What will the fourth industrial revolution mean for retail supply chains and jobs?

Source: Fetch Robotics
Apr 07, 2017
Ron Margulis

Both retailers and suppliers are moving to a new era of intelligent machines designed to eliminate waste in supply chains and update old business models. This effort, called Industry 4.0, was widely discussed at this week’s ProMat conference in Chicago, with several experts arguing that the disruption smart machines will cause to jobs in those supply chains needs to be addressed immediately.

Markus Lorenz, partner and managing director at Boston Consulting Group, in his keynote presentation described Industry 4.0 as the fourth industrial revolution era that will connect machines and the Internet of Things. The new technology will conduct operations like sensing the freshest produce, then quickly picking and sorting items to send retailers or consumers the optimal product to meet their stated needs while significantly reducing waste. He further explained that cranes at port facilities are nearly smart enough to weigh containers in order to balance cargo on a ship as they are loading, thereby saving fuel and reducing CO2 emissions.

Automation in general and intelligent machines specifically will continue to result in the loss of jobs across industries, but human labor will still play a critical role in operations and beyond. Lorenz said the nature of that work will, however, be quite different in many sectors. His best advice was saved for those workers threatened by automation: “Stop thinking of yourself as a manual laborer and start thinking of yourself as solver of problems,” he told the group of material handling professionals. As an example, he said workers who currently load pallets at the end of a production line will very soon find themselves disintermediated by an automated pallet loader unless they can position themselves as experts in determining the optimal configurations of the unit load.

DISCUSSION QUESTIONS: What impact do you see Industry 4.0 having on the extended retail supply chain? How should retailers and consumer product manufacturers prepare to recruit and train new workers or retrain existing employees for the changes Industry 4.0 will bring to their businesses?

"The ability for people and processes to react and adapt with those changes is critical for success."
"Will we have technological unemployment or radical abundance? Hmmm … it’s really up to us, isn’t it?"
"Wide-scale automation does not necessarily mean blue collar job cuts. It generally means “New Collar” job opportunities."

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20 Comments on "What will the fourth industrial revolution mean for retail supply chains and jobs?"

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Lyle Bunn (Ph.D. Hon)

Retail 3.0 is training consumers to await satisfaction (for shipping) so customer-facing versus supply chain personnel/systems will be a growing division of contributions. With this divide comes a growing need to communicate enterprise vision, mission, goals and priorities to both staff and consumers. Employees who can move through different functions of business are the seed stock for ongoing effectiveness, so Retail 4.0 will bring new employment and growth opportunities.

Max Goldberg

Industry 4.0 will impact jobs, sending people out of work as machines take over their responsibilities. No amount of training or retraining will bring the jobs back. The country will need to deal with the situation, creating political turmoil as the debate plays out. It was predicted that machines would set humans free to pursue more leisure activities and make lives easier. As it turns out, they may set people free, but in ways directly opposite to the prognostications.

Sterling Hawkins

Industry 4.0 and automation does mean retraining and retooling will be required in the workforce. As old jobs are retired, new jobs will open up that haven’t existed before. There’s uncertainty in the transition; however, innovation will continue to march on.

Charles Dimov

From the business perspective, we will see improvements in cost efficiencies, resulting from more robot technology in the retail supply chain. However, Markus is right. What automation does is take on the simple, repetitive tasks, and even some intelligent tasks that are reasonably standard. Being the “problem-solver” is the key. Where humans do best is on the messy problems, that are not standard.

Retail technology is here to stay and is more important than ever to both retailers and the supply chain. Automation is a good thing to help keep businesses profitable and keep commerce going. Becoming the problem-solver who can think orthogonally and figure out the tough and uncommon scenarios, and learning to administrate, fix and improve the system is the smart move for our workforce.

