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2018

Grown only in the tropics, the oil palm tree produces high-quality oil used for cooking in developing countries, but more notably, the oil also is used in food products, detergents, cosmetics, ice cream and even biofuel. Palm oil is an extremely productive crop, offering a far greater yield at a lower cost of production than other vegetable oils. Consequently, as global demand grows quickly, plantations are spreading across Asia, Africa and Latin America.

 

The means of expansion, however, presents numerous problems. For example, the $62 billion palm oil industry has been criticized because developing palm oil plantations has, in some cases, had an impact on the natural environment—including deforestation, increased greenhouse gas emissions and the loss of natural habitats, which has threatened critically endangered species such as the orangutan, and the Sumatran tiger, Sumatran elephant and Sumatran rhinoceros, the World Wildlife Federation explains. Additionally, some oil palm plantations have developed lands without consultation or compensation of the indigenous people occupying the land, resulting in social conflict, the International Labor Rights Forum explains. The exploitation of illegal immigrants and forced child labor in Indonesia has also raised alarming concerns about working conditions within the palm oil industry, Amnesty International reports.

 

All of this has not gone unnoticed. Over the past decade, consumer activist groups have pressed big palm oil buyers such as PepsiCo, Unilever and Nestle with supermarket boycotts and other protests over palm oil’s perceived links to deforestation and human rights abuses. As a recent Reuters article notes, PepsiCo last month suspended procurement from a palm oil supplier over claims of labor abuses on its Indonesian plantations.

 

There is good news too. In a move to boost industry transparency, consumer goods giant Unilever has exposed its entire palm oil supply chain, including all suppliers and mills. In a statement, the company said it is the first consumer goods company to publish such details, having disclosed the location of more than 1,400 mills and more than 300 direct suppliers of the oil used in products from snacks and soaps to cosmetics and biofuels. Palm oil supply chains are complex, the statement explains, as the fruit changes hands many times from farmers to agents before it reaches a mill. It’s then transported via traders to refineries for further processing, when the oil enters a company’s supply chain.

 

Marc Engel, Unilever’s chief supply chain officer, says the company hopes sharing the information will be the start of a new industry-wide movement toward supply chain transparency and achieving a fully traceable supply chain, which is necessary to address deforestation and human rights abuses.

 

“Unilever believes that complete transparency is needed for radical transformation,” Engel wrote in a statement posted on Unilever’s website. “This is a big step toward greater transparency, but we know there is more work to be done to achieve a truly sustainable palm oil industry and we will continue our efforts to make this a reality. We want this step to be the start of a new industry-wide movement.”

 

Having a fully traceable supply chain not only gives Unilever better visibility of where its palm oil comes from, it also enables the company to more proactively identify issues, and address them quickly and effectively, Engel notes. Furthermore, as a result of this data being available, Unilever is making it much easier for others to bring demonstrable challenges and insights to the company’s attention. This, in turn, enables Unilever to investigate and work to remedy the issues alongside suppliers, NGO partners, governments and other stakeholders, Engel explains.

 

What are your thoughts on promoting transparency within the palm oil supply chain? How many companies must endorse transparency for the industry to make significant improvements in ending deforestation and human rights abuses?

Artificial intelligence (AI) has many positive applications, however, it is a dual-use technology and AI researchers and engineers should be mindful of—and proactive about—the potential for its misuse, according to a new report. Best practices can, and should, be learned from disciplines with a longer history of handling dual-use risks, such as computer security, and policy-makers and technical researchers need to work together to understand and prepare for potential malicious use of AI by rogue states, criminals and terrorists, the authors urge.

 

Published by the Centre for the Study of Existential Risk (an interdisciplinary research center at CRASSH within the University of Cambridge), the report, “The Malicious Use of Artificial Intelligence: Forecasting, Prevention, and Mitigation,” forecasts rapid growth in cybercrime and the misuse of drones during the next decade as well as an unprecedented rise in the use of so-called “bots” to manipulate everything from elections to the news agenda and social media. The 26 co-authors from a wide range of organizations and disciplines—including Oxford University’s Future of Humanity Institute; Cambridge University’s Centre for the Study of Existential Risk; and non-profit AI research firm OpenAI—write that the report is intended as a “clarion call” for governments, corporations and individuals around the world to address the clear and present danger inherent in the myriad applications of AI.

