Tag Archives: AI

The Flaw At The Heart Of Trump’s America First policy

5.6 million U.S. manufacturing jobs didn’t move to China and Mexico – they simply disappeared with the march of technology. And that’s the flaw in America First! 

Trump’s stunning election win has been linked to his successful portrayal as both a friend of Corporate America and a champion of the working class. His business-friendly policies include large-scale deregulation, slashing tax rates and a huge infrastructure spend, which (in theory) are designed to boost jobs through trickle-down economics.

But the support of Corporate America isn’t enough to remain in power. In order to retain the presidency for another four years after the 2020 election, Trump will have to deliver on the key promise that won the support of the disillusioned working class – bringing industry home and reviving jobs in America’s once-thriving industrial rust belt.

However, there’s a miscalculation at the heart of the rhetoric around bringing jobs back from overseas factories.

Robots, not overseas workers, have taken 85% of manufacturing jobs

A recent study from the Centre for Business and Economic Research at Ball State University found that:

  • Employment in the manufacturing sector fell by 5.6 million between 2000 and 2010.
  • Productivity growth (automation) accounted for more than 85% of jobs lost in manufacturing in this period.
  • Only 13% of the overall job loss resulted from trade (including Chinese imports).
  • Meanwhile, U.S. manufacturing output has risen steadily, growing 17.6% between 2006 and 2013.

Simply put, American factories – and factories worldwide – are producing more goods with fewer people. Automation is rendering millions of low-skilled jobs redundant, yet Trump’s key policy aim to “bring back jobs” seems to be mistakenly focused on increasing trade protectionism.

Protectionism could backfire by further accelerating automation

ABC’s business editor Ian Verrender writes that even if Trump “slaps massive import duties on Chinese goods and forces his country to start producing everything at home via the magic of ‘America First’”, it risks leading to a domino effect where business will be forced to find efficiencies in order to survive.

  1. The loss of access to low-cost labour would drive up the cost of consumer goods, meaning Americans would find themselves unable to afford the goods to which they’ve become accustomed.
  2. This lack of affordability would spark demands for wage rises.
  3. Firms would respond by pushing even further into automation, using robotics and AI to cut costs.

Verrender comments: “Where once corporations scoured the globe for low-cost labour, and duly shifted their operations, they [would] now seek ways to eliminate labour altogether, particularly in manufacturing.”

Accelerating automation is inevitable

The loss of jobs to robots is only expected to broaden and accelerate. A report from two Oxford researchers found that an incredible 45% of U.S. jobs, across all sectors and professionals, are vulnerable to being automated within the next 20 years.

For example, self-driving technology alone could lead to the unemployment of 1,000,000 truck drivers in the U.S., along with approximately 160,000 Uber drivers, 230,000 taxi drivers and over 600,000 bus drivers.

Some of the big names to comment on the coming social disruption include Stephen Hawking, who wrote last year: “The automation of factories has already decimated jobs in traditional manufacturing, and the rise of artificial intelligence is likely to extend this job destruction deep into the middle classes, with only the most caring, creative or supervisory roles remaining.”

In February, Elon Musk asked the audience at the World Government Summit in Dubai: “What to do about mass unemployment? This is going to be a massive social challenge. There will be fewer and fewer jobs that a robot cannot do better [than a human]. These are not things that I wish will happen. These are simply things that I think probably will happen.”

Bill Gates commented: “You cross the threshold of job-replacement of certain activities all at once. Warehouse work, driving, room clean-up – there’s quite a few things that are meaningful job categories that, certainly in the next 20 years, [will go away].”

What’s the answer?

Marc Benioff, chief executive of Salesforce.com, warned the World Economic Forum in Davos of the “digital refugees” that would be created by AI. “This is the moment … when we have the highest level of anxiety because we can see advances in AI that are beyond what we had expected,” he said. “It’s happening at a rate and a capability that we are worrying about how it will impact the everyman, the broad range of workers around the world . . . There is no clear path forward”.

One hopeful sign is that a public discourse on the disruptive effects of automation has begun. Thought-leaders have already put forward some solutions, although they may seem politically unpalatable at present. Elon Musk recommends that the U.S. adopts a universal basic income (such as that being trialled in Finland) to keep the economy going and guarantee a standard of living for the millions of workers expected to be displaced by automation. Bill Gates has suggested taxing robotic workers to recapture some of the money displaced workers would have paid as income tax. Education, too, will need to transform to equip future generations with the skills needed to find work in a highly-automated future.

Although Trump appears to be currently focused on the wrong job-stealing “villain” (China), there is hope that leaders will listen to the likes of Bill Gates and Elon Musk and start planning ahead for the social upheaval of what has been dubbed the fourth industrial revolution.

