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2018

The increasing use of artificial intelligence in consumer and enterprise domains paired with physical and digital logistics networks offers the potential for new levels of value creation in the logistics industry, according to a new report. This most likely includes back office automation, predictive operations, intelligent logistics assets and new customer experience models.

 

In a joint report, “Artificial Intelligence in Logistics,” logistics service provider DHL and IBM explain the potential for AI in logistics, as well as how it may be best applied to transform the industry, creating a new class of intelligent logistics assets and operational paradigms. The use of AI, for example, could help logistics providers enrich customer experiences through conversational engagement and perhaps lead to delivery of products before customers need to order them, the report explains.

 

“Today’s current technology, business and societal conditions favor a paradigm shift to proactive and predictive logistics operations more than any previous time in history,” says Matthias Heutger, senior vice president and global head of innovation at DHL. “As the technological progress in the field of AI proceeds at great pace, we see it as our duty to explore, together with our customers and employees, how AI will shape the logistics industry’s future.”

 

Many industries have already successfully adopted AI into business processes, such as in engineering and manufacturing, where AI is used in production lines to help streamline production and maintenance through use of image recognition and conversational interfaces. What’s more, in the automotive industry, AI is used extensively to enhance the self-learning capabilities of autonomous vehicles, the report notes.

 

With the help of AI, the logistics industry will shift its operating model from reactive actions to a proactive and predictive paradigm, which will generate better insights at favorable costs in back office, operational and customer-facing activities, the report explains. For instance, AI technologies could use advanced image recognition to track condition of shipments and assets, bring end-to-end autonomy to transportation or predict fluctuations in global shipment volumes before they occur. Clearly, the authors write, AI augments human capabilities but its use also eliminates routine work, which will shift the focus of logistics workforces to more meaningful and value-added work.

 

That may very well be the elephant in the room. So, while internet of things-enabled systems, such as automated sorting and item-tracking technology, gather and store valuable data to potentially forecast supply-chain disruptions such as inventory shortages, manufacturing bottlenecks and delays in transit, their use also consequently renders some human tasks obsolete. It’s that likelihood which—understandably—makes people anxious about their jobs and careers. Acting to adopt the use of AI sooner rather than later, however, will give companies and their workers time to acclimate to this paradigm shift, the report notes.

 

“Technology is changing the logistics industry’s traditional value chains, and ecosystems are reshaping enterprises, industries and economies,” says Keith Dierkx, IBM global industry leader for freight, logistics and rail. “By leveraging AI into core processes, companies can invest more in strategic growth imperatives to modernize or eliminate legacy application systems. This can make existing assets and infrastructure more efficient, while providing the workforce with time to enhance their skills and capabilities.”

 

What are your thoughts on the use of AI and, in particular, how it may make some jobs obsolete? Are you concerned about how the use of AI may impact your job?

The United States lags behind some other countries when it comes to readiness for an increasingly automated world, placing ninth on a ranking of 25 advanced economies, according to a new report from technology giant ABB and The Economist Intelligence Unit. On the other hand, South Korea, Singapore, Germany and Canada, for example, are better prepared to smoothly integrate intelligent automation into their economies, thanks largely to their education systems and labor policies, the authors of the “Automation Readiness Index (ARI): Who Is Ready for the Coming Wave of Innovation?” report explain.

 

Researchers graded nations on three main categories: their innovation environment, which included money spent on research and development; school policies, from early curricula to lifelong learning programs; and public workforce development, such as government-led efforts to retrain workers. The researchers found that while no country is “genuinely ready” for the technological shift expected to displace millions of workers worldwide in the next 30 years, the U.S. is “especially underprepared” for the jobs of the future.

 

Guido Jouret, ABB’s chief digital officer, singled out the U.S. education system, which pushes students toward two- or four-year college degrees. The problem, he says, is colleges tend to be less nimble when it comes to keeping up with technological changes, and companies will seek workers who can adapt to cutting-edge developments, a Washington Post article reports.