 

“AI is a game changer and this report has imagined what the world could look like in the next five to 10 years,” says Dr. Seán Ó hÉigeartaigh, executive director of the Centre for the Study of Existential Risk and one of the report’s co-authors. “We live in a world that could become fraught with day-to-day hazards from the misuse of AI, and we need to take ownership of the problems because the risks are real.”

 

The report identifies three security domains—digital, physical and political security—as particularly relevant to the possible malicious use of AI. So, for example, the authors expect novel cyber-attacks such as automated hacking, speech synthesis used to impersonate targets, finely-targeted spam emails using information scraped from social media, or exploiting the vulnerabilities of AI systems themselves, e.g., through adversarial examples and data poisoning. Likewise, the proliferation of drones and cyber-physical systems will allow attackers to deploy or repurpose such systems for harmful ends, such as crashing fleets of autonomous vehicles, turning commercial drones into face-targeting missiles or holding critical infrastructure to ransom, the authors warn.

 

To mitigate such risks, the authors explore several interventions to reduce threats associated with AI misuse. They include rethinking cyber-security, exploring different models of openness in information sharing, promoting a culture of responsibility, and seeking both institutional and technological solutions to “tip the balance in favor of those defending against attacks.”

 

“For many decades hype outstripped fact in terms of AI and machine learning. No longer,” says Ó hÉigeartaigh. “This report looks at the practices that just don’t work anymore, and also suggests broad approaches that might help, such as identifying how to design software and hardware to make it less hackable, and examining laws and international regulations which might work in tandem with this.”

 

Though the technology is still emerging, billions of dollars have already been spent on developing AI systems. IDC, last year, predicted that by 2021, global spending on cognitive and AI systems could reach $57.6 billion. What’s more, last summer, China laid out a development plan to become the world leader in AI by 2030, aiming to build a domestic industry worth almost $150 billion. With such growth, and projected growth, in mind, it certainly seems this is the time to identify safeguards and put them in place to prevent malicious use of AI.

 

What are your thoughts on AI development? Is it’s possible malicious use a concern for executives where you work?

Most of the workers responding to a recent survey said they see significant opportunity for artificial intelligence (AI) to create a more engaging and empowering workplace experience. Interestingly, they also said a lack of transparency by their employers is the primary cause of fear and concern about AI in the workplace.

 

The Workforce Institute at Kronos Incorporated and Coleman Parkes Research surveyed 3,000 hourly and salaried workers across various industries in Australia, Canada, France, Germany, Mexico, New Zealand, the UK and the U.S. The resulting report, “The Engaging Opportunity: Working Smarter with AI” explains that employees from all eight nations said they would welcome AI if it simplifies or automates time-consuming internal processes (cited by 64 percent), helps better balance their workload (64 percent), increases fairness in subjective decisions (62 percent), or ensures managers make better decisions impacting individual employees (57 percent).

 

“Organizations are making significant investments in benefits, technology and innovative workplaces, yet employees are working more than ever and engagement has remained stagnant for decades,” says Joyce Maroney, executive director, The Workforce Institute at Kronos. “While emerging technologies always generate uncertainty, this survey shows employees worldwide share a cautious optimism that artificial intelligence is a promising tool that could pave the way for a game-changing employee experience if it is used to add fairness and eliminate low-value workplace processes and tasks, allowing employees to focus on the parts of their roles that really matter.”

 

Workers in Mexico are most enthusiastic about AI’s benefits while Canadian and U.S. employees were the next groups ready to welcome the technology. That is, 81 percent of the survey respondents from Mexico said they believe use of AI would simplify time-consuming processes, while 65 percent of the Canadian and 62 percent of the U.S. workers felt the say way. Furthermore, 84 percent of the Mexican workers, 61 percent of the U.S. workers and 61 percent of the Canadian workers said they believe use of AI will better balance their workload.

 

I wasn’t surprised to see that an overall lack of communication makes employees apprehensive. According to the report, 58 percent of the respondents said management at their organization has not discussed the potential impact of AI on their workforce with employees, however 61 percent of the employees surveyed said say they’d feel more comfortable if employers were more transparent about what the future may hold. U.S. companies seem to be the most secretive, with 67 percent of the U.S. respondents reporting they have no knowledge of their organization’s plans for AI, while employees in Canada (66 percent) and the UK (62 percent) report they are similarly in the dark. On the other hand, 67 percent of those surveyed in Mexico said their organization has openly discussed AI with employees.

