The Supply Chain of the Future
Jan 16, 2019
Supply chains are modernising at a rapid rate as organisations look to capture the opportunity and potential offered by new technology and digitalisation.
Aligned to Industry 4.0, Supply Chain 4.0, combines new tools and solutions including; Internet of Things (IoT), advanced robotics and automation in the supply chain, cutting edge technology such as blockchain, advanced analytics and the management of ‘big data’. According to McKinsey Group, by connecting the supply chain with sensors and various touchpoints to input data, organisations are able to “create networks everywhere, automate anything, and analyse everything to significantly improve performance and customer satisfaction”.
In preparation for T|A|C Events second Digital Supply Chain conference, our pre-event research revealed what supply chain and digital transformation professionals from various sectors considered to be the biggest trends and challenges in the digital supply chain space.
We were keen to get a stronger understanding of the latest subjects and issues within the supply chain field. The results in this report display what respondents consider to be the most important issues when looking to digitise a supply chain, as well as highlighting some of the most common challenges preventing a successful implementation project.
We would like to take the opportunity to say thank you to all of those who participated and supported our research!
Our research was conducted by phone calls to various organisations and an emailed survey. The findings report targeted operators and solution providers in the digital supply chain ecosystem over the course of a 6 week period between October and November, 2018.
For more information on the 2019 event, explore the Digital Supply Chain Conference website.
Key Trends in Building a Digital Supply Chain
Obstacles to a Digital Transformation Project
When asking industry professionals what they considered to be the most important topic, the results showed massive importance placed on tackling company data and data management.
Digital Supply Chain Trends … Data is the Key!
As Figure 1 shows, 46% of our respondents raised data and data management as one of the biggest issues when considering digital supply chain transformation. As will be outlined later in the report, this result mirrors our 2017 research, placing heavy importance on data as it forms the foundation for any robust digital supply chain.
Breaking down the feedback on data further, data quality and human error were referred to as a very challenging problem. Data sets built on shaky ground have had detrimental effects when later required to fully establish new technology such as Artificial Intelligence (AI) or Blockchain. Before discussions around new technologies and strategy can take place (which will be covered shortly), new projects must ensure that data is clean and ready to handle any new digital solution.
Aside from quickening response times and actions, enhancing visibility across the supply chain, improving efficiency and pin-pointing problems in the supply chain, a successful digital network results in increased data-based decision making within the company. Acting on better and more accurate data, management and personnel are able to ensure that the most appropriate decisions and actions are being taken – something pointed to in our research. Adapting traditional supply chain structures and strategy to use data more impactfully within an organisation is one of the biggest challenges for business moving forward.
A note was also placed from our respondents on the need to include legacy data. As businesses try to build more intelligent/robotic processes within their supply chain, legacy data forms a very important background for equipment and software to begin building towards a self-taught model.
Embedding New Solutions and Technology
Highlighted in Figure 1. was the impact of the technology and software solutions associated with digital supply chains. With so many solutions and tools on the market, filtering through the technological attributes of digital enablers to find the most appropriate and applicable system for your operation is a vital part of the digital transformation process. This ‘Solution Sift’ can be both time consuming and costly, so technical insight and knowledge coupled with a well-balanced supply chain project planning team, bringing knowledge from various fields, will result in a smooth and less disruptive transition. See some of the technological examples making a difference below:
- Avoiding transit concerns with RFID chip and track and trace technology
- The potential of 3D Printing
- The adoption of autonomous vehicles technology
- Drones; involved in asset management, supply chain support, warehouse operations and transportation of product
- Business Process Outsourcing (BPO)
- Making use of social media to communicate with the customer
Artificial Intelligence (AI) and Automation
Research respondents also pointed to Artificial Intelligence (AI) and automation within the supply chain. 35% recognised this to be one of the next major steps in digitising a supply chain. Automating formerly manual processes and transactions leads to much greater efficiency, a redistribution of personnel within the supply chain to more specialised roles and an overall reduction in time delays. An important note; almost all respondents claimed that AI and Robotics Process Automation (RPA) – 86% – will not lead to job culling, but rather a redistribution of jobs and roles across the business. Comments raised by respondents included:
- Results in better forecasting
- More proactive risk management practice
- Easy usability
- Building an intelligent supply chain
- Enhanced agility, optimisation and even decision making processes
- The variety of ways machine learning can be applied to automate the supply chain