 

With that report’s findings in mind, I was interested to also read that an independent task force from the Council on Foreign Relations writes in a new report that although the world is in the midst of a “profound transformation” in the nature of work as smart machines and other new technologies remake how people do their jobs and pursue their careers, the U.S. has not stepped up to meet these new challenges. The report authors note that rapid technological change, heightened global competition, and growing barriers to opportunity have weakened the link between work and rewards. While new opportunities will likely be created to replace lost jobs, American workers face substantial obstacles in acquiring the education and skills needed to prosper in a more automated work environment, according to the task force.

 

“Even with the reasonably strong job growth of recent years, the divide between those succeeding and those struggling is growing, regional disparities are increasing, economic inequality is rising and public anger is deepening political divisions,” writes the task force. “The country’s future as a stable, strong nation willing and able to devote the necessary resources and attention to meeting international challenges depends on rebuilding the links among work, opportunity and economic security.” A failure to address the nation’s workforce challenge “will increase the pressures for retrenchment that are already causing the U.S. to back away from global leadership.”

 

The task force’s report, “The Work Ahead: Machines, Skills, and U.S. Leadership in the Twenty-First Century,” explains that, “to prosper and to lead, the United States needs to find new ways to meet the workforce challenges of the twenty-first century.” Toward that goal, the authors recommend members of federal, state and local government, as well as companies in the private sector: help Americans take advantage of the opportunities posed by technology; strengthen the link between education and employment; spur job creation, especially for better-paying jobs; make the skill demands of jobs more transparent; provide better help for displaced workers; and improve the benefits and returns from work for all Americans.

 

I was particularly interested in the report’s final recommendation: Understand that the problems will not be solved by Washington alone.

 

“To underscore the urgency of the task of building the workforce of the future, the president and the nation’s governors should create a National Commission on the U.S. Workforce to carry out research, share best practices and conduct public outreach on workforce challenges,” the authors write. “This should be the start of an ongoing effort to put workforce issues at the center of the national conversation.”

 

What are your thoughts on increasing automation in the workplace? Are workers prepared for this transition? If not, what actions can be taken to remedy the situation?

Japanese researchers have discovered vast reserves of rare-earth elements in deep-sea mud, with the potential, they explain, to meet global demand on a “semi-infinite basis” for the elements needed to build high-tech products such as cellphones, electric vehicles, and even modern tanks, missiles and aircraft.

 

The deposit, a roughly 965-square-mile Pacific Ocean seabed near the remote Minamitori Island about 1,150 miles southeast of Tokyo, contains more than 16 million tons of rare-earth oxides. The study, conducted by Waseda University’s Yutaro Takaya and the University of Tokyo’s Yasuhiro Kato, along with members from businesses and government institutions, estimates the deposit holds 780 years’ worth of the global supply of yttrium, 620 years’ worth of europium, 420 years’ worth of terbium and 730 years’ worth of dysprosium, the researchers write in Scientific Reports.

 

Large rare-earth deposits are found in many nations, but China dominates the field—supplying roughly 90 percent of the minerals. That’s, in part, because rare-earth element production is often a byproduct of other mining operations, but China also has businesses to process the minerals into materials usable in industrial applications. China extracted around 150,000 tons of rare earths in 2016, according to industry experts, Japan Times reports.

 

China has also demonstrated a willingness to artificially reduce supply. For instance, in 2010, China pushed rare-earth prices up as much as 10 times by cutting its export quota on 17 elements by 40 percent from the previous year. Bejing said it wanted to clean up a polluting industry, although the move conspicuously also came at a time of heightened diplomatic tension with Japan, and left Japanese manufacturers—the world’s second-largest consumer of these minerals—with serious supply shortages. Japanese manufacturers have since lowered the amount of rare-earth metals they use in batteries and motors. It’s worth noting that the World Trade Organization (WTO) eventually ruled that China’s export restrictions on rare-earth elements were inconsistent with its obligations as a WTO member.