 

Finally, as would be expected, there are differences of opinion among generations in the workplace. For instance, globally, 88 percent of Gen Z employees believe AI can improve their job in some manner, however, just 70 percent of Baby Boomers think the same way. In the U.S., Gen Z sees the biggest benefit of AI as its ability to create an overall fairer working environment (48 percent), while Canadian Gen Z employees hope AI will bring more fairness to performance reviews (50 percent).

 

Younger Millennials, older Millennials and Gen X employees in Canada and the U.S. say they think the biggest benefit of AI will be the elimination of manual processes and time wasted on basic, administrative work—each of which detracts from more rewarding workplace activities. As for Baby Boomers working in the U.S., 38 percent either don’t think about or aren’t sure how use of AI would improve their job.

 

What do you think about AI in the workplace? Are you optimistic that the use of AI will improve, and not replace, your job? Finally, is your company transparent about its plans for use of AI?

As inconceivable as it sounds, KFC (formerly Kentucky Fried Chicken) has announced most of its 900 KFC outlets in the UK and Ireland were forced to close due to a shortage of chicken—of all things. Taking to Twitter to explain the crisis, KFC said the shortage had been caused after it had taken on a new delivery partner, DHL, and apologized for the closures.

 

First, the company apologized to customers on Saturday, blaming “teething problems” with DHL. In an update Monday, it listed almost 300 stores as open, but didn’t say when the other stores may reopen. It said those branches that remained open were operating a limited menu or shortened hours.

 

“We’ve brought a new delivery partner onboard, but they’ve had a couple of teething problems—getting fresh chicken out to 900 restaurants across the country is pretty complex!,” KFC said in an online statement Monday. “We won’t compromise on quality, so no deliveries has meant some of our restaurants are closed, and others are operating a limited menu, or shortened hours.”

 

DHL, which took on the contract last November with QSL after promising to “re-write the rule book and set a new benchmark for delivering fresh products to KFC in a sustainable way,” also apologized.

 

“Due to operational issues a number of deliveries in recent days have been incomplete or delayed,” a DHL spokesperson told CNBC. “We’re working with KFC and our partners to rectify the situation as a priority and apologize for any inconvenience this may have caused.”

 

Some of the fallout has been immediate. For example, frustrated possible customers have resorted to contacting Members of Parliament and even calling police. Police departments in many municipalities have, in turn, been using social media to promote the message that “fried chicken is not a police matter.”

 

There are also allegations that KFC was warned this type of trouble could occur. The Guardian reports the GMB union said it had expressed major doubts about KFC’s decision last October to switch its deliveries from the food delivery specialists Bidvest Logistics to DHL. Mick Rix, the GMB’s national officer, said he told KFC that it could face a repeat of supply problems that had plagued Burger King when it switched from Bidvest Logistics to DHL six years ago, The Guardian article reports.

 

“We warned them a few months ago. I wrote to KFC. I alluded to Burger King trying to cut costs and ending up with poorer quality service and poorer distribution. They had shortages, too, but not on the scale we’re seeing now at KFC,” Rix says in the article. “Within six months they [Burger King] were pleading with Bidvest Logistics to take it back.”

 

Rix further says in The Guardian that KFC’s current crisis stemmed from dropping a supply system based on six warehouses run by Bidvest to a system of one distribution center in Rugby run by DHL. Conditions at the Rugby warehouse were “an utter shambles,” he says.

 

“They took a lower tender with a load of promises that have not materialized. The system can’t cope,” Rix says in The Guardian. “My sources say KFC execs knew three weeks ago that there was a major problem with DHL. They were concerned about the set-up and the systems after testing. And some of the answers from DHL were completely strange and worrying. It was clear it was going to fall flat on its face.”

 

It’s difficult, at this point, to determine all of the possible consequences stemming from the chicken shortage—especially since it appears the end is not in sight. That said, Stifel analyst Chris O’Cull estimates that the roughly 750 KFC outlets affected by the chicken shortage, or about 3.5 per cent of the brand’s global total, generate daily sales of U.S. $2.1 million, the Financial Post reports.

