Trends & Predictions 2017: Supply Chain

“It has become apparent that in the decade since scholars such as Cranfield’s Martin Christopher first began talking about the concept of supply chains, rather than companies, competing against one another, the idea has become a reality,” writes Kevin O’Marah (@komarah), Chief Content Officer at SCM World. “Supply chains are now undeniably at the heart of businesses, and the skills required to manage them are increasingly the same as those required to run the company.”[1] If O’Marah is correct (and I think he is), business leaders need to know how emerging trends and technologies could affect their supply chains if they are going to be successful. As Alexa Cheater (@Alexa_Cheater) observes, “Chasing every shiny object could lead your supply chain down a path of instability. Dismissing emerging technology as just hype could leave you stranded decades behind your competitors.”[2] Below are some trends and predictions about how the supply chain could transform in 2017 and beyond.

Blockchain and the Supply Chain

“Blockchain technology is established as the next revolution in transaction recording,” Gartner proclaims. “A blockchain ledger provides an immutable, shared view of all transactions between engaging parties. Parties can therefore immediately act on a committed blockchain record, secure in the knowledge that it cannot be changed. Any kind of value exchange can happen in minutes, not days. Blockchain applications can free up cash, reduce transaction costs, and accelerate business processes. While blockchain development is still immature, it is attracting product and capital investment.”[3] Although most of the attention given to blockchain technology is found in the financial services industry, analysts at Business Insider Intelligence note, “A number of companies are rolling out new technology solutions that pair blockchain with connected sensors to provide history, visibility, and security into their supply chains.”[4] Walmart recently announced it will use blockchain technology to track pork imports from China.

Visibility and Collaboration

supply-chain-01Richard Howells (@howellsrichard), Vice President of Solution Management for Supply Chain at SAP, predicts, “Supply chains will deploy ‘digital operations centers’ that deliver real-time information based on function and individual role. The centers will combine structured data from business systems and IoT with unstructured data such as weather, traffic, and customer sentiment. The goal is to not only measure what’s happening in the supply chain, but also to predict it.”[5] The purpose of a digital operations center (or control tower) is to achieve as much visibility into the supply chain as possible. Visibility requires data and, to obtain all of the necessary data, companies need to collaborate with other supply chain stakeholders. Lora Cecere (@lcecere), founder and CEO of Supply Chain Insights, laments, “Traditional procurement functionality in SRM focused on improving transactional efficiency. There has been little progress in the management of direct materials and the collaboration with suppliers on innovation. This is especially true in discrete industries.”[6] She believes, however, this may be changing. “The evolution of supplier collaboration applications in solutions like Directworks, Pools4Tools, and SupplyOn,” she writes, “enable the sharing of design data and collaboration on design specifications.”

Digital Supply Chain and Cognitive Computing

Another trend that excites Cecere is the maturation of cognitive computing solutions. She explains, “My recommendation is for companies to stabilize their ERP spending and divert the funds into cognitive learning and artificial intelligence pilots. I think these solutions will fill in the current gaps in master data management and will be the basis of the next generation of supply chain planning. The future is autonomous planning. Today there are three primary providers: Enterra Solutions, IBM, and RuleX, but look for more competitors in this space in the near future.” Most analysts agree that in order to survive companies must transform into digital enterprises. Autonomous planning is one aspect of digitization. Cheater notes, “Cisco predicts by 2020 that there could be as many as 50 billion devices, with connected pieces of technology outnumbering the human population. Sentient supply chains are one possible future reality, as a result.” Other trends of digital transformation, along with the adoption of cognitive computing, include additive manufacturing (aka 3D printing), Uberization of industries, and the continued adoption of cloud, Internet of Things (IoT), and solution as a service technologies. O’Marah observes, “In isolation, each of these offers different benefits — cost advantages with cloud, precision in operations with IoT, agility with digital supply chain. In combination, however, they could end up obsoleting much of the boxes-and-materials supply chain everybody else is still stuck with.”[7]

