Trends and Predictions 2020: Supply Chain

Stephen DeAngelis

January 07, 2020

Greeting the new year is like walking into a dimly lit room from the bright sunlight. We need time to adjust to our new surroundings even if those surroundings are familiar. The mixture of anticipation and anxiety with which the new year is greeted is invigorating because most people appreciate new beginnings. The new year is also the season of prognostication; with brave souls venturing guesses about what will take place during the following twelve months. Predictions are normally based on how specific areas are going to respond to current trends. One area in which there is no shortage predictions is the supply chain. Simon Ellis, Vice President of IDC Manufacturing Insights, observes, “The supply chain continues to undergo almost unparalleled levels of change. The older measures — productivity, quality and service — still apply, but we now see digital transformation poised to change everything. The supply chain has increasingly become a critical function for companies to realize their business aspirations and is a competitive weapon in the modern, digital economy.”[1]

Supply chain trends

As I noted above, predictions are normally based on how specific areas are expected to respond to current trends. IBM analysts have identified five trends they believe will shape the supply chain of the future. Each trend emerges from a different Digital Age technology. The analysts note, “Digital disruption has become a way of life. Everything from customer expectations to the competitive landscape is changing.”[1] The IBM technology trends are:

1. Artificial intelligence (AI): Supply chains will be intelligent and self-correcting. “Intelligent, self-correcting supply chains use artificial intelligence so you can make better decisions and take more informed actions faster. More so than ever, companies are turning to AI-powered analytics to perceive patterns of demand for products and services, across geographic and socioeconomic segments.”

2. Internet of Things (IoT): Supply chains will understand the state of things and take action. “Spurred in part by the Internet of Things, supply chains are increasingly integrating data from sensors, GPS and weather patterns to see events and witness scenarios as they occur. Extracting more intelligence from assets like products, machines, facilities and processes, the next step in this evolution is to recommend or take action.”

3. Blockchain: Multi-enterprise network hubs will be enabled with blockchain, giving power to companies of all sizes. “Blockchain democratizes the supply chain, enabling a secure, transparent network with all participants. Blockchain enables companies to gain transparency across multi-enterprise networks. Supply chains will be able to procure, source, manufacture and handle logistics across a broad array of players including small to medium businesses. Creating a foundation of trust, blockchain documents the history of exchanges of information.”

4. Intelligent order management: Supply chains will orchestrate the perfect order and master inventory visibility. “The perfect order … is the holy grail of distributed order management in the multi-system world most companies live in today. … Supply chains of the future will enable an intelligent order management system — working on your behalf, across multiple partners — to orchestrate demands in real time from source to delivery to returns.”

5. Quantum: Supply chains will have new possibilities with Quantum. “Quantum computing can crunch through numerous variables and factors, from more sources, across more scenarios, faster and with greater accuracy than ever. This fifth trend offers an opportunity to co-create the future of supply chain together with a new kind of computing.”

As those trends highlight, sometimes it’s difficult to distinguish between a trend and a prediction.

Supply chain predictions

Ellis and his IDC colleagues are among the brave souls willing to make predictions about the supply chain. They offer up ten such predictions.

Prediction 1. Artificial Intelligence: “By the end of 2021, half of all manufacturing supply chains will have invested in supply chain resiliency and artificial intelligence, resulting in productivity improvements of 15%.” David Barton, ToolsGroup General Manager for North America, predicts, “Algorithmic supply chain planning will go mainstream.”[3] Madhav Durbha, Group Vice President of Industry Strategy at LLamasoft, predicts AI and Machine Learning will move beyond its current “hype cycle” to offer more tangible use cases that deliver real business value.”[4] Use cases include predicting volatile order patterns, market sensing, and reducing chargebacks.

Prediction 2. Process Automation: “By 2022, firms will dedicate 35% of their logistics business process outsourcing services budget to process automation, focusing on order, inventory and shipment tracking.” Barton predicts planning processes will also be automated. He explains, “The planner’s role is being enhanced by AI and machine learning, which automates certain tasks and self-learns over time for better results.”

