In March 2020, at what was one of the very last major exhibitions to be held to date, those attendees (like me) who went ahead with their plans to come to MODEX in Atlanta had the rare experience of having a global pandemic declared in the midst of a trade show. As the halls of the Georgia World Congress Center—already thinned by 50% as half of the pre-registered people decided not to come—began to empty as those of us who could headed out earlier than planned for the airport or the highway, it was a common thought that if ever supply chains were going to be put to the ultimate test, it was going to be now, in reaction to COVID-19.
A year later, trade shows are just starting to return, and by late summer it’s expected that most exhibit halls will be back in business. That timing, however, meant that the big ProMat show (the biggest North American trade show devoted to material handling and logistics, which alternates every other year with MODEX) would have to be reimagined as a virtual event. Rather than postpone the show, the MHI revamped the show, renamed it ProMatDX (for Digital Experience), and proceeded as originally scheduled in early April—not in Chicago, but online.
Another thing that went on as scheduled was the eighth annual industry report on disruptive supply chain technologies, presented by MHI and Deloitte Consulting. John Paxton, MHI’s new CEO (replacing the retired George Prest), joined Deloitte’s Thomas Boykin and a panel of supply chain experts in an analysis of how supply chain professionals have responded to the pandemic over the past year. Based on the results of a survey of 1,000 manufacturing and supply chain industry leaders, 49% say their companies have dramatically accelerated spending on digital technologies, with the goal of becoming more responsive and forward-looking during the pandemic.
“What the findings of this report makes clear is that data and technology are central components needed to power supply chains of the future,” Boykin says. “It also makes clear that another central component will be the people it takes to run these next-generation supply chains and the skill sets necessary to connect the digital supply chain technologies.”
The digital technologies used in supply chains are constantly evolving, he adds, so the skillsets required to support these technologies must also evolve. “For this reason, many companies are targeting more general skill sets better suited for dynamic work environments,” requiring people Boykin refers to as supply chain athletes.
“Companies that embrace innovation and digital technologies can (1) respond more quickly and effectively to the immediate challenges posed by disruption, (2) recover faster than their peers, and (3) create sustainable competitive advantage that enables them to thrive in the post-pandemic world,” he asserts.
According to Paxton, 83% of respondents think digital supply chains will become the predominant business model within five years, and tellingly, 22% believe that’s already the case. Among the respondents, 81% are executives, and nearly half (49%) work at companies with sales over $50 million, and 18% at companies with sales over $1 billion. And when it comes to spending money on digital technologies, 45% of respondents say their companies plan to spend more than $1 million over the next two years, and 12% plan to spend more than $10 million.
Not Just Tech for Tech’s Sake
Among the dozen or so digital technologies examined in the report, the one with the biggest adoption rate is cloud computing, at 57%, which shouldn’t come as a surprise since cloud computing isn’t specifically a supply chain technology and thus has more general applications. The second-most adopted technology, though, lives squarely in the supply chain arena: inventory and network optimization tools, which are currently in use at 44% of the companies studied, followed by sensors and automatic ID tools, at 42%.
The technology most likely to be adopted within the next five years is predictive analytics (48%), followed by Internet of Things tools (46%) and artificial intelligence (45%). And just as it was last year, blockchain continues to bring up the rear as the technology with the lowest current adoption rate, at 12%.
“Digital supply chains reached a tipping point this past year [due to the pandemic], and are now table stakes for successful operations,” says Annette Danek-Akey, executive vice president, supply chain, with Penguin Random House.
However, Paxton cautions that just adopting technology-for-technology’s sake is a bad strategy. “Many companies swirl in an endless loop of doing digital things rather than making changes to their mindset, business, operating and customer models,” he observes. “It’s critical that they move beyond just ‘doing’ digital.”
“A too-early investment can be just as detrimental to your digital journey as a too-late investment,” adds Randy Bradley, associate professor of information systems and supply chain management at the University of Tennessee. “Are organizations taking the necessary steps to ensure there’s a readiness within the organization from a cultural standpoint and also from a human capital standpoint to embrace the digital technologies they’re investing in? A supply chain is only going to be as agile, resilient and responsive as the infrastructure that undergirds it. I do wonder that because of a rash adoption on the part of some but not necessarily all organizations, when we view this digital transformation are we really viewing digital as technology-only? If so, that’s a fallacy that’s going to end in results that are not necessarily going to be beneficial in the long run.”
Based on the survey results, the top supply chain challenge for companies is hiring and retaining qualified workers (52%), followed by forecasting (48%), and customer demands for lower costs and response times (47%). Boykin adds that companies are taking the following actions to prepare for changes in the next 10 years:
48%: partnering with vendors to better understand applications and benefits.
42%: piloting new technologies.
39%: increasing investment/budgets for innovative technologies.
37%: recruiting for different skillsets to align with future needs.
Returning to the topic of the pandemic, Bradley says, “When we have a pandemic, or any kind of natural disaster type of event, the typical mindset is to rally the troops and weather the storm. The challenge is, afterwards you’re no better prepared for the next storm than you were for this one, and that’s a concern. If the focus is just on surviving the event, then you won’t look any different and your capabilities won’t be any better. You might have a greater understanding of what you can handle, but you didn’t necessarily shore up where you had gaps in your business continuity or disaster recovery plans.”
Instead, he suggests that supply chain leaders focus on not just getting through a disruption but rather on insulating their operations from it the next time around. “If you view the pandemic as a staging or prep area for innovation, you’ll come out looking so much better than when you went in.”
For more details, you can check out the entire ProMatDX 2021 experience online.