 

What sort of reputational damage do you think is being done to KFC? With significant financial losses adding up, what do you think the eventual outcome will be?

 

Despite considerable talk and industry attention, the reality is that meaningful artificial intelligence (AI) deployments are just beginning to take place, according to Gartner. The research firm’s 2018 CIO Agenda Survey found that just four percent of CIOs said their organization has implemented AI, however another 46 percent said their company has developed plans to do so.

 

“Despite huge levels of interest in AI technologies, current implementations remain at quite low levels,” says Whit Andrews, research vice president and distinguished analyst at Gartner. “However, there is potential for strong growth as CIOs begin piloting AI programs through a combination of buy, build and outsource efforts.”

 

As is generally the case with emerging technologies, early adopters face many obstacles to the progress of AI in their organizations. Gartner analysts have identified four lessons that have emerged from these early AI projects.

 

The first lesson is to aim low at first rather than falling into the trap of primarily seeking hard outcomes with AI projects, such as direct financial gains, says Andrews. In general, it’s best to start AI projects with a small scope and aim for “soft” outcomes, such as process improvements, customer satisfaction or financial benchmarking, he continues.

 

Expect AI projects to produce, at best, lessons that will help with subsequent, larger experiments, pilots and implementations. What’s more, in some organizations, a financial target will be a requirement to start the project.

 

“In this situation, set the target as low as possible,” says Andrews. “Think of targets in the thousands or tens of thousands of dollars, understand what you’re trying to accomplish on a small scale, and only then pursue more-dramatic benefits.”

 

Next, companies should focus on augmenting people rather than replacing them with AI. Big technological advances are often historically associated with a reduction in staff headcount. Nonetheless, while reducing labor costs is attractive to business executives, it’s likely to create resistance from employees whose jobs appear to be at risk.

 

“We advise clients that the most transformational benefits of AI in the near term will arise from using it to enable employees to pursue higher-value activities,” says Andrews. “Leave behind notions of vast teams of infinitely duplicable ‘smart agents’ able to execute tasks just like humans. It will be far more productive to engage with workers on the front line. Get them excited and engaged with the idea that AI-powered decision support can enhance and elevate the work they do.”

 

Another key lesson is for companies to plan for knowledge transfer. Gartner’s survey found that most organizations aren’t well-prepared for implementing AI. Specifically, they lack internal skills in data science and plan to rely to a high degree on external providers to fill the gap. Indeed, 53 percent of organizations in the CIO survey rated their own ability to mine and exploit data as “limited”—the lowest level.

 

“Data is the fuel for AI, so organizations need to prepare now to store and manage even larger amounts of data for AI initiatives,” says Jim Hare, research vice president at Gartner. “Relying mostly on external suppliers for these skills isn’t an ideal long-term solution. Therefore, ensure that early AI projects help transfer knowledge from external experts to your employees, and build up your organization’s in-house capabilities before moving on to large-scale projects.”

 

Finally, AI projects will often involve software or systems from external service providers, so it’s important that some insight into how decisions are reached is built into any service agreement, Gartner recommends. Although it may not always be possible to explain all the details of an advanced analytical model, such as a deep neural network, it’s important to at least offer some kind of visualization of the potential choices, says Andrews. In fact, in situations where decisions are subject to regulation and auditing, it may be a legal requirement to provide this kind of transparency, he says.

 

What are your thoughts on use of AI? Does your company have plans to implement AI?

Striving to address competitive pressure, management at many companies is challenged to reduce business complexity and cost while simultaneously maintaining quality and improving on-time delivery. The answer for many companies is a combination of plant closures, relocations and consolidations.

 

For example, as part of a multibillion-dollar effort to remake an old and inefficient network of factories, warehouses and offices into a new network that delivers goods to stores more quickly, consumer products giant Procter & Gamble has consolidated hundreds of offices and warehouses across North America into eight facilities and set up six so-called mixing centers, where computer algorithms work with robots and humans to load trucks with the optimal mix of products to ship to retailers, a recent Morningstar article reports. Once complete, P&G said its new supply chain will enable 80 percent of the U.S. production to reach stores within 24 hours.

 

Started in 2012, the project has become more critical amid the faster pace of retail in the e-commerce era and as big retailers such as Walmart increasingly demand that suppliers deliver shipments on time, Morningstar notes. It has also become a key factor in P&G’s long-term efforts to cut costs amid slow sales.

