The age of the Digital Supply Chain is at hand, according to the findings of MHI’s 6th Annual Industry Report “Evaluating Supply Chain Digital Consciousness,” developed in conjunction with Deloitte Consulting LLP and released at ProMat 2019.
As with previous iterations, the 2019 report again confirms that digital technologies and innovations continue to fuel increasingly demanding customer expectations for better, faster and more transparent service. Likewise, it validates that the companies who respond to those challenges by readily embracing embrace a digital mindset are the ones who reap the benefits of a digital supply chain that is agile, fully automated and self-learning, says George Prest, CEO of MHI.
“The pace with which technological innovations have been adopted within supply chains over the past six years of our survey is truly astounding,” he notes. “We’re well past the early adopter phase; indeed, those companies who were on the bleeding edge are already experiencing real, measurable and decisive competitive advantages within their marketplaces.”
To help companies better understand both their degree of awareness and of their own progress in achieving a Digital Supply Chain, this year’s report offered two new sections: a review of the four stages of digital maturity, and a self-assessment for benchmarking of digital consciousness.
The report again asked more than 1,000 survey respondents to assess the role of 11 digital innovations in their operations:
- 3D Printing
- Artificial Intelligence (AI)
- Cloud Computing and Storage
- Driverless Vehicles and Drones
- Internet of Things (IoT)
- Inventory and Network Optimization
- Predictive Analytics
- Robotics and Automation
- Sensors and Automatic Identification
- Wearable and Mobile Technology
Cloud computing and storage is well-entrenched across 56% of supply chains, with adoption expected to grow to 78% in the next two years, and to 90% over the next five. The numbers are similar for inventory and network optimization, and for predictive analytics.
Faster growth rates for the full spectrum of innovative technologies have likely been hampered by companies’ perennial struggles to hiring qualified workers, with 64% rating it extremely or very challenging and 91% calling it at least somewhat challenging. Further, the ever-changing scope of customer demands—including for lower pricing, faster response times and greater customization—represented three of the top five company challenges.
These key challenges are likely the primary drivers behind continued heavy investment in robotics and automation by both manufacturing and supply chain operations, says Thomas Boykin, Leader of Strategy and Operations for Deloitte Consulting’s Supply Chain and Manufacturing Operations practice.
“Based on our analysis, projected spending in 2019 is up by 95% after a trend of survey respondents reporting a decline in planned investments from 2015 to 2018,” he notes. “That would indicate that companies’ forecasted spend on supply chain innovations is at a critical inflection point.”
Boykin also says this finding suggests that as the technologies themselves are maturing, organizations are increasingly recognizing their potential significance to both addressing challenges and impacting the bottom line—and are therefore becoming more comfortable with investing in them.
“Those impacts address the two major challenges identified by survey respondents,” he says. “Yes, customers are increasingly plugged in and expecting near instantaneous service and a high degree of transparency—and digital solutions can address that by making a supply chain far more nimble.”
More details about the 2019 MHI Annual Industry Report are explored in a recent article in MHI Solutions magazine, which also features reflections on the report from members of industry and academia, including:
- Randy V. Bradley, Assistant Professor of Information Systems and Supply Chain Management, Haslam College of Business, The University of Tennessee
- Annette Danek-Akey, Senior Vice President of Supply Chain, Penguin Random House
- Jim Liefer, CEO of Kindred AI
- Joel Reed, CEO of IAM Robotics
To read the full article, click here.