 

It’s also worth pointing out that rare-earth elements require what, frankly, is a laborious and sometimes hazardous extraction process. To separate the elements from the ore which contains them, the materials are repeatedly dissolved in solutions of acids, then filtered, and dissolved even more. Rare-earth ore goes through these steps hundreds of times, and for each new mining location, the concentration of the necessary acids must be recalculated to specifically target the precise impurities in the soil. In many respects, it can be argued that the process isn’t so much about removing rare earths from the mix, but more accurately is about removing everything else.

 

As for the new Japanese find, isolating rare-earth minerals from mud hundreds of meters underwater undoubtedly will be both expensive and time consuming, and the researchers do stress the importance of the efforts to develop efficient and economic methods to collect the deep-sea mud. That said, the team explains they have also developed an efficient method to separate valuable elements from others in the mud.

 

“The enormous resource amount and the effectiveness of the mineral processing are strong indicators that this new (rare-earth rich mud) resource could be exploited in the near future,” the researchers write.

 

It will be interesting to follow research about this new rare-earth find.

The most common exploitations of internet-connected devices typically involve either conscripting thousands of vulnerable IoT devices into botnets or gaining access to a network through an exposed IoT device for ransomware attacks. I was interested to read that researchers from IoT security firm Senrio have recently shown that a company’s publicly exposed IoT devices can be used as an unsupervised backroad into networks. Consequently, cyber attackers can jump from one vulnerable IoT device to the next, bypassing conventional devices such as PCs and servers, which makes the intrusion considerably more difficult to detect.

 

“We were seeking to answer the question ‘why does one device matter?’” M Carlton, Senrio’s vice president of research, says in a Wired article. “An attack like this shows why it’s important to know what’s really on your network. These devices are all connected to each other and can create a hole in the network. It would be very difficult to catch this.”

 

IoT-based attacks are also growing. A recent CEB, now Gartner, survey found that nearly 20 percent of organizations reported at least one IoT-based attack in the past three years. To protect against those threats, Gartner now forecasts that worldwide spending on IoT security will reach $1.5bn in 2018, a 28 percent increase from 2017 spending of $1.2bn.

 

“Interest is growing in improving automation in operational processes through the deployment of intelligent connected devices, such as sensors, robots and remote connectivity—often through cloud-based services—however organizations generally don’t have control over the source and nature of the software and hardware being used by smart, connected devices,” says Ruggero Contu, research director at Gartner. “We expect to see demand for tools and services aimed at improving discovery and asset management, software and hardware security assessment, and penetration testing. In addition, organizations will look to increase their understanding of the implications of externalizing network connectivity. These factors will be the main drivers of spending growth for the forecast period with spending on IoT security expected to reach $3.1bn in 2021.”

 

Despite the steady year-over-year growth in worldwide spending, Gartner predicts that—through 2020, anyway—the biggest inhibitor to growth for IoT security will stem from a lack of prioritization and implementation of security best practices and tools in IoT initiative planning. This will hamper the potential spend on IoT security by approximately 80 percent.

 

“Although IoT security is consistently referred to as a primary concern, most IoT security implementations have been planned, deployed and operated at the business-unit level, in cooperation with some IT departments to ensure the IT portions affected by the devices are sufficiently addressed,” Contu says. “However, coordination via common architecture or a consistent security strategy is all but absent, and vendor product and service selection remains largely ad hoc, based on the device provider’s alliances with partners or the core system that the devices are enhancing or replacing.”

 

The absence of “security by design” comes from a lack of specific and stringent regulations. Going forward, Contu expects this trend to change, especially in heavily regulated industries such as healthcare and automotive. Indeed, by 2021, Gartner predicts that regulatory compliance will be the prime influencer for IoT security uptake.

 

What are your thoughts on IoT device security? Do you believe companies in heavily regulated industries will be the ones driving security architecture for IoT devices?