Tony Orlando

I like the statement of people being problem-solvers, as it is critical for anyone in the workplace to be more than just someone with a pulse. The uneducated and the slackers out there are in for a rude awakening, as employers will demand more than someone just showing up for work and having to be told what to do every 10 minutes. This is not meant to be harsh, as the reduction of the work force will allow employers the luxury to pick future employees from a larger pool, as jobs shrink in these industries. Stay in school kids, and learn a skill, as the demands for your specific talents are waiting for you with a bright future for those who excel in their field.

Adrian Weidmann

Automation, robotics, sensors and the Internet will continue to disrupt and disintermediate the status quo in both process and human labor. Creative thinking and problem-solving will become much more valuable in the evolving industrial and retailing revolution. These technologies will never replace human contact and interaction. As such, consumer product manufacturers and retailers need to elevate and empower individuals in their organizations that are multidimensional and can learn and adapt quickly — one-trick ponies won’t survive in this environment. At the heart of all this is the ability to communicate effectively and efficiently. The changes are happening at unprecedented speeds and the ability for people and processes to react and adapt with those changes is critical for success.

Jasmine Glasheen

Intermediate technical training will be necessary for workers to retain relevance in the technological revolution. Best case scenario: manual workers get tech training from their employers. Older workers could save their bodies and younger workers could use their minds. The technological revolution doesn’t have to mean worker displacement, but companies without a strong CSR may take the easy way out and ignore their responsibility to the economy and those they employ.

Lee Kent

I sat in on a terrific session at NRF about this very topic however it went well beyond the supply chain. The session focused on the Fourth Industrial Revolution we have entered into that is transforming mankind, with 47 percent of jobs at risk over the next 20 years. Yes there is no doubt that this technological revolution and AI in particular will bring great change. The session left us with a big question. Will we have technological unemployment or radical abundance? Hmmm … it’s really up to us, isn’t it?

That’s my 2 cents, now what is yours?

Cathy Hotka

AI is going to cause a huge disruption in the job market and we as a society are not doing much about it. Our schools are going to need to adapt and our expectations of workers will have to change. With what will we replace these jobs?

Ed Dunn
1 year 16 days ago

There is a major misconception with the Fourth Industrial Revolution portraying manual labor replaced by “machine” robots and nothing can be further from the truth. Manual labor produces free energy based on a human calorie burning system whereas robots require fuel and other forms of physical energy harvested by the sun or coal mines and converted to energy at an additional cost.

The real 4IR threat will be in the white-collar sector among management and analysts where robots are machine-learning to think about processes and optimization. In the supply chain, an AI entity can literally “talk” and even negotiate contracts and terms to another AI entity without human involvement. AI will be capable of providing instructions to the manual labor and also measure the performance of manual labor.

The employee with the text-based keyboard in front of them attached to a computer should be figuring out how they can reposition themselves to teach machines as they are the most vulnerable to intelligent automation.

Harley Feldman

Industry 4.0 is about using machines to add value to the information used to make better decisions in the extended retail supply chain. Supply chains will get more efficient, lees costly and more responsive as the people involved in managing the supply chain make smarter decisions due to this new information. The new workers in Industry 4.0 will require information technology skills. This additional education must be added to current public education curriculum so U.S. companies have access to this new skilled labor. Just graduating high school and looking for a manual labor job will become more difficult in the future as supply chains get more efficient and less labor is required to make them work.

Ken Cassar

I worry, a lot, about the impact of all of this automation on jobs in the U.S. The retail industry has picked up so much of the slack from manufacturing shifting overseas (albeit with lower paying jobs often without benefits), but every day we’re hearing about key tasks in the retail store, from the cash register to stocking to customer support, being moved to machines. My economics professors would assure me that with increases in productivity, living standards inevitably increase and would have many historical examples to cite, like the invention of the chainsaw leading to a boom in building. Still, I worry …

Kate Munro

With Industry 4.0 comes the opportunity for retailers to implement technology that helps suppliers become smarter, optimizing the manufacturing process. Purchase-to-pay systems will ease the process for retailers and suppliers, and overall the retail supply chain will become more efficient. As repetitive tasks become automated, human talent will be even more focused on creativity and innovation in the retail world.

