The Supply Chain of the Future: The Role of Digitization in Supply Chain Logistics

As technology becomes more and more advanced, a staple of developed nations, people have come to expect instant gratification. When you place an order online, you know that if you pay enough money for it, it can be on your doorstep the next morning. According to an MHI Annual Industry Report, 80% of survey respondents, which included 1,100 small to large-sized manufacturing and supply chain industry leaders, believe digital supply chains will be the predominant model in the next five years, while 16% believe that they already are. Another survey from SCM World Industries illustrates that there is a demand for innovative technologies in the supply chain industry, with 81% of respondents citing big data analytics as important and disruptive, and 67% and 64% for digital supply chain and the Internet of Things, respectively.

 

While the modern supply chain is not yet entirely digitized, the truth is that the industry has already embraced many technological innovations that have permanently altered the way supply chains operate.

 

A supply chain involves all of the resources, innovations, people, organizations, and technology involved in the transfer of a product from creation to delivery. It’s a complex, multi-step process in which multiple variables must come together. Therefore, it only makes sense that technology would be utilized to streamline the process. The 2017 MHI report cites nine innovations it believes have the potential to disrupt the supply chain industry this year, for better or worse. These include:

 

  • Inventory and network optimization
  • 3D printing
  • Sensors and automatic identification
  • Predictive analysis
  • Cloud computing and storage
  • Robotics and automation
  • Wearable and mobile technology
  • Autonomous vehicles and drones
  • The Internet of Things (IoT)

 

These technologies have the potential to both disrupt and create competitive advantages. Those who adopt the new technologies will have a competitive advantage over those who don’t, who will be at a serious disadvantage. A majority of survey respondents, 92%, believe that at least one of these nine technologies could be a source of disruption or competitive advantage in the next 10 years.

 

According to Kodiak Community, “There is a gap in the education for the utilization of supply chain technologies and how they can simplify the extremities of the modern supply chain.” The primary challenges to adopting these new technologies will be a talent gap in the supply chain workforce, as well as pressure to meet customer demands for quicker response times and lower delivery costs.

 

In order to implement any of these new technologies, supply chain industries will need access to a skilled workforce trained in the technologies. As recent reports from MHI show, the talent gap widens as more technologies are introduced. Technology has the power to make the supply chain more efficient, secure, and advanced; yet even with automation and artificial intelligence playing a role, skilled human workers are still needed to operate the technology; we have (thankfully) not yet reached a point where robots transcend the need for human workers. Hiring and retaining a skilled workforce therefore remains the largest obstacle supply chain companies face, with 63% of survey participants reporting a talent gap as a problem, and 50% citing the need to train their workforce in new technologies as a top priority.

 

As technologies become more advanced, the aforementioned instant gratification comes into play as well, with Scott Soper, principal at Deloitte Consulting, explaining, “As digital capability fuels customer expectations to unprecedented heights, the next generation supply chain must be proactive and predictive, with all of its links interconnected and synchronized to the same drum beat of consumer demand.”

 

The supply chain of the future is at our fingertips. “Digitization of the supply chain has the potential to dramatically lower costs, increase product availability, and even create new markets unknown or unavailable prior to the availability of key technologies,” says Arnab Banerjee of Infosys Ltd. It is simply a matter of maximizing the currently available technologies to their full potential, which can only be accomplished through a skilled workforce and meeting consumer demands.