Consumer-facing companies, notably ranging from consumer products company Unilever to McDonald’s Corp., have increasingly invested in sustainable sourcing to meet growing customer requirements. Starbucks, for example, has invested more than $70 million in collaborative farmer programs and activities which directly support improving farmer livelihoods and ensuring a long-term supply of high-quality coffee. Now, The Hershey Company is joining those ranks by announcing it will spend $500 million to produce its chocolate Kisses from more sustainable cocoa.

 

Through its Cocoa for Good holistic cocoa sustainability strategy, Hershey will invest the funds through 2030 to addresses the most pressing issues facing cocoa-growing communities: poverty, poor nutrition, at-risk youth and vulnerable ecosystems. Hershey seeks to drive positive change in these areas through collaborative programs, partnerships and significant investment.

 

“A sustainable cocoa supply depends on a multi-stakeholder collaborative approach to find solutions to the social, environmental and economic challenges facing cocoa-growing communities,” says Susanna Zhu, Hershey’s Chief Procurement Officer. “As a critical player in the cocoa value chain, we are committed to doing our part. Under Cocoa For Good, we continue to work toward a future where there’s a long-term, sustainable cocoa supply, the natural environment is protected, and we are creating better lives for everyone. It’s good for the cocoa farmers, families, communities, chocolate consumers and the success of our business.”

 

About 95 percent of world cocoa output is produced by small farmers, many of whom still use traditional growing methods. Chocolate demand has been growing, and is generally expected to continue significant growth. At the same time, because global yields have remained stagnant, supply increases have come primarily as a result of expansion of cultivated areas. Côte d’Ivoire and Ghana, for example, are leading producers of cocoa, and many observers say cocoa farming is the driving force behind rapid rates of deforestation in both countries, reports sustainable trade initiative IDH.

 

All of this, Hershey explains, is why there is a critical need for Cocoa For Good, which is expected to impact the lives of thousands of farmers in cocoa-growing regions—with a focus on West Africa, where about 70 percent of the world’s cocoa is grown. The initiative will focus investments and work in four key areas: nourishing children, elevating youth, prospering communities and preserving ecosystems.

 

Toward that goal, Hershey’s strategy prioritizes:

  • Increased family access to good nutrition,
  • Elimination of child labor and increased youth access to education opportunities to give youth in cocoa-growing regions the skills and resources they need to build successful futures,
  • Increased household incomes for women and men to economically empower women and help all farmers support prosperous businesses, and
  • Zero deforestation and increased agroforestry by investing in innovative agroforestry methods such as growing cocoa in shaded areas which can be productive for as much as 15 years longer than when plants are grown in full sun.

 

“Cocoa is a tremendous part of the livelihoods for the people of Côte D’Ivoire and public-private partnerships are critical to improving the lives of people living in cocoa communities and protecting our precious natural resources,” says H.E. Daniel Kablan Duncan, Vice President of the Republic of Côte D’Ivoire. “We value our partnership with The Hershey Company and look forward to working together to bring about the meaningful change that this new investment will catalyze.”

 

What are your thoughts on increasing sustainability? As a consumer, are you willing to pay more for products and services that come from companies which are committed to positive social and environmental impact?

Although IT security teams plan to hire more staffing resources to address vulnerability response (the process companies use to prioritize and remediate flaws in software which could serve as attack vectors), it won’t improve IT security unless the team also fixes broken patching processes, according to a new report. This, the report continues, is security’s “patching paradox”—hiring more people does not equal better security. The issue is that organizations struggle with software patching because they use manual processes and can’t prioritize which vulnerability must be patched first, the report explains.

 

ServiceNow’s report is based on the findings of a survey by Ponemon Institute of nearly 3,000 IT security professionals in Australia, France, Germany, Japan, the Netherlands, New Zealand, Singapore, the UK and the U.S. to understand the effectiveness of their company’s vulnerability response tools and processes. “Today’s State of Vulnerability Response: Patch Work Demands Attention,” explains that efficient vulnerability response processes are critical because timely patching is the most successful tactic companies use to prevent cyber breaches.