Prediction 3. Automated Analysis: “By the end of 2020, half of all large manufacturers will have automated supplier and spend data analysis, resulting in a 15% procurement productivity gain.”

Prediction 4. Micro-applications: “By 2023, supply chain micro-application extensions will account for one-third of all new technology investments in manufacturing and retail.”

Prediction 5. Warehouse Automation: “By 2023, 65% of warehousing activities will use robots and situational data analytics to enable storage optimization, increasing capacity by over 20% and cutting work order processing time in half.”

Prediction 6. Blockchain: “To lessen stress on the service supply chain, by 2023, 25% of OEMs will leverage blockchain to source spare parts, improving accuracy of usable parts by 60% and lowering expedite costs by 45%.” Barton adds, “Though it will gain some traction in 2020, blockchain adoption won’t happen overnight. Similarly to broader digital transformation initiatives, many businesses lack solid use cases and internal buy-in/expertise to pilot blockchain projects.”

Prediction 7. Robotic Process Automation: “By 2023, 60% of G2000 manufacturers will invest in AI-infused robotic process automation to automate tasks through increased productivity and address supply chain skills deficit.”

Prediction 8. Personalization: “By 2024, 75% of all consumer-facing companies will have developed the ability to customize at scale within their supply chains, resulting in, on average, a 2–3 percentage point increase in market share.”

Prediction 9. Warehousing: “By 2022, the number of companies offering flexible warehousing options will have increased by 50%, which can help address seasonal demand challenges and lower fixed overhead costs by over 20%.”

Prediction 10. Transparency: “By 2024, for transparency and efficiency, 40% of customs agencies will join private blockchain and API-powered trade platform ecosystems to achieve a 50% increase in cross-border compliance.”

In addition to the IDC predictions, others have proffered a few predictions:

Prediction 11. Digital twins will help mitigate supply chain risk: Barton writes, “The growing momentum around systems-based thinking in supply chain planning has given rise to the ‘digital twin’ — the ultimate ‘what-if’ scenario planner. Digital twins help companies mitigate risk by accurately testing the resilience of complex, multi-echelon, global supply chains.”

Prediction 12. Supply chain goes from ‘boring to the boardroom’: Anders Remneback, Product Manager at Optilon AB, predicts, “We are finally seeing supply chain getting the attention it deserves from board-level stakeholders, which is a very welcome development.”[5]

Prediction 13. Increased cyber attacks. Trend Micro Incorporated analysts predict, “Attackers will increasingly go after corporate data stored in the cloud via code injection attacks such as deserialization bugs, cross-site scripting and SQL injection. They will either target cloud providers directly or compromise third-party libraries to do this.”[6]

Concluding thoughts

What’s clear is that technology is driving most supply chain predictions. Ellis concludes, “Invest in technologies that provide efficiency/effectiveness today yet enable future capabilities that can enhance resiliency or identify new opportunities. Not ‘technology for technology’s sake’ but solving business problems or seizing on opportunities. Are you a technology company? If the answer, as it often is, is ‘no,’ then work with a technology partner and focus your efforts on how technology helps solve existing business problems or in anticipation of future problems.”

Footnotes
[1] Simon Ellis, “Top 10 Predictions for Worldwide Supply Chains in 2020,” Material Handling & Logistics,
[2] Staff, “Five trends that will shape the supply chain of the future,” IBM, November 2019.
[3] David Barton, “Supply Chain Predictions 2020: Uncertainty Demands Resilience,” ToolsGroup Blog, 10 December 2019.
[4] Patrick Burnson, “Next Gen Supply Chain Prediction: Increased ‘Operationalization’ of AI/ML Yields Business Value,” Supply Chain Management Review, 21 November 2019.
[5] Barton, op. cit.
[6] Staff, “Trend Micro’s 2020 Predictions – Escalating Cloud and Supply Chain Risk,” CISOMAG, 21 November 2019.