Investment in digital supply chains is set to increase dramatically in 2019, a new survey suggests – but the biggest challenge remains in finding enough workers with the necessary skills to implement them.
The research by MHI, an international trade association that represents the material handling, logistics and supply chain industry, shows eight out of ten survey respondents believe digital supply chains will be the predominant model within just five years.
The survey results also found that investment in supply chain innovation is at a critical inflection point, with a trend of declining investment from 2015 to 2018 being more than countered by a 95% increase in projected spending for 2019.
57% of respondents are planning new technology investments totaling more than $1m over the next two years (up 10% over last year’s survey); 34% plan to spend more than $5m; and 22% plan to spend more than $10m.
Carried out in collaboration with Deloitte Consulting, the 2019 MHI Annual Industry Report on ‘Elevating Supply Chain Digital Consciousness’ says that while manufacturing and supply chain professionals are facing many challenges, the top one continues to be hiring qualified workers (65%).
Among the innovative technologies with the most potential to transform supply chains are: blockchain, robotics and automation, predictive analytics, Internet of Things (IoT), artificial Intelligence, driverless vehicles and drones, wearable and mobile technology, inventory and network optimisation, sensors and automatic identification, cloud computing and storage, and 3D printing.
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By GlobalDataThese eleven technologies work together to create next-generation supply chains that can meet these challenges because they are digital, on-demand and always-on.
“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 risk of inaction is only growing. Leading manufacturing and supply chain executives agree that technology is the key to future success.”
Potential to disrupt and create competitive advantage
The top technologies identified by respondents as a source of either disruption or competitive advantage are: robotics and automation (64%), predictive analytics (59%), artificial Intelligence (55%), the Internet-of-Things (52%), driverless vehicles & drones (51%).
Cloud computing and storage has the highest current adoption rate (56%). Adoption is expected to grow to 79% over the next two years, and to 91% over the next five years.
Over the next five years predictive analytics is expected to reach an 87% adoption rate, followed by IoT at 80%, robotics and automation at 72%, artificial intelligence at 55% and driverless vehicles and drones at 51%.
However, the top three barriers to adoption of these technologies are: tackling the supply chain skills gap and workforce shortage (65%); customer demands for lower prices (56%); and customer demands for faster response times (54%).
In particular, the supply chain talent gap is growing as the adoption of these technologies rises.
Their implementation requires a highly-skilled and increasingly digital supply chain workforce, with the top critical skills needed to compete in the next-generation supply chain according to the survey being: analytics/modeling/visualisation (40%), strategic problem solving (37%), and general business acumen and cross-functional knowledge (31%).
When it comes to digital adoption the report defines a pyramid that has four technology stages, starting with the collection of data through digital connectivity, and then moving up the pyramid to generate increasing supply chain value and insights from that base data through automation, advanced analytics, and ultimately artificial intelligence.
