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Supply chain leaders can drive impactful, lasting transformation within their organizations. Here are the digital solutions garnering attention and investment. Digital Supply Chain Technology Investments Spurred by Disruption
T he supply chain challenges that arose from the pandemic have inspired a tsunami of investment in emerging and innovative technologies. That revelation was among the key findings of the 2022 MHI Annual Industry Report, researched by MHI and Deloitte Consulting LLP, “Evolution to Revolution: Building the Supply Chains of Tomorrow.” As nearly every major company’s forecasts were impacted by continued supply chain bottlenecks and constraints, 87% of the more than 1,000 manufacturing and supply chain leaders surveyed said COVID-19 elevated the strategic importance of their supply chains. Nearly 78% of supply chain leaders from both large (+ $1 billion) and smaller (+$50 million) operations say their digital transformation accelerated due to the pandemic, and 64% of them increased their digital supply chain investments. (We’re conducting the survey for the 2023 MHI Annual Industry Report. Add your input: surveymonkey.com/r/2023AIR.) Where Investments are Focused Two out of three organizations reported plans to spend more than $1 million in the next two years. Notably, over 2021, the biggest jump in projected spending was in the middle range of $5 million to $10 million. Overall, 41% of respondents plan to spend between $5 million and up to $100 million, while 18% plan to spend at least $10 million.
Investment has been primarily devoted to the following innovations, and MHI’s ninth Annual Industry Report tracks the current level of adoption and the expected level over the next five years: • 3D printing • Artificial intelligence (AI) • Blockchain • Cloud computing and storage • Driverless vehicles and drones • Internet of Things (IoT) • Inventory and network optimization • Predictive analytics • Robotics and automation • Sensors and automatic identification • Wearable and mobile technology Respondents said all these digital solutions will achieve an adoption rate of 66% or higher over the next five years. Cloud computing and storage has the highest current adoption rate at 40% and will grow to 86% in the next five years. The technology expected to grow fastest is AI, which participants said will rise from 15% current use to 73% in five years—a nearly five-fold jump. Further, expected investment levels over the next two years are rising, with 82% of respondents saying they will spend between $1 million and $10 million. This is a clear acknowledgment that supply chain is now a technology- driven industry, and organizations that do not invest in transformational digital solutions will fail to meet their top 2022 challenges:
• Supply chain disruptions and shortages (57%) • Hiring and retaining qualified workers (54%) • Customer demands for faster response times (51%) • Out-of-stock situations (48%) • Forecasting (46%)
Making the Business Case The biggest investment barrier was the lack of a clear business case for companies that have not deployed transformational technologies. Although leadership may understand their supply chains will benefit tremendously from digital supply chain innovations, they are stymied by ongoing pressure for profitable growth as well as concerns about anticipated costs and potential operational distractions. To help build a successful digital supply chain technology investment business case, MHI offers the free Supply Chain Digital Consciousness Index (DCI) self-assessment tool (mhi.org/dci). The tool allows companies to quickly assess their digital mindset and evaluate their adoption progress. Further, this year’s report shares a framework for building a business case that minimizes risk, creates discipline, establishes a case for change, and provides control.
—By John Paxton
To discover the latest technologies and solutions for your supply chain, attend ProMat, the premier manufacturing and supply chain expo held March 20-23, 2023 at McCormick Place in Chicago. You’ll find free education sessions, daily keynotes, and more than 900 exhibitors showcasing the latest technologies and solutions capable of delivering transformative change. For more information or to register, please visit promatshow.com.
CEO, MHI
November 2022 • Inbound Logistics 23
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