 

The survey found that organizations which were breached struggle with vulnerability response processes compared with those organizations that weren’t breached. For example, 48 percent of the surveyed organizations experienced a data breach in the last two years, and a majority of breach victims (57 percent) said they were breached because of a vulnerability for which a patch was already available. I was surprised to read that 34 percent of the respondents said the company was actually aware of a vulnerability before it was breached, and 37 percent  of breach victims said the company doesn’t scan for vulnerabilities.

 

IT security teams already dedicate a significant proportion of their resources to patching. For instance, organizations spend 321 hours a week on average–the equivalent of about eight full-time employees–managing the vulnerability response process. They also plan to invest in additional staff for vulnerability response: 64 percent of respondents say they plan to hire more dedicated resources for patching over the next 12 months.

 

Interestingly, the report notes that hiring alone won’t solve the vulnerability response challenges organizations face because the process itself is unwieldly. For instance, 65 percent of respondents said they find it difficult to prioritize what needs to be patched first, 61 percent say that manual processes put them at a disadvantage when patching vulnerabilities, and 54 percent say that hackers are outpacing organizations with technologies such as machine learning and artificial intelligence. At the same time, cyberattack volume increased by 15 percent last year, and severity increased by 23 percent, respondents said.

 

“If you’re at sea and taking on water, extra hands are helpful to bail,” says Sean Convery, vice president and general manager, ServiceNow Security and Risk. “The study shows most organizations are looking for bailers and buckets instead of identifying the size and severity of the leak. Automating routine processes and prioritizing vulnerabilities will help organizations avoid the ‘patching paradox,’ instead focusing their people on critical work to dramatically reduce the likelihood of a breach.”

 

Convery adds that there are five key recommendations which provide organizations with a pragmatic roadmap to improve cybersecurity. They are:

  • Take an unbiased inventory of vulnerability response capabilities,
  • Accelerate time-to-benefit by tackling low-hanging fruit first,
  • Regain time lost coordinating by breaking down data barriers between security and IT,
  • Define and optimize end-to-end vulnerability response processes, and then automate as much as possible, and
  • Retain talent by focusing on culture and environment.

 

What are your thoughts on vulnerability response processes? Is it difficult to prioritize patches?

 

Although executives are increasingly aware of the benefits of digital supply networks (DSNs), many report that their organization is still in the early phases of adoption, according to a new study. While 51 percent of respondents believe their DSN maturity is at least “above average” compared to competitors, only 28 percent reported their organization has started implementing DSN solutions.

 

Conducted by Deloitte and the Manufacturers Alliance for Productivity and Innovation (MAPI), the survey of executives from more than 200 manufacturing organizations found that most respondents believe DSNs can provide significant advantages in comparison to traditional linear supply chains, but few expect implementation will lead to “game-changing” positive impact. The resulting report, “Embracing a digital future: How manufacturers can unlock the transformative benefits of digital supply networks,” explains that, nonetheless, 56 percent of the respondents said they do believe a DSN will provide a significant benefit to their company.

 

Increasing speed remains a primary reason for implementing DSN among manufacturing organizations surveyed. Most respondents (52 percent) cited the ability to dramatically reduce the time to make strategic decisions as a top reason, followed by the ability to operate more efficiently and effectively (43 percent).

 

Most executives also said many in their companies recognize the potential financial benefits of DSNs. When asked about the most important financial goals of a DSN, they cited increasing sales efficiency/effectiveness (22 percent), reducing operating costs (17 percent) and improving pricing and margins (17 percent).

 

There are, of course, significant challenges to address. For instance, the changing nature of work in advanced manufacturing technology may also impact DSN rollouts. Two of the biggest barriers associated with implementing DSNs were finding and training employees, each cited by 30 percent of respondents as a top challenge.

 

Additionally, organizations are potentially hesitant to change. Nearly four in 10 respondents (37 percent) said overcoming resistance to change is the greatest risk to the success of their DSN initiatives, followed by operating in silos/lack of integration (33 percent).