gordon arnold
Looking at automation of any kind with the preposterous perspective that the machinery can be made to evolve and own the ability to think is not a sound method of prediction. There is much room to increase production and/or accuracy using less resources in terms of manpower. The ability to communicate initialization, measured adjustment(s) and time scheduling has improved costs of goods and services sold but not without the need for error correction and direct input from human resources. The tendency to reduce the relevance of mankind in the labor force is an underscore of our complacency and refusal to accept evolutionary change through free and innovative thinking. We do need to see the progress described as opportunity to provide the time we need to make ourselves aware of the worldwide needs mankind is currently shackled to. With automation, communication and education, the most advanced processes of today can and will become easy to own and/or participate in. This is the goal and mission of informed technologies for the foreseeable future. As a final note… Read more »
Ralph Jacobson

My son was an exhibitor at ProMat this week. Wide-scale automation does not necessarily mean blue collar job cuts. It generally means “New Collar” job opportunities. Yes, retraining will be required, however these AI technologies and even “dumb” robotics already in place around the world have opened up a multitude of jobs that didn’t exist even ten or 15 years ago. Don’t worry, machines won’t be taking over the world … at least for a couple more years.

Ricardo Belmar

Industry 4.0 should bring new operational efficiency and cost savings to the retail supply chain. Not just from automation, but also from monitoring technologies that will help deliver preventive maintenance on machines/robots.

There will definitely be an impact to jobs in the supply chain, but this should translate into a need for employers to retrain their employees and focus on new sets of skills related to maintenance and operation of these new machines. As others have said here, the robots and machines will replace mundane and repetitive tasks allowing people to focus on more elaborate and detailed skills that should lead to higher level job functions and better wages.

Cate Trotter

There’s no getting away from the fact that technology, AI, robotics and all sorts of other developments are going to impact the industry more and more in the future. I think it’s important to remember that technology is a tool though, an enabler, rather than a solution in itself. As Ron notes we still need people to solve problems, to determine how best to use technology and where. I’m just not sure we’re fully preparing people for this though. Ideally we will be upskilling staff so that as technology gradually comes in, so they can adapt to new roles around that.

Jeff Miller

No doubt that jobs and more importantly our entire education system will need to change from one of repetition and following orders to one of creative thinking, problem solving and asking good questions. The people who ask good questions and use creativity and computing power to solve them will be the ones who have the unfair advantage. Training current workers and updating education out of the mold it was created for to create factory workers will be key not just in supply chain but all industries.

Tom Erskine
1 year 13 days ago

Automation and AI will have a deep impact on jobs in the retail supply chain, including threatening jobs that only a few years ago believed to be “safe” from displacement. With AI, computers can now write pop songs, how long before they can design stores, predict trends, buy products based on tastes, etc?

In order to address this, many employers are focusing on re-skilling toward engineering/software development. This is a questionable strategy, as software is evolving quickly to require less coding. Instead, employers need to focus on training programs that emphasize critical thinking and problem solving skills.

Michael Spencer

It’s fairly clear that the automation economy will be fairly catastrophic for retail jobs. Remember, in 2017, more than 9,000 stores will close (more than in 2008). As Amazon opens up brick and mortar stores along with its various other kinds of services such as AmazonFresh; and as mobile sign-in replaces retail lines and checkout, millions of jobs become obsolete.

Unlike some industries, Retail does not “add” these jobs elsewhere. Robots and autonomous vehicles in the logistics and supply chain are a whole different story and yet another batch of jobs. All told, it’s not hard to see this resulting in a net loss of 3-6 million retail jobs by 2030.

"The ability for people and processes to react and adapt with those changes is critical for success."
"Will we have technological unemployment or radical abundance? Hmmm … it’s really up to us, isn’t it?"
"Wide-scale automation does not necessarily mean blue collar job cuts. It generally means “New Collar” job opportunities."

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