The Internet of Things and Other Emerging Technologies

Part of the cognitive computing package is the capability to perform advanced analytics. Howells notes, “With the emergence of IoT, Big Data is just getting started. That will drive a critical need for predictive analytics in 2017.” Cognitive computing systems can collect, integrate, and analyze both structured and unstructured data. This important because much of today’s data is unstructured. Cecere explains, “Social data and unstructured data abound. It includes warranty, quality, and return data. All is valuable for the supply chain, but is not used today. The use of unstructured text mining enables sensing capabilities. Today the supply chain cannot sense. It only responds. The building of listening posts is a great opportunity for most supply chain leaders.” She agrees with most other analysts that maturation of the IoT will make advanced analytics even more important. “Sensors surround us,” she writes. “One of the greatest opportunities to use sensor data is in the building of digital manufacturing strategies. The goal is to use shop-floor data to redefine maintenance. … In addition, the use of telematics, i.e., GPS and RFID, in logistics enables the building of accurate Estimated Time for Arrival (ETA) and the continued automation of logistics. Another use case is RFID sensor capture in cold chains and the calculation of temperature exposure and the recalculation of shelf life.” All of these emerging technologies will help make supply chains more efficient and effective. And because cognitive computing systems can handle much of the workload autonomously, they can help simplify the management of complex supply chains. Howells, concludes, “[The IoT will generate] major disruption, because there will be an enormous Big Data explosion. If you’re not ready, that will be a disaster, because too much data can cause more confusion than too little data. But if you have the means to identify, gather, harmonize, analyze, and deliver that data in the right context, you stand to gain significant new speed and insights.”

Coping with the Speed of Business and Minimizing Risk

Dale Benton reports, “According to a recent study, the top issues concerning global supply chains next year will be shorter lead times, time to deliver and risk minimisation.”[8] It’s not just shorter lead times companies should be concerned about. The speed at which businesses operate seems to accelerate each year. To keep up, companies must upgrade their processes to ensure they can analyze, decide, and act as fast or faster than their competitors. Cognitive solutions can help. Being informed in real- or near-real-time also helps corporate risk management processes. Cecere notes, “The world is less certain than a decade ago. The move from regional to global supply chains increased risks. Geopolitical shifts, economic uncertainty, and demand/supply volatility are rising. In addition, to spur growth, companies are quick to add products to the item master, but slow to rationalize the portfolio. The rising complexity of items sold decreases the organization’s ability to forecast, and the longer lead times across multiple tiers of sourcing and supply increases the Bullwhip Effect’s impact (distortion of the demand signal across multiple tiers of the value network). This increases risk.”[9] Risk, business speed, and complexity are all predicted to increase next year. Companies need a cognitive solution that can cope with all three.

Footnotes
[1] Kevin O’Marah, “How the supply chain has become central to business,” Supply Chain Digital, 19 September 2016.
[2] Alexa Cheater, “Future of End-to-End Supply Chain Management: 3 Megatrends to Watch For,” 21st Century Supply Chain Blog, 27 October 2016.
[3] “Top 10 Predictions for IT in 2017 and Beyond,” Information Management, October 2016.
[4] BI Intelligence, “Blockchain and IoT devices could revolutionize the supply chain,” Business Insider, 28 November 2016.
[5] Richard Howells, “7 Supply Chain Predictions for 2017,” The Huffington Post, 15 November 2016.
[6] Lora Cecere, “Five Technology Trends That Excite Me,” Supply Chain Shaman, 28 November 2016.
[7] Kevin O’Marah, “Digitization In Supply Chain: Five Key Trends,” Forbes, 17 November 2016.
[8] Dale Benton, “Speed and risk minimisation look set to dominate 2017 supply chain agendas,” Supply Chain Digital, 30 November 2016.
[9] Lora Cecere, “Supply Chain: The True Game of Risk,” Supply Chain Shaman, 11 August 2015.

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