The future is here for a digital supply chain. It’s driven by new technologies and innovations that are expected to deliver an electronics supply chain that is more connected and optimized for speed and agility. These supply chain disrupters range from big data and cloud computing to the Internet of Things (IoT) and 3D printing.
A new study, conducted by JDA Software Group Inc. and SCDigest, finds that digitization is a top priority to drive supply chain performance. Nearly 80 percent of the 200 supply chain professionals surveyed, expect to leverage strategies and technologies for “digitization.” These technologies include advanced analytics, big data, cloud-based applications, mobile applications, and IoT.
“At JDA, we refer to digitization as the process of using technology advancements linked with physical and digital assets to redefine and reimagine current business practices to create a significant competitive advantage,” said Fred Baumann, group vice president, Global Manufacturing Industry Strategy at JDA, in a statement. “For companies challenged by today’s fast-paced, hyper-competitive, omni-channel environment, most view supply chain technology as a key enabler of the speed, agility, resilience and customer responsiveness they need to remain competitive, drive greater revenue, profit and efficiencies across their operations.”
The study, 2016 SCDigest Supply Chain Digitization Benchmark survey,” and white paper, The Future Is Now: Harnessing the Power of Digitization to Drive Greater Supply Chain Performance,” also finds that supply chain professionals expect to “drive the greatest value from digitization by leveraging technologies” for improved supply chain visibility (59 percent), advanced analytics (52 percent), systems integration with trading partners (44 percent), and internal systems integration (35 percent).
One of the key value drivers is the IoT, according to 30 percent of respondents. The biggest opportunities for improvement include product innovation and supply chain performance.
The survey finds that 70 percent of respondents see IoT as an opportunity to drive product innovation and 35 percent see it as a major opportunity. In comparison, 84 percent see IoT as an opportunity to improve supply chain performance and reduce costs, while 44 percent see it as a major opportunity.
Other benefits of IoT include real-time inventory visibility (55 percent), understanding product flows (45 percent), and machine/production monitoring (40 percent).
Another industry study points to eight emerging technologies - including analytics, IoT, and mobile - that are expected to improve visibility and efficiency. MHI and Deloitte surveyed 900 industry leaders (including executives, managers, and department heads) at manufacturers, distributors and service providers, who cited eight technologies that could help them deliver big performance gains around optimizing processes and efficiency. These include predictive analytics, robotics and automation, sensors and automatic identification, wearables and mobile technology, driverless vehicles and drones, inventory and network optimization tools, cloud computing and storage, and 3D printing.
These eight emerging and potentially disruptive technologies are creating what MHI and Deloitte call digital “always-on” supply chains that are expected to deliver better efficiency, visibility and customer service, according to the study.
A key finding of the 2016 MHI Annual Industry Report, Accelerating Change: How Innovation is Driving Digital “Always-On” Supply Chains reveals that 83 percent of survey respondents, up from 75 percent in 2015, expect at least one of the eight technologies to be a competitive advantage or disruption for supply chains over the next ten years.
Four of the eight key technologies are expected to provide competitive advantages for “always-on” supply chains, according to respondents. These include:
- Robotics and automation (cited by 51 percent of respondents, up from 39 percent in 2015. Adoption is currently 35 percent, and is expected to rise to 74 percent over the next six to 10 years.
- Inventory and network optimization tools (48 percent, up from 45 percent in 2015)
- Sensors and automatic identification (47 percent, up from 42 percent last year)
- Predictive analytics (44 percent, up from 38 percent in 2015)
Corroborating the MHI/Deloitte finding that new technologies will drive up supply chain performance improvements is increased investments in these technologies by more manufacturing and supply chain companies. According to the report, 52 percent of respondents plan to invest more than $1 million in new technology, up from 49 percent in 2015, and three percent expect to spend at least $100 million on new technologies over the next two years.
Over the next six to 10 years, six of the eight technologies are expected to have adoption rates of 74 percent or higher, according to the report. The exceptions are driverless vehicles and drones and 3D printing, which are expected to have 50 percent and 48 percent adoption rates, respectively.
“This accelerated pace of change will dramatically alter the way supply chains work and how they are managed in the future,” according to the MHI/Deloitte report.
However, there are several barriers cited by survey respondents including a lack of skilled supply chain talent (56 percent), customer demand for faster response times (56 percent), customer demand for lower delivery costs (56%), a lack of business case (43 percent), a lack of adequate talent to use technologies effectively (38 percent), and cultural aversion to risk (35%).
Respondents to the JDA/SCDigest study cite similar barriers to digitization. These include a lack of internal systems integration, a lack of clarity about what to do, having available IT resources and budget, understanding the return on investment, and lack of prioritization by executives.
Whether it’s called digitization of the supply chain or digital “always-on” supply chains, it will require manufacturers and distributors to embrace new technologies, starting at the top executive level and down in order to leverage these innovations to deliver the speed and agility required in a digital world. In many cases, this will require partnerships with solution providers to help select and implement the right technologies for the biggest supply chain optimization gains.