As we embark on a new year, the supply chain continues to undergo almost unparalleled levels of change. The older measures—productivity, quality and service—still apply of course, but we now see digital transformation poised to change everything. This reality is the overriding theme of IDC’s worldwide supply chain top 10 predictions for 2019.
We believe now more than ever that business leaders who recognize the real impact of digital technologies on their industry, customers, partners, suppliers, functions and business practices stand to gain substantial advantage over their competitors. And the supply chain is increasingly viewed by manufacturers and retailers as a critical function for their future success.
According to our biannual supply chain survey, there were many fascinating insights into the role and approach for the modern supply chain, but three broad observations rose above all others:
● After years of being relegated to support status, the supply chain is now perceived by manufacturers and retailers as a strategic tool for business performance and growth—from “cost center” to “opportunity center.”
● Digital technology is now the top driver of change in the supply chain, reflecting both the potential for driving transformation and the lack of full clarity into true potential.
● Supply chain transformation is both about driving efficiency and effectiveness today for ROI and building resilience to disruption tomorrow (almost 60% believe their business will be disrupted in 2018).
If companies are going to embrace new business models, or digitally enable older ones, they are going to need a modern, capable supply chain to do it. Our annual top 10 predictions can help guide technology leaders and their counterparts in the line-of-business operations in their IT strategic planning efforts in 2019 and beyond. Our predictions cover the near term to the long term, and the impact will be felt for years to come.
Prediction 1: By 2024, over 60% of G2000 manufacturing organizations will rely on artificial intelligence platforms to drive digital transformation across the supply chain, leading to productivity gains of over 20%.
Prediction 2: By 2022, over 40% of manufacturers worldwide will be integrating data from product lifecycle apps into their supply chain data to improve overall after-sales service levels, achieving increases of 60%.
Prediction 3: By 2020, 65% of e-commerce operations will make use of autonomous mobile robots within their order fulfillment processes, thus helping increase productivity by over 100%.
Prediction 4: By 2021, smart supplier lifecycle management solutions will automate 50% of suppliers’ enterprise activities, from onboarding to exit, thus improving both performance and relationships.
Prediction 5: By 2024, one-third of large manufacturers will have moved to using actual demand data instead of short-term forecasts, resulting in an OTIF delivery improvement of 2 percentage points on average.
Prediction 6: By 2020, half of the large manufacturers will have begun shifting their supply chain applications from enterprise-centric to network-centric, driving productivity gains of 2 percentage points.
Prediction 7: By 2022, digital technologies will have enabled the automation of repetitive operational tasks, leading to 50% less planner intervention and “touchless” sales and operations planning.
Prediction 8: By 2023, talent shortages in the supply chain for 75% of the top 500 manufacturers worldwide will largely have been mitigated by the use of supply chain digital assistants.
Prediction 9: By 2019, 25% of manufacturers will have doubled investments in distribution automation in reaction to dramatic increases in single-item orders originating from the growth of online marketplaces.
Prediction 10: By 2020, track-and-trace investments will have increased by 30% to improve forecast accuracy and customer experience metrics, and real-time order visibility will have become the norm for consumers.
To help manufacturers in their digital transformation journey, we recommend the following approaches to maximize the value of both current and future technology investments in the supply chain. These recommendations revolve around thinking about the future of the business, the likelihood of industry disruption, and the specific things technology would be able to do for your supply chain:
● Invest in technologies that provide efficiency/effectiveness today yet enable future capabilities that may be as yet undefined.
● Not “technology for technology’s sake” but solving business problems or seizing on opportunities.
● Work with small and large partners to accelerate your IT capabilities and serve the line of business.
● Review your supply chain to make sure it’s ready for increasing levels of digitally enabled products and processes.
● Evaluate your relative maturity in the adoption of new technologies and, more importantly, your ability to translate those technologies into digital transformation.
Manufacturers and retailers are rethinking and reimagining products, services and processes because of the new capabilities that a digitally enabled, thinking supply chain can offer. But we must emphasize that it isn’t enough just to have technology for technology’s sake. Manufacturers must continue to innovate and create value from their investments in solving business problems or enabling new offerings. The coming years will greatly alter the technology landscape for business functions in the manufacturing and retail industries.
Digital transformation is now the overriding priority for most manufacturers and retailers, with the adoption of digital technologies aimed at improving efficiency and effectiveness as well as providing the opportunity to either disrupt their market segment or be resilient to others that may try.
Simon Ellis is program vice president with analyst firm IDC Manufacturing Insights.