New report highlights technologies driving next-generation supply chains and how to overcome the top barriers to adoption
Atlanta, GA – MHI announces the release of the fifth in a series of MHI Annual Industry Reports developed in collaboration with Deloitte Consulting on April 11 during MODEX 2018 in Atlanta. The 2018 MHI Annual Industry Report, titled “Overcoming Barriers to NextGen Supply Chain Adoption” provides new insights into trends and technologies that are having a dramatic business impact on supply chains, their security and the people who run them.
Manufacturing and supply chain professionals are facing many challenges but, according to the report, the top two are increasing customer demands on supply chains (73%) and hiring qualified workers (64%).
Eleven technologies are working together to create next-generation supply chains that can meet these challenges because they are digital, on-demand and always-on. Eight out of ten survey respondents believe these supply chains will be the predominant model within just five years.
This year’s report provides updates on the innovative technologies MHI predicted would have the most potential to transform supply chains four years ago when the MHI Annual Industry Report was launched. The 2018 report includes two new technologies (Artificial Intelligence and Blockchain) that are rapidly emerging and also covers the potential of these technologies to disrupt the industry as well as their adoption rates and barriers to adoption. The 11 technologies covered in the report are:
- Robotics and Automation
- Predictive Analytics
- Internet of Things (I0T)
- Artificial Intelligence (AI)
- Driverless Vehicles and Drones
- Wearable and Mobile Technology
- Inventory and Network Optimization
- Sensors and Automatic Identification
- Cloud Computing and Storage
- 3D Printing
“Early adopters are successfully combining next generation (NextGen) supply chain technologies to improve speed and agility and increase efficiency and visibility,” said George Prest, CEO of MHI.
Potential to Disrupt and Create Competitive Advantage
The top technologies respondents say can be a source of either disruption or competitive advantage are:
- Robotics and Automation (65%, up from 61% in 2017)
- Predictive Analytics (62%, up from 57% in 2017)
- The Internet-of-Things (IoT) (59%, up from 55% in 2017)
- Artificial Intelligence (AI) (53%, new category in 2018)
- Driverless Vehicles & Drones (52%, up from 30% in 2015)
Cloud Computing and Storage has the highest current adoption rate at 57%. Adoption is expected to grow to 91% over the next five years. Inventory and Network Optimization, now at a 44% adoption rate, is expected to grow to 90% over the next five years.
Over the same time frame, Predictive Analytics is expected to reach an 82% adoption rate, followed by IoT at 79%, Robotics and Automation at 73%, Blockchain at 54%, Driverless Vehicles and Drones at 50% and AI at 47%.
Top Barriers to Adoption
The top three barriers to adoption of these technologies are:
- Making the business case for NextGen supply chain investments
- Tackling the supply chain skills gap and workforce shortage
- Building trust and security in digital, always-on supply chains
Supply Chain Talent Gap
To implement any of these technologies, firms need access to a skilled and increasingly digital supply chain workforce. This has been a theme in all five annual reports—and the talent gap is growing as the adoption of these technologies increases.
The top critical skills needed to compete in the NextGen supply chain according to the survey are strategic problem solving (49%), analytics/modeling/visualization (43%) and general business acumen and cross-functional knowledge (38%).
“Algorithms, automation, sensors, big data and artificial intelligence are dramatically changing what supply chain talent looks like, how to find it and how to retain it,” added Prest.
Emerging Trend: Blockchain as a Solution to Supply Chain Cybersecurity and Transparency Challenges
When it comes to cybersecurity, the sophistication of hackers and “threat actors” is the biggest risk (44%), followed by the lack of awareness of the threat within the organization (40%) and poor cybersecurity practices among suppliers (37%).
While cybersecurity concerns grow, the demand for transparency at every level of the supply chain is skyrocketing as consumers increasingly expect full information about the origin and history of the products they consume.
Blockchain’s unparalleled ability to enable transparent yet controlled data sharing—in a way that is extremely reliable, efficient, and highly encrypted—provides a powerful and robust platform to tackle some of today’s toughest supply chain challenges, while also providing an unmatched level of cybersecurity. This is where Blockchain can be a huge supply chain differentiator.
This year’s report introduces the topic of Blockchain and examines how it may be the answer to cybersecurity, trust and transparency challenges of supply chains.
The biggest barrier for Blockchain adoption is that very few people understand what it is or how it can realistically be used in their operations. Only 11% of respondents believe they have a working understanding of Blockchain technology and how it might be applicable to supply chains.
Adoption of Blockchain in supply chains currently stands at 5%, but it is projected to jump to 54% over the next five years.
Firms across industries can benefit from using Blockchain in their supply chains. Automotive manufacturers, food producers and pharmaceutical manufacturers, among others, can take advantage of the immutable and transparent nature of Blockchain to track product origin, then quickly and discreetly recall products that may have been produced with a defect. This minimizes brand damage, costs, and customer inconvenience.
The report also provides real-world case studies of NextGen supply chain technologies and recommendations for leaders for developing strategies implement these innovations.
“The time is now to think big, but start small and act fast. You don’t need to invest a lot to start testing these technologies,” said Scott Sopher, Principal and Leader of the Global Supply Chain Practice at Deloitte Consulting LLP.
“While the transition to NextGen supply chains is complex, inaction is not a strategy. Ignoring these important developments may leave your supply chain at a severe disadvantage in the future,” added Prest.
The findings in this report are based on survey responses from 1,100 manufacturing and supply chain industry leaders representing a wide range of industries. Half of respondents hold executive-level positions such as CEO, Vice President, General Manager, or Department Head. Participating companies range in size from small to large, with 47% reporting annual sales in excess of $100 million, and 10% reporting annual sales of $10 billion or more.
The report was released at a keynote panel during MODEX 2018 on April 11 in Atlanta’s Georgia World Congress Center and can be downloaded at mhi.org/publications/report.
MHI is an international trade association that has represented the material handling, logistics and supply chain industry since 1945. MHI members include material handling and logistics equipment and systems manufacturers, integrators, consultants, publishers and third-party logistics providers. MHI offers education, networking and solution sourcing for their members, their customers and the industry as a whole through programming and events. The association sponsors the ProMat and MODEX expos to showcase the products and services of its member companies and to educate manufacturing and supply chain professionals on the productivity solutions provided through material handling and logistics. MODEX 2018 is being held April 9-12 in Atlanta’s Georgia World Congress Center.
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