 

P&G recently announced, as part of the strategy, it will close its dish soap factory in Kansas City, Kan., and cut hundreds of jobs at its Iowa City, Iowa, facility which makes hair products and body wash. Roughly 280 people will lose jobs in Kansas City, however about 200 of the Kansas City jobs will be relocated to West Virginia, while workers in Cincinnati will take on additional duties created by the Iowa job cuts, Kansas City Business Journal reports.

 

The moves are expected to be finalized by 2020. Recognizing the impact on employees, Procter & Gamble officials said it will negotiate with labor unions to help employees find other roles in the company or elsewhere.

 

“Decisions like this are never easy, but we are communicating this decision more than two years in advance to help our employees plan for the future,” P&G said in a statement. “We are committed to supporting P&G people through the transition in a manner consistent with our values and principles.”

P&G broke ground on its Tabler Station, W.Va., plant in 2015, and the first building was slated to be operational in January. The plant initially will produce Bounce dryer sheets and then expand to other products, including Pantene and Head & Shoulders shampoos, and Olay Body Wash, The [Martinsburg, W.Va.] Journal reports.

 

“The new site is being master-planned to be a large, multi-category facility much larger than the Kansas City plant, with strategic suppliers co-located on site, closer to three mega-distribution centers and presenting significant scale opportunities to develop solutions for channels and customers across categories that would not be feasible/cost effective for smaller sites,” according to a P&G spokesperson, The Journal reports.

 

P&G’s news follows Harley-Davidson announcing it will cease operations at its Kansas City plant by early 2019, and consolidate the Kansas City operations into its manufacturing plant in York, Pa. About 800 workers will lose their jobs in Kansas City but the shift will add about 450 jobs in Pennsylvania.

 

The announcement came as Harley-Davidson reported its fourth quarter and year-end financial results failed to meet expectations. The motorcycle manufacturer said its worldwide retail motorcycle sales were down 6.7 percent in 2017 when compared to the previous year. The drop was more pronounced in this country, with U.S. sales down 8.5 percent, compared with a 3.9 percent drop overseas.

 

“The decision to consolidate our final assembly plants was made after very careful consideration of our manufacturing footprint and the appropriate capacity given the current business environment,” Harley-Davidson CEO Matt Levatich said, the Kansas City Star reports. “We are constantly evaluating capacity and our current U.S. capacity exceeds U.S. demand.”

 

What are your thoughts on plant closures and consolidations? Is your company—or any key suppliers—going through similar restructuring?

Port operations, historically, have not been very high tech. That all stands to change, however. The Port of Rotterdam Authority and IBM announced they will collaborate on a multi-year digitization initiative to transform the port’s operational environment using cloud-based Internet of Things (IoT) technologies. The initiative will also prepare the Port of Rotterdam’s entire 42-kilometre site to host connected autonomous ships in the future.

 

Key to the initiative is the development of a centralized dashboard application which will collect and process real-time water, weather sensor data and communications data, analyzed through the IBM IoT platform. Products from Cisco and Axians are also part of the solution. The initiative will enable safer and more efficient traffic management at the port, according to the port authority.

 

“Here in Rotterdam, we’re taking action to become the smartest port in the world,” says Paul Smits, chief financial officer of the Port of Rotterdam Authority. “Speed and efficiency are essential to our business, and require us to use all of the data available to us. Thanks to real-time information about infrastructure, water, air, etc., we can enormously improve the service we provide to everyone who uses the port, and prepare to embrace the connected, autonomous shipping of the future.”

 

As the largest port in Europe, the Port of Rotterdam handles more than 461 million tons of cargo and more than 140,000 vessels annually. Previously, the port relied on traditional radio and radar communication among captains, pilots, terminal operators, tugboats and others to make key decision on port operations. Now, as the Port of Rotterdam begins its digital transformation, sensors are being installed across 42-kilometers of land and sea—spanning from the City of Rotterdam into the North Sea—along the Port’s quay walls, mooring posts and roads, the port authority explains. Collected data from the sensors—including water and weather data about tides and currents, temperature, wind speed and direction, water levels, berth availability and visibility—will be analyzed by IBM’s cloud-based IoT technologies and turned into information that the Port of Rotterdam can use to make decisions.