 

“While enthusiasm is high and manufacturers realize the benefits of digital supply networks, many companies struggle to identify the right technology landscape which will provide the most value when they are approaching a digital shift,” says Stephen Laaper, principal, Deloitte Consulting LLP and co-author of the study. “As a result, many hold off with key aspects of their transformation, which in turn puts their transformation at too slow a place to avoid disruption.”

 

To determine the best route to digital transformation, Laaper says executives should be asking key questions, such as: What is the strategic vision they are working toward? Other critical questions to ask are: “How is the company going to win?” and “How will the company execute in sprints to start down the path without having all the details worked out?”

 

There is no one way to deploy a DSN, says John Miller, council director, MAPI. All companies operate differently, thus their DSN implementations carry unique challenges based on the existing infrastructure, talent base, culture and technological requirements, he explains.

 

“Companies which are too conservative in their approach may wait too long before finally implementing initiatives that are too large and complex,” Miller says. “In the end, these companies risk being late to the game and implementing solutions whose value is hard to measure because of either the time it takes to show an improvement or the overall scale of the implementation.”

 

What are your thoughts on digital supply networks? What do you think are the main obstacles to implementing solutions?

 

Support for enterprise analytics and development of IT talent are two priority areas for CIOs in 2018, as companies “seek to unlock the value of digital business,” according to new research. The downside, however, is that companies’ efforts to deploy and derive value from digital tools are likely to be handicapped by low capability maturity in these two key areas, as well as a lack of initiative to improve over the coming year, the study reports.

 

At the heart of the challenge of gaining the value of digital business, is a strategic disconnect between expectations and capabilities, according to The Hackett Group’s 2018 IT key issues research, “Driving Value from Transformation,” which is based on results gathered from surveying more than 160 executives in the U.S. and abroad—most at large companies with annual revenue of $1 billion or greater. Nearly 75 percent of the executives agreed that digital transformation will fundamentally disrupt their industry and the competitive landscape in which they operate, while 82 percent expect it to fundamentally change the operating model of their business.

 

The report recommends that IT organizations focus on improving enterprise analytics capabilities in 2018, including stronger governance around data management and architecture practices as well as supporting the foundational tools that help enable analytics in the business. It’s also vital that IT organizations improve their ability to develop and acquire talent, particularly in data management, advanced analytics and customer-centric design, the authors explain. Many companies strive to design services, products and delivery channels to enable digital customer experiences, which further requires IT departments to have more staff with customer-oriented design experience, including customer journey mapping and design thinking.

 

Indeed, the research found that in IT—and across the enterprise, for that matter—access to talent will rival cybersecurity as the greatest business threat within the next two years. Aligning talent with future business needs is a top three priority for IT. However, the research also found that efforts to improve talent are not getting commensurate attention in 2018. For instance, only 45 percent of study respondents across the enterprise have talent improvement initiatives underway or planned, and only 21 percent of IT leaders report plans to align IT skills and talent with changing needs of the business.

 

“The impact of digital transformation on talent is a critical factor,” says Scott Holland, The Hackett Group principal and Global IT Executive Advisory Practice leader. “IT roles are being transformed by digital—more than one in four IT roles are already affected. Current staff are aging out and millennials show little interest in employers that have not fully embraced digital, and in working for companies located outside of technology innovation centers such as the U.S. West Coast. Data savviness, agility/ability to change and creativity are increasingly critical skill sets that are lacking in most IT organizations. Companies which don’t address staffing challenges more aggressively will suffer, as they fall behind competitors in leveraging new tools, processes and business models.”

 

The good news is that IT organizations will be getting funds in 2018 to address these challenges. Study respondents said they expect operating budget increases of 1.8 percent in 2018, in stark contrast with other business services areas. Indeed, the research shows finance, procurement and HR are all expected to see flat or declining budgets in 2018, despite projected revenue growth of 3.6 percent.

 

What are your thoughts on the challenges of digital transformation? Do you agree a lack of analytics and sufficient staff with necessary skills are the two main challenges?