The Material Handling Institute (MHI) and Deloitte have released their annual report on supply chain trends, this year focusing on how technology is making an impact on logistics operations. The report, “Elevating Supply Chain Digital Consciousness,” found that 80 percent of respondents think digital supply chains will be the predominant model over the next several years, and that technology spending will increase by as much as 95 percent in 2019.
According to MHI, 57 percent of respondents are planning new technology investments that could total more than $1 million in the next two years (a 10 percent increase compared to last year), while more than a third plan to spend more than $5 million on technology, and nearly a quarter have plans to invest more than $10 million in supply chain technology.
“The pace of supply chain innovation over the six years of our survey is truly astounding, creating real and measurable competitive advantage for early adopters,” says George Prest, CEO of MHI. “With supply chain complexity showing no signs of slowing, the risks of inaction is only growing. Leading manufacturing and supply chain executives agree that technology is the key to future success.”
The report identifies 11 technologies that are poised to help transform the digital supply chain, including blockchain, robotics, predictive analytics, the Internet of Things (IoT), artificial intelligence, autonomous vehicles/drones, wearable/mobile computing, inventory optimization, sensors/automatic identification, cloud computing, and 3D printing.
According to the report, the technologies that respondents believe will be the source of disruption or competitive advantage are:
- Robotics/automation (64 percent)
- Predictive analytics (59 percent)
- Artificial intelligence (55 percent)
- IoT (52 percent)
- Autonomous vehicles/drones (51 percent)
However, the technology with the highest current adoption rate is cloud computing/storage (56 percent), and adoption of that technology is expect grow 91 percent in the next five years.
“As digital capability fuels customer expectations to unprecedented heights, next-gen supply chains must be proactive, predictive and prescriptive, with all of its links interconnected and synchronized to the same drum beat of consumer demand,” says Scott Sopher, principal and leader of the global supply chain practice at Deloitte.
Consulting firm BSI has also chimed in with its own supply chain trends report for 2019, focused on the effects o geo-political shifts on the global supply chain, including cybersecurity, the impact of Brexit and U.S.-China trade relations, mass migration, and trade-related border security issues.
“We’re seeing key shifts to global supply chains this year, driven by quite dramatic changes in the geopolitical landscape,” says Jim Yarbrough, global intelligence program manager at BSI. “The concern is that as supply chains change – with Chinese companies moving operations to Africa, for example, or the U.S. sourcing goods from other Southeast Asian nations – major implications will also evolve. Increased exposure to labor exploitation, terrorism, corruption and natural disasters must be a consideration for companies making changes to their supply chain, and best practices must be maintained in order to prevent threats to business continuity or corporate social responsibility.”
For importers and exporters in the U.S., one key development will be the revision of the minimum security criteria under the U.S. Border Protection’s Customs-Trade Partnership Against Terrorism (CTPAT). Companies will need to adjust supply chain security strategies in order to comply.
Artificial Intelligence to drive better forecasting
Gartner also released a report on important trends, this one focused on leveraging new technology, including artificial intelligence, the Internet of Things (IoT), and blockchain.
Advanced analytics will be leveraged to enable dynamic pricing and replenishment, and the availability of greater supply chain data will help companies better understand future scenarios and rely on improved forecasting engines to make more profitable recommendations. Artificial intelligence (AI) will also help automate supply chain processes like forecasting and planning.
“AI in supply chain consists of technologies that seek to emulate human performance and knowledge, such as Improving order delivery and service levels by using AI capabilities to determine the routes a company should take to optimize deliveries, or optimizing shipping replacement parts by applying AI algorithms and notifying users of a potential equipment failure prior to it occurring,” says Christian Titze, vice president and analyst at Gartner.
“Converting supply chain data into actionable insights is imperative,” adds Scott Sopher at Deloitte. “AI can make those decisions faster, smarter and cheaper.”
That data will be generated by an increased use of IoT technology to help track goods and assets across the supply chain. Gartner also expects companies to deploy more robots, drones, and autonomous vehicles to enable new business processes and to optimize existing processes.
According to MHI, however, adoption of new supply chain technology will be hampered by continuing demands for lower prices and faster response times, coupled with a lack of skilled workers. Respondents to the survey reported the supply chain talent gap is growing, and that companies need employees with higher level experience in analytics that have cross-functional supply chain knowledge.
