MMD

Trends in supply chain management: Automation and human resources

Can automation really replace supply chain jobs?


January 22, 2018
by

The recent announcement by grocery chain Metro that it is updating distribution centres has once again raised the spectre of robots taking supply chain jobs. The company will be introducing automation to its distribution operations, and the changes will result in the loss of almost 300 jobs.

The push for automation is understandable. Automation cuts down on costly human error and variable productivity and it can be worked 24/7 with no need for scheduling, benefits, holidays and the other requirements of human workers. From an operations perspective, well-planned automation can reduce costs and improve customer service. Every supply chain manager knows that cost reduction is the number-one priority for what is a net cost centre.

So, every time we hear about another DC being automated and jobs lost, the question of whether humans will have a role at all in the near future comes to the fore. After all, major companies such as Amazon, UPS and FedEx, among others, already have fully automated DCs in operation. As well, artificial intelligence is making it easier for tasks in customer service and procurement, for example, to be automated.

Different jobs for humans

Many see this as evidence that humans will soon be out of work. The United Nations predicts that the cheap “labour” automation represents will drive a reshoring of production to the industrialized world, leading to a stall in economic development elsewhere.

Likewise, an Oxford University study found that 47 percent of US jobs would be at risk from automation. In Canada it has been estimated that between 1.5 million and 7.5 million jobs could be at risk of automation in the next 10 to 15 years, according to a report by the University of Toronto’s school of public policy and governance. At great risk are the 500,000 who drive trucks and other public conveyances for a living, should automated trucks gain quick acceptance. With job losses that significant the country could face a 12 percent unemployment rate, the report notes.

A policy response

Such dramatic job loss would be a cause for great concern, which is why policymakers are beginning to shape potential responses. In the US the President’s Council of Economic Advisors has highlighted the necessity of fostering training, education and job-hunting skills. In fact, the US Department of Labor predicts that 65 percent of today’s school-age kids will end up doing jobs that do not exist now.

The University of Toronto report offers a series of policy recommendations for the Canadian government that span the gamut from revamping our social safety net, to introducing more protections for workers, to boosting skills training opportunities.

Private sector prevention

While it’s true that some areas of supply chain employment will increasingly be automated, those who might be displaced—and their employers—can do something about it. As the Oxford study noted, the more skilled the job and the higher the education required to do it, the less likely it is a candidate for automation. This is why companies that are embarking on automation programs are looking to retain and retrain the staff who are at risk. They are taking the initiative to ensure that the people they have already invested in continue to be assets to their business.

It’s not a new idea that advances in technology change the nature of work. Look back in history: The first industrial revolution at the end of the 18th century generated riots as machines began to take over once-manual jobs. But ultimately, that revolution completely changed our economy and ended up by creating more jobs than it destroyed.

Now that we are in what is called the third industrial revolution—a time characterized by increasing digitization of production—we have the chance to take a lesson from history and apply it by preparing now for the inevitable shift in what we mean by work, both in the supply chain and beyond.