Technology is Transforming the Supply Chain

Stephen DeAngelis

May 29, 2019

Technology is constantly changing and efforts to keep up with those changes can be both head-spinning and costly. Nevertheless, there are some technologies that must be adopted in today’s business environment. One of the most important areas for technology investment is the supply chain. A couple of years ago, McKinsey & Company analysts noted, “The digitization of supply chains will have the biggest impact on [a company’s] revenue, yet 49% of companies are investing in digitizing their distribution channels or marketing instead. Only 2% of companies are applying digital strategies to the supply chain.”[1] Recently, Gartner identified eight must-have supply chain technologies. According to Christian Titze, research vice president at Gartner, “These technologies are those that supply chain leaders simply cannot ignore. Within the next five years, if half of large global companies are using some of these technologies in their supply chain operations, it’s safe to say that the technologies will disrupt people, business objectives and IT systems.”[2] Those technologies include: Artificial intelligence (AI); advanced analytics; Internet of Things (IoT); robotic process automation (RPA); autonomous machines; digital twin technology; immersive technologies; and blockchain.

Must-have supply chain technologies

Saying something is a “must-have” technology may sound a bit hyperbolic; and, perhaps, some hype is associated with the technologies identified by Gartner. Nevertheless, most analysts agree supply chains must transform in order to keep pace with the changing business environment. Scott Fawcett, Divisional Managing Director at Essentra Components, observes, “In today’s world, the supply chain is a hugely complex, multi-faceted ecosystem. As many of us know, it’s all too easy for one weak link to break this chain and completely shut down the entire manufacturing process. In a world where digitization and automation are completely transforming traditional processes from the very core, the supply chain can hugely benefit from these developments which will help businesses futureproof themselves in this new world.”[3] With the future clearly in mind, let’s take a closer look at the eight must-have technologies identified by Gartner.

Artificial intelligence. “AI technology in supply chain seeks to augment human performance. Through self-learning and natural language, AI capabilities can help automate various supply chain processes such as demand forecasting, production planning or predictive maintenance. ‘AI supports the shift to broader supply chain automation that many organizations are seeking,’ said Mr. Titze. ‘For example, AI can enhance risk mitigation by analyzing large sets of data, continuously identifying evolving patterns, and predicting disruptive events along with potential resolutions.'” Connectivity, data, and analytics are essential for success (even survival) in today’s business environment. Cognitive technologies, like the Enterra Supply Chain Intelligence System™ can help provide end-to-end supply chain visibility and analytics providing actionable insights.

Advanced analytics. Although Gartner lists advanced analytics as a technology separate from AI, the truth of the matter is most AI systems leverage embedded, advanced analytics capabilities. According to Gartner, “Advanced analytics span predictive analytics — those that identify data patterns and anticipate future scenarios — as well as prescriptive analytics — a set of capabilities that finds a course of action to meet a predefined objective. The increased availability of Internet of Things data and extended external data sources such as weather or traffic conditions allow organizations to anticipate future scenarios and make better recommendations in areas such as supply chain planning, sourcing and transportation. ‘Advanced analytics are not new, but their impact on today’s supply chains are significant,’ said Mr. Titze. ‘They will help organizations become more proactive and actionable in managing their supply chains, both in taking advantage of future opportunities and avoiding potential future disruptions.'”

Internet of Things. “The IoT,” explains Gartner, “is the network of physical objects that contain embedded technology to interact with their internal states or the external environment. ‘We are seeing more supply chain practitioners exploring the potential of IoT,’ said Mr. Titze. ‘Areas that IoT might have a profound impact on are enhanced logistics management, improved customer service and improved supply availability.'” The IoT is not a single network; rather, it is a network of networks (i.e., separate ecosystems each consisting of sensors, connectivity, and analytic platforms). Security and lack of standards are currently the IoT’s greatest challenges.