In other news this week:

France passes “duty of vigilance” supply chain law

  • Last week, France passed a law that pushes for accountability for multinational companies sourcing from global supply chains.
  • The “duty of vigilance” law requires companies to establish safeguards designed to ensure that labour rights and other human rights are respected in the production sites they source from.
  • The law requires large companies based in France to create a document that sets out their procedures for evaluating suppliers and mitigate human rights abuses. Violating the “duty of vigilance” law can lead to a penalty of up to €10 million.

Read more at Supply Chain Dive

Trump seeks historic increase in military spending

  • President Trump’s first budget seeks to boost military spending by $US54 billion. The US currently spends about $US584 billion annually on defence.
  • If passed by Congress, the 9% increase will be funded by cuts to non-defence spending, including environmental programs, diplomacy and foreign aid.
  • Last year, the rest of the world combined spent a total of $US317 billion on defence. The highest-spending countries under the US were China ($US146 billion), Saudi Arabia ($US82 billion), Russia ($US66 billion) and the UK ($US56 billion).

Read more at ABC News

Food, Glorious Factory Food! – Challenging the Tech Status Quo

If procurement continues to accept the technological status quo as some kind of given, we’ll continue to be fed the same poor diet. Paul Blake explains why it’s time to challenge the hard-and-fast rules we’ve adopted for so long without question. 

Register as an online delegate for the London Big Ideas Summit 2017 here.

Have you ever wondered why food made in factories is so awful?

Please don’t assume this is going to be a rant about organic carrots and the danger of the shop-bought cake. Let me reassure you that it’s on the contrary.

There’s nothing quite like a home-cooked meal 

Modern living and demands on personal time mean that conveniently available, ready-to-eat food is a fact of everyday life. Everything from jam to lasagne is made in factories, often with minimal human interaction. This can be a very good thing in many ways.

So, if we accept that industrially manufactured food is a thing, one question still remains. Why is it just not as good as the homemade or handmade equivalent? Again, we should allow for the dependency on precisely whose hands are involved. But, all things being equal, a dish made by a competent cook, from scratch will out-score a factory-made one.

At first glance, it might seem obvious. Factory products resource lower cost raw ingredients, preservatives and flavourings for longer shelf-life. No wonder your canned chilli ain’t a patch on your own efforts. This is basic profit-driven economics. And, it’s true, you get what you pay for.

But there is another, more subtle reason, that factory food doesn’t quite hit the mark. A reason that is in no way immediately apparent. And it has to do with our relationship with technology.

Robots that POUR!

For a dish to be easily manufactured in a factory, in large quantities, on a production line, it is crucial that the components, from raw ingredients to part finished elements, are able to be pumped.

How do you get the meat sauce for your lasagne from its cooking vat to the line where it’s assembled? The sauce, the pasta and the béchamel must be sent through a pipe, and often for a considerable distance. The pumping of certain traditional ingredients, such as butter, is impossible. As such, the food industry has had to identify, develop and sometimes engineer alternatives.

The infrastructure, the routing process has had such limitations that it has defined the very nature of the outcomes that are possible. But, as the presenters of the great BBC technology show of the 70s and 80s, Tomorrow’s World, used to say “that is, until now!”

The food factory of the future will be populated, not by machines that pump – but by robots that POUR. And with that simple change, a whole new world of possibilities opens up.

By analysing how a chef systematically puts a dish together, and replicating that, with industrial upscaling, into a robotic process – and eradicating the notion that the conventional wisdom of “pumpability” was some kind of hard-and-fast rule. This new paradigm in food production could forgo the need for chemically-altered shortening agents. You know those ones that taste terrible (requiring added salt as a mask), have dubious health impacts but which, can  at least,  be pumped along a pipe.

Limitations in procurement

In business, and without doubt in the procurement business, we have precisely that same relationship with the technology available to us. We’ve been limited in the quality of the results we can produce because of how the tools and technologies we use are built.

Until recently, the software used in procurement has restricted the procurement professional to working in ways determined by how the software was written, and not by what is best for the outcome. This means procurement has become attenuated to these limitations and now accepts them as hard-and-fast rules.

A good example of this is the notion of “best of breed”.  This uses the most sophisticated software tool available for each step in the source to pay process. We’re indoctrinated to see lists of features and functions as the sole measure of suitability of software.

Dividing up the entire spend management process from strategy planning to invoice payment into a set of silos, and then equipping each step with the best tool for that task might at first seem to be a sound approach.  But this is only if you look at the steps in isolation. That’s just the same as looking at each ingredient in your recipe and only considering whether you can pump it around your factory.

How can tech make procurement processes more palatable?

In procurement, the separation of sourcing from contract into entirely different systems does nothing to promote positive outcomes and the isolated software components actively compound the difficulty of realizing savings and value.

However, technologies are emerging that are permitting us to look at the entire source to pay process as a single business requirement.  This allows us to consider how the various “ingredients” interact and work with each other to create the optimum result.

In the future, we will no longer be restricted to working the way the software dictates. Whilst a good part of the process may be run automatically, we will get to determine the ideal set of inputs and outputs to suit us.

