There may be considerable interest in the digital transformation of supply chains, but the industry appears to remain firmly in the early stages of adoption. For example, just five percent of the respondents to a recent survey said their company is at a “transformation supply chain-wide level of application.”
Based on the survey results, a new report from logistics provider DHL—“Digitalization and the supply chain: Where are we and what’s next?”—explains that although new technologies and solutions are developing at a fast-pace and disrupting industries on multiple fronts, supply chains struggle to keep up. Nearly 350 supply chain and operations professionals from around the world in automotive, consumer, life sciences, technology, engineering and manufacturing took part in the survey. It is somewhat expected that 95 percent of respondents said their company is not fully capitalizing on the potential cost-reduction benefits for operations and supply chain strategies resulting from the use of next-generation robotics, artificial intelligence, blockchain, big data analytics, sensors and other technology.
All of this is not to say, of course, that supply chain and operations professionals aren’t investigating such technology—and predicting significant gains. Indeed, when respondents were asked about their expected top benefit from integrating physical technologies, 82 percent of the respondents said they anticipate reduced costs and improved profitability, while 77 percent said the same for analytics-based digitalization.
Technology adoption, however, certainly lags. The report notes that “businesses are beginning to test the waters,” with 39 percent of the respondents reporting their company is developing one or more information or analytics solution, but only 31 percent are doing the same for physical applications. The underlying reasons for the slow pace are symptomatic of traditional organizational change scenarios, the report explains. For hardware technology applications, 68 percent of the respondents said reliability was the main concern, while 65 percent reported a resistance to change in their organization, followed by concerns about insufficient or prolonged return on investment, cited by 64 percent of the respondents. Comparatively, for information and analytics solutions, 78 percent of the respondents reported that organizational siloes and legacy systems were the top impediments, followed by a lack of specialized talent expertise, cited by 70 percent of the respondents.
“This is a transformative juncture for the supply chain industry,” says José F. Nava, chief development officer, DHL Supply Chain. “The traditional model faces unprecedented levels of disruption from new hardware technologies combined with information and analytics solutions. Technology offers considerable opportunity to reduce cost and improve profitability, but it also means businesses which fail to adapt risk getting left behind. It’s vital for companies to digitalize processes to meet an ever-increasing demand to drive efficiency and flexibility, and improve the customer experience.”
Interestingly, the report explains that survey respondents ranked big data analytics as the most important information solution, with 73 percent reporting that their company was investing in this technology—ahead of cloud-based applications (63 percent), the Internet of Things (54 percent), blockchain (51 percent) and machine learning (46 percent). On the other hand, importance in physical hardware has focused on robotics, with 63 percent of the respondents ranking it as the most important physical technology—considerably ahead of 3D printing at 33 percent, and augmented reality and drones at 28 percent.
What are your thoughts on the digital transformation of supply chains? Is your company undertaking this initiative? If so, what do you think the largest benefit will be?