more efficient implementation; Blockchain technologies; the Internet of Things; robotics; smart sensors; drones; 3D printers, electric cars and Hyperloop (it is still a fantasy, but if Elon Musk gets involved, then the chances are real).
As I said, the first signs of the technological revolution in logistics are already noticeable: warehouses are robotised; platforms are being developed that connect the carrier and the consignor, thus eliminating the influence of cargo brokers. The second and a more serious wave will start when autopilot vehicles, boats and airplanes will massively occupy roads, airspace and water. The third and the major wave will come when all technologies will be integrated into one whole, i.e. factories will use their automated systems to track cargo balances and sales; they will be able to automatically order transport and raw materials; the Internet of Things and other technologies will contribute to it. Across the whole value chain and the supply chain people practically will no longer be needed, processes will be automated, accurate and calculated with the help of sensors, big data and other technologies. Quite amazing times are ahead of us, when we come nearer to the perfect supply chain, where we can very accurately plan supply and demand, inventory turnover and many other things. Why do I think it is attractive? Because logistics is primarily an optimal, timely and accurate management of information and inventory, and all the technologies will allow it to return to its source, eliminating unnecessary and time-consuming forms of operation.
The Future of Logistics Companies
New technologies will become a real challenge for logistics service providers. As the concept of the supply chain, and in particular logistics, includes a large number of service providers – carriers (air, road, water); brokers; port forwarders; stevedoring companies; customs brokers; warehousing companies; packaging and distribution companies; manufacturing companies etc. – it would be very difficult to talk about each one individually, so I will divide them into three groups and generally talk about the technologies that will have the greatest impact on the processes discussed above. The amount of the influence a manager in the new technology company will have is crucial, as are the aspects to be considered by service companies if they want to remain in the market.
With regards logistics companies, I will divide them into companies with own assets (carriers, warehousing companies etc.); companies with no own assets (freight brokers, port forwarders etc.), as well as technological companies (companies that develop logistics solutions in order to eliminate intermediary’s or to make profit from technological solutions by selling them to logistics companies).
“Middle man” or companies that do not have own assets will undergo a real threat of going down, because their business can be taken over by a technological platform that works more efficiently and cheaper, too. Such companies will need to promptly change their established management structures and sales channels, and seek out new talent that could lead the company towards success. During this period, it will be necessary to firmly decide as on how to compete with new market players in order to create added value for clients, so that they cannot be easily replaced by platforms.
Carriers and other asset-driven companies will have to optimise their operations, choose the technologies most relevant to them and invest heavily. They will encounter problems related to staff changes, i.e. some workers will be replaced completely (loaders, drivers); the number of some employees will be significantly reduced (coordinators, planners, middle managers); the number of some positions will increase (eg. programmers); and I have no doubt that there will be new positions as well (possibly external consultants who will implement these changes). In general, it is necessary to understand that your competitive advantage will depend on the ability to properly identify the areas that are most relevant to you and on the ability to implement those changes as quickly as possible, because when you reduce the number of processes, success increasingly depends on the operational efficiency of the process. It should not be forgotten that 3D printers will also have a significant impact on the growth of logistics companies, similarly to e-commerce. This technology, however, will have the opposite effect – it will lead to a decline in the logistics sector, which, of course, will increase the tension and will create a competitive struggle.
Technology-based companies are companies that will only have technologies and will be willing to sell them to customers (factories, logistics companies etc.), or companies that will have technologies and will want to profit from them directly by eliminating brokers (eg. brokerage platforms). These companies will make the biggest fuss and give a good impetus to the established companies that will be forced to implement organisational changes, to transform and to progress in line with the new trends. Given the rapid development of technologies nowadays, these companies will have to monitor the competitive environment and to follow the innovations so that new market players do not begin to provide more innovative services. In this area, the competitive battle will be won by companies that will provide the most innovative solutions to the innovative society, will be able to expand or change their range of services in such a way as to outmatch competitors and adapt to shifting conditions faster.
Undoubtedly, technologies will change the work of CEOs and the heads of divisions. First of all, technologies will reduce the importance of human capital, optimise operations, reduce performance duration, all of which will reform the currently dominant multistage business management structure into a flatter one; positions will change, i.e. the number of unskilled workers, specialists who simply enter information into systems etc., will decrease. Generally, information will be very much simplified, so future managers will receive it in an increasingly simplified form, and this information will be easily accessible and structured. Therefore, we are living very interesting times, the times of transformation, when each organisation as well as its leaders will have to change. Apart from the usual traits of a good manager, such as the ability to convey mission and assignments; the ability to communicate and sell their ideas; team management; the ability to make the right decisions; organisational skills; the ability to attract the best talent etc., other features will be required, for instance, the knowledge of technologies and various business areas; the ability to systematise and process information; the ability to implement constant changes and make quick decisions. Managers of large technological companies are already required to apply all the knowledge, but the representatives of smaller or traditional business areas are still unwilling to change. But with technologies entering more and more business areas, a deeper knowledge and innovative approach will also be required from the managers of traditional business areas.
As for the executives of modern logistics companies or the managers of the supply chain, it should be emphasised that they are in many cases thinking the old way, narrow-minded people, who do the calculations and forecasts in excel; they are rigorous because, dealing with truck drivers and warehouse workers, one cannot be soft; however, rather mistakenly they believe this will help avoiding human-factor-based errors.
A typical manager of a small or medium-sized carrier company is a bitter, gloomy persona, as drivers are late all everywhere, coordinators do not make enough effort to avoid it; they are glad that GPS and mobile technologies allow seeing the location of their trucks, contacting drivers, and that trips can be entered in to TMS (transport management system).
A typical logistics manager of a small or medium-sized manufacturing company calculates the demand of raw materials in excel; at best, he uses some SAP-based management programme, but does not take the advantage of all the modules; he orders transport upon demand; works with the same carriers or brokers; prices are usually set intuitively, according to the season or selecting the cheapest option after sending out a survey.
The manager of a typical freight-forwarding company tries to strictly demand that his employees call and email customers and carriers as much as possible to attract more clients; he often focuses on quantity instead of quality. In the whole value chain, we might find a lot of such typical cases, and I am not saying it is wrong – it has been working so far and it will continue to work until a technological competitor stirs the industry; unfortunately, at that time it is going to be too late.
To summarise, modern managers need to expand their mindset together with the changing technologies; introduce necessary innovations; change their routine management structures and selling schemes; remodel their service delivery schemes; clear-cut all processes to perfection; and, most importantly, executives must understand the new trends, the impact of these innovations to their main operational area, and to model the mission, strategy, action plans etc., accordingly.
In my opinion, the first wave of technologies will allow for optimising and reducing the importance of human capital in many modern business areas, which will, as a result, allow for more efficient performance with less costs; we will be able to work longer, which means later retirement; the shortage of certain employees will be addressed more effectively. Surely, some jobs will be eliminated, but in the beginning it will be an auxiliary measure that will allow employees to adapt and over time technologies will become cheaper, and then we will probably be ready for a huge elimination of jobs and a number of business areas. Nonetheless, technologies are developed for people and will only be successful if there is anyone at all to use them and to afford them; therefore, there is no need to go to the dark side, since the society, business and politicians will have to make compromise. No less important aspect is the interest of traditional business areas; we still have a lot of traditional business areas that are prosperous, powerful and influential, and will definitely combat the technological businesses that will hit their markets. I truly believe that in the long run, we will all make use of technologies – by all means, it will depend on the ability to communicate and make compromise as well as adopt mutually beneficial solutions.