Robotic process automation. Despite its name, RPA involves software “bots” rather than physical robots. Many analysts view RPA as a gateway technology to AI. Gartner explains, “RPA tools operate by mapping a process in the tool language for the software ‘robot’ to follow. They cut costs and eliminate keying errors. ‘We are seeing a significant reduction in process lead times RPA technology is used to automate the creation of purchase and sales orders or shipments, for instance,’ said Mr. Titze. ‘RPA technology reduces human intervention and improves consistency across manual data sources within manufacturing.'” I tell clients, if they want to improve processes and not simply automate them, they should be thinking in terms of Cognitive Process Automation™ (CPA) rather than Robotic Process Automation. CPA is powered by cognitive computing platforms, like the Enterra Enterprise Cognitive System™ (AILA®) — a system that can Sense, Think, Act, and Learn®.

Autonomous machines. Because of their potential to eliminate jobs, autonomous machines are getting a lot of press. Gartner explains, “Autonomous things use AI to automate functions previously performed by humans, such as autonomous vehicles and drones. They exploit AI to deliver advanced behaviors that interact more naturally with their surroundings and with people. ‘The rapid explosion in the number of connected, intelligent things has given this trend a huge push,’ said Mr. Titze. ‘The once distant thought of reducing time for inventory checks by using drones’ cameras to take inventory images, for instance, is here.'” Most analysts believe smart machines will take over specific tasks leaving humans to concentrate on higher level activities. Many analysts predict human/machine collaboration will characterize future workplaces.

Digital twin technology. “A digital supply chain twin,” Gartner explains, “is a digital representation of the relationships between all physical entities of end-to-end supply chain processes — products, customers, markets, distribution centers/warehouses, plants, finance, attributes and weather. They are linked to their real-world counterparts and are used to understand the state of the thing or system in order to optimize operations and respond efficiently to changes. ‘Digital supply chain twins are inevitable as the digital world and physical world continue to merge,’ said Mr. Titze.” Digital twin technology allows companies to conduct rapid what-if exercises so they better understand how decisions could affect operations without actually making physical changes to operational processes.

Immersive technologies. Immersive technologies were once confined to the gaming and entertainment fields — no more. Gartner explains, “Immersive experiences such as augmented reality (AR), virtual reality (VR) and conversational systems are changing the way people interact with the digital world. ‘In supply chain, organizations might use AR along with quick response (QR) codes and mobile technology to speed up equipment changeovers in factories,’ said Mr. Titze. ‘Immersive user experiences will enable digital business opportunities that have not yet been fully realized within global supply chains.'”

Blockchain. Blockchain technology is most-often linked to cryptocurrencies like Bitcoin. Recently, however, people have come to realize it has much broader application. Gartner explains, “Although supply-chain-related blockchain initiatives are nascent, blockchain has potential to fulfill long-standing challenges presented across complex global supply chains. Current capabilities offered by blockchain solutions for supply chain include traceability, automation, and security. ‘Organizations might use blockchain to track global shipments with tamper-evident labels, allowing a reduction in the time needed to send paperwork back and forth with port authorities and improved counterfeit identification,’ said Mr. Titze.”

Concluding thoughts

All of the above technologies are emerging in the digital age. Justine Brown insists, “Business leaders that think digital transformation is simply a trend or a passing fad are simply wrong. To remain competitive in the market, going digital is becoming mandatory.”[4] Fawcett adds, “The main aim of the digital supply chain is to open up the network and provide visibility for everyone involved. [Companies] wanting to compete on a global scale must begin implementing a digitized supply chain network now. In doing so, businesses can respond in real time, ultimately improving the experience both for the [companies] and the customers. Supply chains are extremely complex and multi-faceted so this digitization will be no easy feat. However, [companies] must be reassured by the fact that this long term investment will pay dividends to the company for many years to come.”

Footnotes
[1] Justine Brown, “Want digital transformation? Make sure you’re investing in the right places, McKinsey says,” CIO Dive, 10 February 2017.
[2] Katie Costello, “Gartner Identifies the Top 8 Supply Chain Technology Trends in 2019,” Tucson.com, 23 April 2019.
[3] Scott Fawcett, “Streamlining the Supply Chain with Industry 4.0,” Automation.com, 11 March 2019.
[4] Brown, op. cit.