Whilst awareness of blockchain solutions is high, adoption - particularly within SME market - remains low. 30% of our respondents referred to blockchain as an “emerging trend” and a subject area that they require more insight on before making any decisions about implementation. Understanding the business benefit and how to incorporate blockchain into a supply chain operation are the biggest factors. More solid case studies from businesses adopting blockchain are vital before it has more of an impact on digital supply chains. Benefits of blockchain include:
- Hands-free processing and automated transactions
- Tracking quality control of the product throughout the supply chain
- Ensuring traceability and accountability
- Better visibility of data and information for all parties
- Enhanced relationship between customer and supplier
- Removal of 3rd parties to conduct transactions and handle payments
Supply Chain 4.0
Supply Chain 4.0 and the digital revolution enables business to address the needs of modern customer demand. A connected loop is required all the way through and digital technology promises to offer solutions that will allow supply chains to respond to demand faster, more efficient, more agile, and more accurate. 29% of our research respondents highlighted this as a major factor in their digital supply chain thinking. Establishing Supply Chain 4.0 principles is key developing a new and improved way to structure regional, national and global supply chains. Points raised during the research included:
- How to incorporate digital technology across the supply chain
- Building a connected, smart, and highly efficient supply chain ecosystem
- Connecting supply chain and taking advantage of the Industrial IoT (IIoT)
- Making data-based decisions and using analytics in planning and execution
- Smart logistics and transportation – moving product to market faster
- How technology increases the operational effectiveness of supply chains
The Digital Mindset and Culture
As well as trends and topics, we were keen to know what are the biggest challenges and obstacles preventing supply chain digitisation and the increased implementation of digital technology. By quite some distance, our respondents, drawing on career experiences and expertise, highlighted the biggest challenge as ‘people’. This broad response can be sub-divided into “mindset, culture, talent & skills”.
The ‘digital skills gap’ represents a major challenge for supply chain operations as the required talent is consigned to a small pool of qualified professionals. This is a major worry for firms who are looking for professionals to have an instant impact on digital transformation projects. Digitisation will occur more effectively when people are skilled with the right business and digital insight to fully optimise supply chains with new solutions. Over 60% of respondents highlighted this as the primary challenge.
The integration and implementation phase of new systems also represented a major challenge. Over 40% of respondents pointed to issues experienced before, during and after implementation projects. Selecting the most suitable solutions must be followed up with effective integration into the business operation with minimal disruption. To guarantee long-lasting success, there must be company-wide buy-in from shop floor to boardroom.
Survey Results and Further Findings
The survey asked respondents to identify the department they affiliated and the results are displayed in Figure 4.
When it comes to a digital transformation project, traditional supply chain roles (logistics, procurement, buyer etc.) are now joined by those with a digital and IT focus.
In fact, over a third of respondents (34%) identified as working in the IT department, ahead of those who worked in the supply chain department (31%). A clear distribution of supply chain roles and responsibilities has occurred as digitalisation takes root, beyond the supply chain department.
What are the common job titles and functions? Digital supply chain teams regularly include professionals from outside traditional supply chain department roles and are now made up of roles including;
- IT architecture
- Digital Transformation
- Supply Chain
- Project Management
- Solution Experts
- Logistics and Procurement
- Data & Analytics
This is reflective of the impact that digitalisation is having on the workplace. There is an increasing requirement for technological and digital insight to be embedded into a supply chain operation. De-siloed supply chain operations involve input from as many stakeholders as possible to prevent project failure. Establishing a strong business case that blends the transformation with both bases supply chain principles and new solution and technology will lead to a good ROI.
The research clearly indicates the complexity of a fully established digital supply chain. But when properly incorporated into the business, the opportunities afforded from digital transformation are massive. In addition, it appears that in acting as the ‘central thread’ running throughout an organisation’s operation, supply chains are increasingly at the heart of digital change.
Once again, our research pointed to the foundation of any successful digitisation project - data. Data forms the base on which to build a robust and modern digital supply chain before discussions around further technology can take place. But what else defines the digital supply chain? A combination of real-time data fed through the business, connected stakeholders, improved analytics, rapid and agile action, increasingly automated processes and data-based decision making; all this and more help to maintain your company’s competitive edge.
However challenges loom, as business struggle to find the people skilled in the right areas, backed up with the right experiences. It is not only the selection of the best solutions that suffers from this, but also the maintenance and proper utilisation of new digital technology within your business.
We hope to see you in Amsterdam!
We will be looking to discuss all this and more at the 2019 Digital Supply Chain conference in Amsterdam.
If you would like to be part of the agenda, partner with the event or join us to hear and discuss the content, please contact a member of the team via email at firstname.lastname@example.org or phone on (+44) 121 200 3810.