The emergence of AI founded on big data, mobile, always-on connectivity and, crucially, the unification of strategic procurement and day-to-day purchasing into a single operational environment are changing the effectiveness of the procurement operation.

Challenging the status quo

By accepting the technological status quo as some kind of given, we will only continue to be fed the same poor diet.

Returning to the analogy, we don’t have to reject the notion of manufactured food entirely. Not if we can see that technology can actually make it better, possibly even better than we can do ourselves. There’s a thought!

The same applies completely to the idea of the automated supply chain. It needn’t (and won’t) be the death of Procurement. The smart use of new technology will actually give our industry new lease of life. As long as we stop adhering to the outdated technology rule book.

There is another way. The time is now.

Paul Blake is Senior Manager, Technology Product Marketing at GEP Worldwide. He’ll be speaking at the 2017 Big Ideas Summit next week. Join the conversation and register as a digital delegate here.

Are You A Procurement Starter Or A Finisher?

Are you a starter or a finisher? According to IBM’s Barry Ward, you’d better be both! Barry discusses the key skills most critical to procurement in the coming years.

Barry Ward, Procurement Brand Manager, Global Business Services at IBM is a keynote speaker at Big Ideas Summit 2017.  He’ll be explaining the big ideas behind Watson and the opportunities that cognitive tech presents to procurement. When we spoke to Barry ahead of the event he was keen to remind us that, despite rapid tech developments, traditional procurement skills are far from being made redundant.

How do you stay productive and current in a world of fast-paced innovation?

  • Collaborating with colleagues
  • Networking with others – using social media and other channels
  • Building and nurturing an ecosystem of organisations that are leading or developing solutions that may have or will have an impact in your function

What key skills are critical for procurement in the next 5 years?

We will always need traditional procurement skills such as the ability to be a strong negotiator, to communicate well internally and externally, to be a starter and a finisher. But, on top of this I think the importance of an open mind and curiosity in terms of the role that technology can play in the future is going to be more important than ever.

There will be an increasing need for project management skills, change management, relationship management skills. This is on top of the usual and still critical traditional procurement skills such as category expertise or negotiation skills. I can also say that there is a growing importance in soft skills: communication, teamwork and collaboration and problem solving.

How has technology, the Internet of Things and e-Procurement affected IBM?

Technology has placed a key role in IBM’s transformation over the past 20 years or so. Its importance is perhaps more critical in the the current phase of our procurement transformation. Understanding how digital technology can transform the supply chain and our source to pay activities is critical in terms both driving our efficiency and effectiveness but also to showcase how procurement can drive value throughout our organisation.

This positions Procurement in a much more strategic role than ever before. Procurement data is much more visible than ever before.  Insights through combining unstructured and structured information augment our knowledge, with alerts being posted to mobile devices instantaneously means that buyers can have much better assurance of supply continuity, of being able to understand price opportunities and to focus their time and energies on higher value activities than ever before. Lower value work will become automated or systems-driven. This is all good news for Procurement.

One clear impact of this transformation is that our key stakeholders now have very high expectations of high performance from Procurement personnel, perhaps more so than ever before, but the rewards are clearly evident in terms of the value that individuals can bring as well as the procurement organisation as a whole.

How valuable have mentors been in your career?

Mentoring is a highly personal thing. Some people need to have guidance and direction particularly in an organisation that may be widely spread and fast-moving, and if you are looking to move around different functions. Similarly for those who are in a smaller organization, mentors can bring an external, broader perspective.

Others are confident of their own abilities in charting a course for their own development and progression. I have had mentors in the past, particularly when I was in the early stages of my career. The more confident you are of your attributes and ambitions the less I have found that I needed mentoring. I spend time mentoring others mainly from within IBM and mainly from other geographies.

How did you first become interested in procurement?

I didn’t know very much about Procurement in my time as an undergraduate. It was not a profession that had much coverage when I was at University, unlike Finance or Engineering.

My first job as a business graduate was as a Purchasing Analyst running Bill of Material queries in a MRP system for a large manufacturer. This brought me into contact with many parts of the organisation including procurement. The procurement manager at the time was quite an intellectual and gave me a broad view of the role that procurement can play in an organisation.

Clearly he influenced me as I have spent my subsequent career in procurement and supply chain roles!

How will cognitive technology impact procurement professionals?

Cognitive technology will transform the role of the procurement professional and the impact that he or she can make for their organisation. It will be able to remove some of the more prosaic parts of the procurement role, such as data gathering and analysis, together with augmenting a buyer’s knowledge thus enabling them to spend more time on higher value tasks and ultimately make better decisions and be more effective.

Procurement professionals will need to understand how cognitive technology works – so they can be alert to potential mistakes that can happen from cognitive solutions, so that data input from these solutions is relevant and accurate.  It will eventually help, and force, them with their career progression as well as developing their expertise.

Join the conversation and register as a digital delegate for Big Ideas 2017