 

Writing in an IBM THINK Blog post, Vincent Campfens, Business Consultant, Internet of Things, Smart Infrastructure, Port of Rotterdam, explains that coordinating the berthing of each vessel is a complex task that involves multiple parties and must be executed safely and securely—and may take several hours. With a new digital dashboard, the port authority will be able to view the operations of all parties at the same time and increase volume and efficiency of shipped goods that pass through the port, he continues.

 

“In fact, shipping companies and the port stand to save up to one hour in berthing time, which can amount to about $80,000 US dollars in savings for ship operators and enables the port to dock more ships each day,” Campfens writes.

 

“Having access to data about air temperature, wind speed, (relative) humidity, turbidity and salinity of the water plus water flow and levels, tides and currents, enables us to better predict visibility on a given day, helping us calculate clearance heights for ships. In addition, by predicting water conditions, wind direction and speed, we will be able to determine how smooth a ship’s entry into port is likely to be,” Campfens writes. “This data will also have a significant positive economic impact on shipping costs. Calm water and weather conditions allow for lower fuel consumption rates, facilitate cost-effective per-ship payloads and help ensure the safe arrival of cargo.”

 

What are your thoughts on a “smart” port, where the port authority is able to make better-informed decisions that increase volume and efficiency of shipped goods that pass through the port? How would such capabilities have an effect on your company’s supply chain?

 

 

When it comes to clout with suppliers, there’s no dispute Walmart makes significant demands. The latest is that Walmart has announced it will ask suppliers to deliver more goods to warehouses exactly on time or face fines, as it strives to simultaneously keep inventory low and replenish out-of-stock items faster to better compete with rivals such as Amazon.

 

“We’ve reduced inventory in stores in order to have the right amount of stock, and have made significant progress in the past few years,” Steve Bratspies, chief merchandising officer at Walmart, told Reuters. “We want to focus on improving that even more.”

 

Bratspies, in an interview with the Wall Street Journal, said company executives are telling large suppliers they need to deliver full orders within a specified one- or two-day window 85 percent  of the time or face a fine of three percent of the cost of delayed goods. Previously, suppliers had to hit a 75 percent threshold to avoid fines. For smaller suppliers, the on-time threshold will move to 50 percent, up from 33 percent. The changes will take effect in April.

 

“This is not a ‘Hey, let’s see how unreasonable we can be,’” Bratspies said, the Wall Street Journal reports. “We need the product that the customer wants when they want it.” Walmart would rather have the products on-time than fine suppliers, a spokesman added.

 

As Walmart, Kroger Co. and other retailers demand tighter delivery windows, suppliers including Kraft Heinz Co. and Procter & Gamble Co. have invested heavily to meet those requirements and make their supply chains more flexible for online buyers, the Wall Street Journal article notes. Last February, Walmart executives told suppliers more accurate delivery times would be a focus going forward and first introduced fines for inaccurate deliveries last year.

 

A more precise delivery window helps Walmart keep shelves stocked and the flow of products more predictable, satisfying customers while simultaneously reducing inventory, say executives. That goal has become increasingly important to the world’s largest retailer as it moves to ensure stores increase profitability so it can channel funds to boost online efforts. What’s more, accurate inventory data is increasingly important to retailers as they strive to offer shoppers more ways to buy products online for in-store pick up.

 

“They’re trying to get as much inventory as possible off the books,” Adrian Gonzalez, a supply chain analyst and president of research firm Adelante SCM, says in the WSJ article. “They want to order more frequently and in smaller quantities, and kind of accelerate that whole process.”

 

The drawback is that the strategy also increases the risk of products being out of stock, and consumer disappointment, Gonzalez says. “Wal-Mart is trying to balance that…while still making sure the product is on the shelf.”

 

What’s also interesting is that Walmart’s demand for a tightened delivery window comes as freight costs are climbing. Many companies struggle to book transportation, particularly for time-sensitive deliveries, because demand has outstripped the supply of available trucks. Prices on the spot market, used by shippers to arrange last-minute transportation, are up more than 20 percent compared with this time last year. Fuel prices are also rising, adding to suppliers’ overall costs.

 

What are your thoughts on Walmart’s new delivery requirements? Is your company under pressure to meet similar requirements?